Low fees

[Mike Garrett RAA]

Who knows? I would say.."who cares"..but I really do care. I still say and will say until the words no longer come from my cold dead lips......"a trainee with less than a year in the business has no business doing 500 to 600 appraisals a year!" Where is the training?

There is so much more, or at least should be so much more to this job than just driving by, clicking a picture, and then filling out a form. It is called appraising...the act of "thinking, reasoning, and coming up with a supportable value conclusion". We wonder why we are held in such low esteem by the lender community? Because they see our job as nothing more than filling out a form, a task anyone with a high school GED, a car, and digital camera can do.

90 hours of ON LINE class really provides one with a well rounded practical appraisal education...NOT! 90 hours in a class room with a real live practicing appraiser is not enough to make anyone proficient at doing appraisals. It will; however, qualify (in my state) to sit for the registered appraisers test. The program was designed to allow a person to have a "learners permit". From there, they are required to receive 2000 hours of creditable appraisal experience which should include some on the job training. My state board is deeply concerned about the quality of the training and the quality of the appraisal.

For that reason the board supports the AQB in it's draft proposal to increase the education requirements and limit the number of trainees to two (2). The proposed draft also wants to stop newly licensed appraisers from doing exactly what Michael is presently doing. Only certified appraisers (seasoned) would be allowed to mentor and train new appraisers. At first I didn't agree since I know many qualified "licensed appraisers" who could do a very good job of training. The logic behind the proposal is that it would stop someone from jumping into the business and doing exactly what we are seeing here.

I have no heartburn with those who want to make "big bucks" appraising. Just don't do it in a manner that discredits the profession. Don't give those who visit this website the idea anyone can make a million dollars appraising properties in the first couple of years. It's sort of like Carlton Sheets or what ever his name is telling the world..."become millionaires buying real estate with nothing down". That isn't the real world and making hundreds of thousand of dollars doing residential appraisals in your first couple of years isn't either.

The appraisal business has been good to me. I show my appreciation for that by facilitating the registered appraiser course. Sure I get paid for doing it but not as much as I could make from doing "one more appraisal" in the same time period. I do it so that those who decide to enter the business have someone who will expose them to the real world of appraising..not some "pie in the sky..fantasy world". I have seen the same thing in the real estate business. Sure there are agents who do very well but The National Association of REALTORS® (NAR) will tell you 80% of the money is always made by 20% of the agents AND the average real estate salesperson makes less that $15,000 a year.

 

[Michael Reilly]

William, it works very well every day for the last 2.5 years.

Lee Ann, demographics and access to the data play a big part in whether the system would work for you or any appraiser for that matter.

The trick is removing the downtime, what downtime is in this business you ask?

1 prospecting new accounts and all that goes with it. sifting, paper work etc...
2 setting appointments and schedules that make sence.
3 interviewing the borrower, realtor, seller or contact.
4 running the applicable data to bring into the field inc..mapping, tax, flood, plat, census, potential comps etc...
5 be productive during travel time (mobile office setting) leave the driving to someone else.
6 team approach to inspection (two pair of eyes) equals speed without compromise.
7 build in a review process
8 build in a customer service/delivery process
9 build in an IT department
10 build in an accounting department (to get your money)

All said and done we cater to the appraisers and the assistants cater to the appraisers.

We even pick up their vehicle, gas, toll, radio and maintainace expenses.

We call it Appraisal DisneyLand

I'm not saying it didn't cost alot to set this up infact big $$$$
but so far it has been well worth it.

Mike-NY

 

[Mike Garrett RAA]

Hi Mike...

What you are talking about is "economy of scale". I will not disagree with you one bit when it comes to what I call "busy work".

About 11 years ago I thought just like you. Set up an office, hire help, hire appraisers and keep my time to being productive doing appraisals. Thus the company name "Affiliated Appraisers, Inc".

Nice office, nice location. I hired and trained several appraisers as well as office support personnel. Some really interesting things happened.

1. As soon as the appraiser was trained they wanted to be independant and started their own shop. Fine, must be my fault, not paying enough. Raised the fee split...same thing, they thought 100% was better than 75%.

2. Office help gets pregnant, moves away, gets married, goes to jail, has auto accidents, etc. One even broke a finger lifting a plat map book and filed workman's comp and unemployment.

3. Expenses go up every year...fees generally do not. It is not uncommon to need 20 appraisal assignments just to cover the overhead.

4. Liability increases with each person you have on board...just ask your E & O provider.

5. More volume means more customer service and more selling of the business. When there is a problem they don't call the appraiser, they call the boss.

6. No one will take care of your business like you will and you can take that to the bank.

7. With employees and associate appraisers the paper work for taxes increases dramatically. You have to deal with unemployment insurance, for an example. Monthly reports and payments. Payroll withholding and additional cost of social security, medicare tax, and FUTA (Federal Unemployment Tax). Christmas bonus', Christmas gifts, Christmas parties where you could be sued because someone has a drink and then an accident.

It only took slightly more than 10 years for me to finally realize why most appraisers are "single person" shops and why many work from their homes. It's called "economy of scale". Either be very big or be very small...the guy in the middle gets squeezed. So, this year I quietly closed my office, eliminated nearly $65,000 in expenses, and moved into my new home with a home office.

Now I can handle half the volume and make the same amount of money. Actually, I have almost as much volume as I did with a full office but a lot less expense and headache. Oh sure, I complain and moan about having to work all the time...and I do have a trainee who helps out sometimes but I will NET (and that is the key word) more than I did trying to be the CEO.

Good luck with your model. If it wasn't for people like you...we would still be traveling cross country in a covered wagon instead of a 767. Just remember one thing...it doesn't work for everyone. Check the survey done by the Appraisal Institute about size of office if you doubt me. Almost 85% of all residential appraisers are "one man shops". The trend to home business has increased dramatically also.

I wish you well!

 

[Michael Reilly]

LOL great response Mike

That's not the first time I've heard that. The only difference between what you stated and what I stated is truly increasing the appraiser’s productivity to where it all makes sense. If you have a shop that supports 10 appraisers through systematic efficiencies produced the work of 25 then truly the economies of scale are working. We also set this up for the appraiser to work from the home office should they desire which addresses your final point.

Keep on keeping on Mike

Mike-NY

 

[Farm Gal]

Mike and Mike:

I get both points. Most of us do.

Mike the younger: are you associated with a perticular group which proferrs a "whole system" inclusive of van and etc. and 'guaruntees' BIG $$ if you buy into their system?

or is this stuff you have developed yourself?

 

[Mike Garrett RAA]

Been soul searching....reading and re-reading this thread. I ask myself ..."what am I doing wrong if I am not making at least $250,000 a year in this market?".

Mike .... you stated an appraiser could make more doing HUD appraisals. I agree; however, I also know you must have at least two years experience and be licensed..not a trainee in order to get on the HUD roster. We have seen a huge number of newly licensed appraisers get on the roster only to find the only way to get assignments is to cut fees. The going rate for a HUD appraisal here has dropped dramatically, in fact, some are offering to do them for as little as $250.

I do work for Fannie Mae. Interestingly, they require a full URAR report for their REOs. It takes a lot more work to do this type of report. 3 closed sales, 3 listings gridded and adjusted. Repair addendum with cost estimates. Additional interior pics including repair items. Their standard fee is $300 regardless of distance. The last one I did was over 100 miles round trip. Guess I am just old and slow because it takes all day to do one of those.

My main source of work is the Veterans Administration. Been on the panel for over 10 years. The fee is the highest in this area for conventional work. Many of my assignments are new construction which requires me to review the contract, spec sheet, and plans. These still take a full day to do the do the research, site inspection, write the report, and send edi. I think I have one of the most extensive libraries of new construction in the area. More than 30 builders, 50 subdivisions, and literally hundreds of models. In addition, the VA regularly sends liquidation appraisal assignments which require more work. We have more than 20 VA appraisers and most only do VA work. Typical work load from them is 15 to 20 assignments a month. That equates to $75,000 to $85,000 a year.

The only thing I can think of that would be more profitable or faster would be to do nothing but 2055 drivebys at, say $250 to $275 each. With a small support staff I can see an appraiser doing 4 a day. Only problem is most of my conventional clients want full URAR reports. I only get 3 or 4 2055s a month right now.

Lastly, I also do Relocation work. Great fees, a ton of work, and talk about customer service...daily communication. It takes a full day to do one of those beasts. Some of my work, less these days, is review work. A field review takes as long as doing a full appraisal and sometimes longer. So I just don't know where the work comes from for those kinds of volume.

Any of you have any ideas?

 

[xmrdfghap]

Mike, Ric Biggers is looking for guys that can do a minimum of 10 a week.......http://www.appraisersforum.com/forums/viewtopic.php?t=3915

Must be able to produce at least 8-10 appraisals per week. Office policy is a maximum of 5 day turn around time, after receipt of appraisal request. We are seeking hard workers that can get the job done. This is an independent contractor position.

maybe you should go visit him and see how it is done....... :lol:

 

[Blue1]

The going rate for a HUD appraisal here has dropped dramatically, in fact, some are offering to do them for as little as $250.

Mike....SAY IT AIN'T SO!!! You have GOT to be kidding!!! I don't touch one of those "dogs" for any less than $375......I'm thinking of NOT doing them altogether....too much liability and ignorant Realtors/LO's. :evil:

I do work for Fannie Mae. Interestingly, they require a full URAR report for their REOs. It takes a lot more work to do this type of report. 3 closed sales, 3 listings gridded and adjusted. Repair addendum with cost estimates. Additional interior pics including repair items. Their standard fee is $300 regardless of distance. The last one I did was over 100 miles round trip. Guess I am just old and slow because it takes all day to do one of those.

Dude.....Gettin' really worried here! :roll: $300? Really? For all that work? I get more for a standard "cookie cutter!" I'm gonna go hug my clients tomorrow..... :lol: :lol:

 

[Charlotte Dixon]

Michael's making lots of money; good for him. I have my own office; I'm happy with my income and production; I'm doing the best I can do to stay on top of all the guidelines; I try to be professional and ethical; I'm behind in my work and tired. No time to mull it over.

 

[George W Dodd]

I don't believe it. Period.