Sale/Purchase of Appraisal Practice

[Long Walk]

I saw this closed thread on this topic and found nothing else: https://appraisersforum.com/forums/threads/small-appraisal-practice.213094/page-2

Last post in that thread was 2016 and the overwhelming agreement then was that appraisal practices are not really saleable. Has anything changed in the market since then?

I know of one sale in MA about 20 years ago that was done by an earn-out and was successful. Other than IRR's practice purchases 20+ years ago, I am not aware of any sales.

Law firms, CPA practices, property management practices are readily saleable. But, I knew a roofer in FL in '90's who bought the business of a roofer I used - he told me that all he bought was the phone number. Today, you would add the website.

What would make an appraisal practice saleable? Is it owning office space? An assembled workforce? Specialty (high bar to entry) clients served by the existing workforce? I understand the sole proprietor working in his/her family room is not a saleable practice.

 

[J Grant]

I saw this closed thread on this topic and found nothing else: https://appraisersforum.com/forums/threads/small-appraisal-practice.213094/page-2

Last post in that thread was 2016 and the overwhelming agreement then was that appraisal practices are not really saleable. Has anything changed in the market since then?

I know of one sale in MA about 20 years ago that was done by an earn-out and was successful. Other than IRR's practice purchases 20+ years ago, I am not aware of any sales.

Law firms, CPA practices, property management practices are readily saleable. But, I knew a roofer in FL in '90's who bought the business of a roofer I used - he told me that all he bought was the phone number. Today, you would add the website.

What would make an appraisal practice saleable? Is it owning office space? An assembled workforce? Specialty (high bar to entry) clients served by the existing workforce? I understand the sole proprietor working in his/her family room is not a saleable practice.

What would make it saleable?
Find a gullible buyer, perhaps a non appraiser, and provide misleading information to them about profit/potential. That is how a number of not profitable /ind contractor businesses get sold, or at least sold for more than they are worth.

The honest way -imo would be to establish a multi appraiser firm with enough business /and a specialty with niche clients, that the firm would be viable without the appraiser/founder at the helm.

 

[Joe Flacco]

The business has to be generating profit without the owner doing the work. That is a business.

A fee appraiser that is doing the work to make a living is not a business. That is called being self employed.

You can sell a business.

 

[Long Walk]

The business has to be generating profit without the owner doing the work. That is a business.

A fee appraiser that is doing the work to make a living is not a business. That is called being self employed.

You can sell a business.

I'm good with the difference between a practice and a business.

At it's heart, my question is about buying commercial practices in other parts of the state and creating a state-wide footprint. I understand if that isn't possible due to appraisers not having obviously saleable businesses, but lawyers actually do this. Partly to get the clients, receivables, and on-going cases. Partly because there is likely to be an existing office with staff that saves the headache of set-up. IOW, staff, set-up, and data may be the value in the practice, even if the chief appraiser retires.

With those purchases comes the old appraisal files and the data in them. The benefit beyond data would be servicing good clients in parts of the state that are inconvenient to service from a single location.

 

[Long Walk]

Find a gullible buyer, perhaps a non appraiser, and provide misleading information to them about profit/potential.

imo would be to establish a multi appraiser firm with enough business /and a specialty with niche clients, that the firm would be viable without the appraiser/founder at the helm.

Is it really possible to sell an appraisal business to a non-appraiser? That would surprise me.

Your point about the multi-appraiser shop is interesting on the sell-side as I build. Everyone buys out the chief appraiser at the end as they run their own practices within the larger practice. Is that what you mean?

 

[alebrewer]

It seems to me there may be economies of scale to be gained by (especially) CG's creating JV's (or whatever legal form of partnership you prefer). And possibly for CR's as well, although due to the lack of requisite 'back office' folks, I'd expect not so much on the resi side...

 

[glenn walker]

Never seen it done but would love to hear from someone who has.

 

[J Grant]

Is it really possible to sell an appraisal business to a non-appraiser? That would surprise me.

Your point about the multi-appraiser shop is interesting on the sell-side as I build. Everyone buys out the chief appraiser at the end as they run their own practices within the larger practice. Is that what you mean?

I would assume a non appraiser could be the business owner, as long as they did not pass themselves off as an appraiser/do the appraisal

I was speculating, that for sale purpose an office employing a staff of appraisers with enough business to keep them busy would have more worth $ than a single practice office.

 

[Long Walk]

It seems to me there may be economies of scale to be gained by (especially) CG's creating JV's (or whatever legal form of partnership you prefer). And possibly for CR's as well, although due to the lack of requisite 'back office' folks, I'd expect not so much on the resi side...

That's kind of what I'm thinking about. I can provide the back office: billing, collections, publishing, internal reviews, insurance, and all the other stuff. Do that from one location, with small offices scattered so nobody drives too far. Imagine the bench strength with that doing a big strip takings job.

I don't know anyone that has done that and am looking for someone who has done it to help me think through structure and how to sell it to appraisers. Proof concept in my state. If it can work, it may be able to scale it to all the New England states.

 

[Joe Flacco]

I'm good with the difference between a practice and a business.

At it's heart, my question is about buying commercial practices in other parts of the state and creating a state-wide footprint. I understand if that isn't possible due to appraisers not having obviously saleable businesses, but lawyers actually do this. Partly to get the clients, receivables, and on-going cases. Partly because there is likely to be an existing office with staff that saves the headache of set-up. IOW, staff, set-up, and data may be the value in the practice, even if the chief appraiser retires.

With those purchases comes the old appraisal files and the data in them. The benefit beyond data would be servicing good clients in parts of the state that are inconvenient to service from a single location.

My buddy used to work at irr when he was training and his office got bought. So seems to me like opportunity for that in commercial.

I know don't have a business that someone would buy though.