The $275 1004

[Skeletor]

Yesterday, I received an email from SingleSource indicating that there is an open order. I parted ways with SingleSource well over a year ago but will do an appraisal for them every once in a while, e.g., I've only prepared two appraisals for them this year. Anyway, I logged in to their system and took a look at the order.

This was a 1004 request for PMI removal. The subject was a historic home located in a historic district, one in which I am very competent in appraising. No surprise - the fee was $275 which is par for the course with this particular bottom feeding AMC. I quoted $450 which is a little lower than what I normally quote on a historic home but what the heck I knew I wouldn't get the order anyway. When I submitted the quote, the order was no longer available. Now there is only one reason why I would get that message - another appraiser accepted the order. Let's break this down:

Revenue - $275
Op Exp Ratio - 45% (about my average currently before S-Corp salary, etc.)
NOI - $151
S-Corp Tax - no less than 20%
EAT = $121 (before FICA/SS, etc.)

Let's assume about 1 hour for the inspection plus 2 to 3 hours report writing. That $121 works out to $30 to $40 per hour.

So let me get this straight comrades. With all of the education and training and the high maintenance relationships we have with these loser AMCs, together with the time and stress to manage a business, $30 to $40 per hour is an acceptable economic incentive? No wonder we can't attract new talent into this business.

EDIT: Yes my friends 2-3 report writing time is optimistic I know this. For argument's sake let's just assume that you are kicking some serious azz on this particular assignment and juiced up to the max with coffee and methamphetamine.

But the numbers look even worse at 3-4 hours report writing time and 1 hour inspection. $24 to $30 per hour.

 

[Michigan CG]

Your math is fuzzy at best.

$275 minus 15% expenses equals ~$235.

$235/3 hours is $92/hour.
$235/4 hours is ~$60/hour.

Taking taxes out first is not logical as everyone pays taxes. But even if we do here are the numbers based on 45% taxes (25% fed, 5% state and 15% SS):

$94 Income after taxes
$31/hour after tax wages
or
$24/hour after tax wages.

My question is how does one write a report in 2 to 3 hours. Polls over the years on this forum have indicated an average time to complete a report, including all aspects (inspection, writing) is 6-8 hours.

 

[Skeletor]

Michigan CG! Look again! I used 45% not 15%. I took out the taxes at the NOI level not the revenue level. This is accounting 101. If anything, my tax estimate is light (because I'm simply basing it on business income and does not consider property tax, FICA/SS, sales tax, etc.) and my report writing time optimistic. I'm just trying to illustrate a point and you're kind of proving it.

 

[Terrel L. Shields]

I agree, total expenses and overhead, licenses, E & O will push 50%. I'd be lucky to drive and inspect+ photo comps in 1 hour, more like 3, plus 4+ hours writing time.

 

[Ariba]

Let's assume about 1 hour for the inspection plus 2 to 3 hours report writing. That $121 works out to $30 to $40 per hour.

So let me get this straight comrades. With all of the education and training and the high maintenance relationships we have with these loser AMCs, $30 to $40 per hour is an acceptable economic incentive? No wonder we can't attract new talent into this business.

I don't believe your numbers but most appraisers would jump at a chance of making $40/Hr or $80,000/yr. That's more than 90% of what most appraiser's make.

 

[J Grant]

I don't believe your numbers but most appraisers would jump at a chance of making $40/Hr or $80,000/yr. That's more than 90% of what most appraiser's make.

? 90% of appraisers should be making over $40 an hour, otherwise time to close up shop. Compare to tradespeople who charge $50-$75 an hour. If we cant' make at least what they make, we're toast. F** Single Source, more like Single Scum, dont accept work for that low $, if they can't get orders filled for lenders, lenders will order direct and the $ won't get siphoned off.

One of the big fallacies with appraisers thinking $40 an hour is good is this is not a steady income flow...if you have 2 or 3 slow months a year ( or longer, ) the compensation is cut ...

 

[Skeletor]

I don't believe your numbers but most appraisers would jump at a chance of making $40/Hr or $80,000/yr. That's more than 90% of what most appraiser's make.

you're assuming two per day 52 weeks per year. No human can do that. Remember, my numbers are before certain taxes, and they assume that there is no fee split with an employer. See how ugly this can get real fast?

 

[Michigan CG]

Michigan CG! Look again! I used 45% not 15%.

I know what you used. Your total income derived from appraising should have about 15% expenses.

 

[jay trotta]

Yesterday, I received an email from SingleSource indicating that there is an open order. I parted ways with SingleSource well over a year ago but will do an appraisal for them every once in a while, e.g., I've only prepared two appraisals for them this year. Anyway, I logged in to their system and took a look at the order.

This was a 1004 request for PMI removal. The subject was a historic home located in a historic district, one in which I am very competent in appraising. No surprise - the fee was $275 which is par for the course with this particular bottom feeding AMC. I quoted $450 which is a little lower than what I normally quote on a historic home but what the heck I knew I wouldn't get the order anyway. When I submitted the quote, the order was no longer available. Now there is only one reason why I would get that message - another appraiser accepted the order. Let's break this down:

Revenue - $275
Op Exp Ratio - 45% (about my average currently before S-Corp salary, etc.)
NOI - $151
S-Corp Tax - no less than 20%
EAT = $121 (before FICA/SS, etc.)

Let's assume about 1 hour for the inspection plus 2 to 3 hours report writing. That $121 works out to $30 to $40 per hour.

So let me get this straight comrades. With all of the education and training and the high maintenance relationships we have with these loser AMCs, together with the time and stress to manage a business, $30 to $40 per hour is an acceptable economic incentive? No wonder we can't attract new talent into this business.

Perfect example of why "Customary & Reasonable" are manipulated /made up banking language; It would be unreasonable to accept Less than $475 on a Historic property, and more reasonable at $650 based on the complexity of the property alone. At 6-8 hrs. report writing, your working hard at just above Minimum Wage and this self inflicted wounding is supported by the Fed.

We should be seeing those "College Educated" graduates "Flocking" to this business in droves. Check your local Board for the "High Enrollment" characteristics of the appraisal profession.....ROFL

 

[Overimprovement]

The accepting party very likely is not even competent to appraise an historic home. There is only one historic district in the area I cover, and I wouldn't accept one last year. I just have no experience doing them. I did research it a little bit--lots of special considerations that can affect value.

So we have someone either:
A) violating USPAP and possibly state law as well by accepting an assignment they have no competency in, and/or
B) someone who is so desperate for work they are willing to essentially work for half price, and/or
C) someone who has runners inspect, and a firm in India type in the report, complete with 100% boilerplate in the important areas, so they still actually are making a few $$.

Yeah, sure sounds like an appraiser shortage to me...more like a common sense and/or ethical shortage.