Starting an appraisal business

[hoppybun333]

Hello,
I am new to this forum, but not new to appraising. I have been a staff appraiser for all of my career, but now have the opportunity to go out on my own. I was hoping for suggestions/advice on getting set up such as choice of E&O, software, other services, etc. I have been doing the research, but I feel like I still don't know what I don't know, and want to get this established correctly from the start instead of having to possibly re-do things or otherwise get myself into trouble.
Thanks!

 

[Fernando]

Decades ago, I quit my staff position and went on my own. It was also during a refi boom and it was a good time to get work.
Since independent working on my own, I'd been through the ups and downs. The prior bank I worked for closed during the Great Recession.
My income base on my efforts. It's hard but love the independence.
You need to see the benefits from your staff position including medical and such in determining if going alone makes more money.
You're running a business so you need to get clients. If make enough money, overhead costs are not significant.

 

[spittman]

When is your license up for renewal? May want to consider the costs of continuing ed and application fees on top of MLS yearly/quarterly fees especially if you don't have many prospects yet. If that is not an issue then look into OREP for E&O. Prices are reasonable and they also have an option to pay monthly. For software, I use SFREP. They are fairly inexpensive and again you can pay monthly, but once you pay it off the software is yours and you are free to use it for as long as you like. It's good software too and that will be one less renewal fee you will have to worry about while you try to establish yourself for the first couple of years. Can't think of any other services you will need, but I do have my own PO box and a separate business account. I also use an EIN instead of my social security #.

 

[hoppybun333]

Decades ago, I quit my staff position and went on my own. It was also during a refi boom and it was a good time to get work.
Since independent working on my own, I'd been through the ups and downs. The prior bank I worked for closed during the Great Recession.
My income base on my efforts. It's hard but love the independence.
You need to see the benefits from your staff position including medical and such in determining if going alone makes more money.
You're running a business so you need to get clients. If make enough money, overhead costs are not significant.

Thanks for the input, Fernando.

 

[hoppybun333]

When is your license up for renewal? May want to consider the costs of continuing ed and application fees on top of MLS yearly/quarterly fees especially if you don't have many prospects yet. If that is not an issue then look into OREP for E&O. Prices are reasonable and they also have an option to pay monthly. For software, I use SFREP. They are fairly inexpensive and again you can pay monthly, but once you pay it off the software is yours and you are free to use it for as long as you like. It's good software too and that will be one less renewal fee you will have to worry about while you try to establish yourself for the first couple of years. Can't think of any other services you will need, but I do have my own PO box and a separate business account. I also use an EIN instead of my social security #.

Thanks for replying, Spittman. My license is up for renewal this year, but my CE is all done. I do have prospects waiting in the wings for me to get going, so I'm happy about that.

Question about SFREP. I've been comparing the software available, and from their website, I only see two subscription options. Maybe they no longer offer what you have?

I will definitely have separate mailbox and bank accounts. Did you set up an EIN so that you wouldn't have to share your social?

 

[Fernando]

Thanks for replying, Spittman. My license is up for renewal this year, but my CE is all done. I do have prospects waiting in the wings for me to get going, so I'm happy about that.

Question about SFREP. I've been comparing the software available, and from their website, I only see two subscription options. Maybe they no longer offer what you have?

I will definitely have separate mailbox and bank accounts. Did you set up an EIN so that you wouldn't have to share your social?

I have EIN but along the way I just use my social.

 

[spittman]

Thanks for replying, Spittman. My license is up for renewal this year, but my CE is all done. I do have prospects waiting in the wings for me to get going, so I'm happy about that.

Question about SFREP. I've been comparing the software available, and from their website, I only see two subscription options. Maybe they no longer offer what you have?

I will definitely have separate mailbox and bank accounts. Did you set up an EIN so that you wouldn't have to share your social?

I don't want to give you wrong information so make sure you email SFREP to clarify, but I signed up for the basic monthly Silver package which actually comes with 2 different versions of software - Appraiseit Pro and Appraiseit Classic. If you like the Appraiseit Pro version you'll have to renew, but you can also keep using the Classic version for free which is what I have been doing. They probably won't tell you that because they are a for profit business. Classic works fine for me, but I have heard the Pro version is pretty awesome if you like all the bells and whistles. If you have more questions you can post them in the SFREP subforum here in the Technical - Hardware/software section.

I don't really remember why I decided to get an EIN. It's not really necessary but security was probably one of the reasons and I just like to keep things separate anyways. If you go with an EIN, make sure you fill out your W9s exactly the same way your info shows on the EIN approval, otherwise it may lead to problems.

As for the PO Box, I got that because I've moved a few times and getting my clients to change my address in their system was always a PIA.

 

[Russ Kitzberger]

Appraisal is like any other business. Setting it up right from the start can save you many headaches down the road.

I remember the computer systems going down one day because a RAID array broke in a white box computer, took days to fix while entire staff was idle. Bought a off lease server, loaded the software on it, ran like a champ for well past its rated useful life when prepped/redundantly taken out of service; no issues. That is the difference between buying cheap stuff for home/micro business use and buying good equipment for business use.

You can do it yourself or you can hire a business coach or pair up with someone from your local SBA.

I would start by finding these parties:

• Mid-sized lawfirm to setup your company articles and other legal docs, run trademark and copyright searches for names and logos and serve as your party for service of process to the company. They can also advise on your record-keeping and other requirements for insurance, workers comp, unemployment, etc in your state. If you hire employees, using a firm with a range of attorneys can help you setup your hiring processes and record keeping. They can also help you create template engagement letters and review engagement agreements from clients. CA has some strict laws around businesses, so I wouldn't sidestep this relationship.
• CPA office that can look at your personal taxes/fiancing and structure business classification to best fit to set up your accounting and tax. They can recommend the bank that will work with their accounting system best. They can help you make decisions about whether to buy or lease your company car, etc.
• A business insurer, don't rely on your regular homeowners agent, get a separate business policy that covers the business risks, THEN have your normal personal insurer fill in the personal gaps with riders and umbrella policies.
• IT contractor for your computers and back systems, serve as the point of contact for any future issues with the computers.
• Find a marketing contractor that can help you with the website, marketing materials, etc.

As far as what software to use, that is really individual preference and how you plan on growing. A solo person might want an easy simple program, someone who is growing might want bells and whistles. Try a few programs out using their trial periods.

 

[Russ Kitzberger]

Also, it is a good idea to contact your local SBA office, they can help you determine if any grants or subsidized business financing is available for your situation and help you classify as a SBE or MBE, or any other classification, so that you can best compete for projects.

 

[Fernando]

When you go after clients, it's best to go for best fees you can get.
I'd been increasing my fees over $250 from its minimum since last year because it's the market.
Don't shortchange yourself.