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The forbidden subject - Fees
- Thread starter Terrel L. Shields
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Pamela Crowley (Florida)
Elite Member
- Joined
- Jan 13, 2002
- Professional Status
- Retired Appraiser
- State
- Florida
I would think that a Jumbo Loan would have all sorts of reasons in the subject structure and site to raise the fee. I don't know of any simple cookie-cutter properties that would have a jumbo loan.
Pamela Crowley (Florida)
Elite Member
- Joined
- Jan 13, 2002
- Professional Status
- Retired Appraiser
- State
- Florida
TC,
My basic fee is $300. Anything unusual - outside of cookie cutter - has add ons. This makes sense to me as it adjusts for the time it takes. My fees have nothing to do with the value of the property.
My basic fee is $300. Anything unusual - outside of cookie cutter - has add ons. This makes sense to me as it adjusts for the time it takes. My fees have nothing to do with the value of the property.
Ross (CO)
Senior Member
- Joined
- Jan 17, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Colorado
My standard for a 1004 is now $337.25. I raised my fee on January 1st from $287.50 because I felt it was a good time to do so. O.K., O.K., O.K. I'm kidding......but I really have wondered if somewhere out there someone does charge such a fee which is "abnormal"......just to be different. I did meet a Century 21 list agent at one of her listings last summer. Her list price was a number ending with the digits $...21. I just had to ask how she came up with such a list price and she said it "was her trademark" and she thought it made her listings easier to recognize in the database. Different strokes.....
Know an attorney/appraiser that charges by the Hour & on a by the job basis - hasn't been brought up on any charges.
Therefore, if you charged $47.85 per hour you could possibly end up with a fee of; $357.35 for a report. But most "Clients" generally want to know what your charging before you go out. Kinda limits what your doing unles you fully charge by the hour.
From the fees noted, our area is behind most of you 8O
8)
Therefore, if you charged $47.85 per hour you could possibly end up with a fee of; $357.35 for a report. But most "Clients" generally want to know what your charging before you go out. Kinda limits what your doing unles you fully charge by the hour.
From the fees noted, our area is behind most of you 8O
8)
A
Anonymous
Guest
Steve Owen,
You have made a couple of assumptions that I would like to address.
First, appraisers work on the farm model. My family being farmers in Indiana and me being an appraiser, I would like to address this. My grandfather, as a kid, used mules in the fields. If you could work an acre a day you were doing well. By the time my father was a kid they had tractors with 8 row towables. Have you seen the new ones? 32 and 64 row discs, cultivators, etc. Amazing. These things cost money, but how much does productivity increase? You assumption that digital cameras and email cost more is very flawed. Let me guess, you were not doing this when we used film? I could buy 4 or 5 digital cameras a month right now for what I paid in film bills 8 years ago per month. I paid over $1500 for my first 2 digital cameras (each) 8 years ago and thought I was robbing the bank with the money I saved.
Now we come to pdf's and high speed internet, etc. Lets see, for a $200 peice of software and $30 per month, I no longer have to print, deliver or mail appraisals. How much consumables did we go through printing appraisals? I used a few hundred dollars per month on just ink jet supplies. I went through 2 or 3 ink jet printers per year. A new laser about every other year. ON research, man this is easy now. All of the counties I cover have public records on line. All MLS's for me are internet based. I can computer search the databases.
Steve, then you said this:
Not only is it not a good idea, but charging by the dollar value is a USPAP violation of the primary kind.
Not so Steve. USPAP does not say that. While I think it is a bad idea to charge a percentage, and was formerly specifically not allowed under USPAP, there is nothing wrong with charging in ranges, which is what many people do. Say basic rate for $0-$250,000 Basic plus $75 for $250-350 etc....Mu guess here Steve is that you are working with an "old timer". I started like that too. Then I sat down and actualy read USPAP. Then I read the several of the Institute's books. Then I left the old timer. I realized how far behind he was and how far behind he was going to stay because "I 've never had a problem doing it like this."
Personally, the technology has made this so simple, I have lowered my fees. It costs me about half to operate this business now then it did 8 years ago. I takes me about a third of the time to compelte an appraisal.
You have made a couple of assumptions that I would like to address.
First, appraisers work on the farm model. My family being farmers in Indiana and me being an appraiser, I would like to address this. My grandfather, as a kid, used mules in the fields. If you could work an acre a day you were doing well. By the time my father was a kid they had tractors with 8 row towables. Have you seen the new ones? 32 and 64 row discs, cultivators, etc. Amazing. These things cost money, but how much does productivity increase? You assumption that digital cameras and email cost more is very flawed. Let me guess, you were not doing this when we used film? I could buy 4 or 5 digital cameras a month right now for what I paid in film bills 8 years ago per month. I paid over $1500 for my first 2 digital cameras (each) 8 years ago and thought I was robbing the bank with the money I saved.
Now we come to pdf's and high speed internet, etc. Lets see, for a $200 peice of software and $30 per month, I no longer have to print, deliver or mail appraisals. How much consumables did we go through printing appraisals? I used a few hundred dollars per month on just ink jet supplies. I went through 2 or 3 ink jet printers per year. A new laser about every other year. ON research, man this is easy now. All of the counties I cover have public records on line. All MLS's for me are internet based. I can computer search the databases.
Steve, then you said this:
Not only is it not a good idea, but charging by the dollar value is a USPAP violation of the primary kind.
Not so Steve. USPAP does not say that. While I think it is a bad idea to charge a percentage, and was formerly specifically not allowed under USPAP, there is nothing wrong with charging in ranges, which is what many people do. Say basic rate for $0-$250,000 Basic plus $75 for $250-350 etc....Mu guess here Steve is that you are working with an "old timer". I started like that too. Then I sat down and actualy read USPAP. Then I read the several of the Institute's books. Then I left the old timer. I realized how far behind he was and how far behind he was going to stay because "I 've never had a problem doing it like this."
Personally, the technology has made this so simple, I have lowered my fees. It costs me about half to operate this business now then it did 8 years ago. I takes me about a third of the time to compelte an appraisal.
TC
Elite Member
- Joined
- Jan 31, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Pennsylvania
Bill,
I could not agree with you more. I went to 100% EDI the first of the year and convinced all my clients to do so. The money I have saved is amazing. No ink cartridges, no stamps, no legal size paper, no Fed-Ex, no rush drop offs, no 35mm film, no processing...the list goes on and on. I had 2 color printers to handle the volume, I gave one to one of my clients who balked at EDI. Now they love it! My costs per appraisal have gone down considerably, I have no plans to raise fees this year. Let the Postal Service raise rates all they want, I don't use them anymore.
TC
I could not agree with you more. I went to 100% EDI the first of the year and convinced all my clients to do so. The money I have saved is amazing. No ink cartridges, no stamps, no legal size paper, no Fed-Ex, no rush drop offs, no 35mm film, no processing...the list goes on and on. I had 2 color printers to handle the volume, I gave one to one of my clients who balked at EDI. Now they love it! My costs per appraisal have gone down considerably, I have no plans to raise fees this year. Let the Postal Service raise rates all they want, I don't use them anymore.
TC
Ray Miller
Elite Member
- Joined
- Feb 20, 2002
- Professional Status
- Licensed Appraiser
- State
- Wisconsin
DISCLAIMER == As I do with all forums that I join. I let it be know from the get go that I have a problem with words and letters and my poor old tired brain. I tend to reverse letters and words and at times leave out words and letters out. Sorry but that is the way the brain works. I have learned to live with it. Would you all please understand. It has not stopped me from getting my different degrees in college, being publish in equine science and published in equine publications local, regional, nationally and internationally and speaking at National Conventions and Clinics. Nor did it hamper me from carrying a 4.0 grade average this past year in my Real Estate Sales, Brokers and Appraisals class at the Tect College. All of my professional work is proofed by my staff. Personal work and internet I let it slide a bit. I feel it is not as formal and would take a lot of additional time. With that said.
Just new to the Real Estate Appraisal Industry, but been doing equine and commercial equine and recreational ranch appraisals for the past 30 years. How ever with that said, I have had a number of articles publish and been interviewed by trade publications on the subject of doing business, the cost of business and on setting fees and what you should be charging clients in another industry. (You can see some of the articles at www.horseshoes.com in the business articles section. Also at the AFA Journal website and my web site www.saddlefitting.net . Have been in that industry for 41 years. Just now retiring to the Real Estate Appraisal Industry for another 15 years I hope.)
This thing about fees and wages plagues every industry. However I have found you can talk about in general, you can talk about how to arrive at a fee. You just can’t talk about setting a fee and having everyone agree on it. Then it becomes price fixing. I have had this on advise of legal council. I want to know where I stood before, I was interviewed and did my own articles for the associations.
I have found it to be very simple. You figure your cost of doing business, all of your overhead related to business. Then the days you want off, vacation time, sick days, personal days, holidays. You take this number of days and subtract it from your forty hour work week. Then you set your gross net income, you need. Then you add your income to the overhead expense and divide that figure by the number of days you will work. This will give you the number of gross nuts you need to make each day. Then you figure what each work product that you do is worth in the amount of time it takes you to do. This then should give you the rate for that project.
If you employee people you do the same for them and always add in your time with them and how much profit they are making you about there cost.
You do you project budgets for the coming year, which include cash flow, income and expenses. As each business will be different the fees charged will be a bit different. I find if you review weekly your budget and cash flow, you should have no problems in business. You can also take care of the little problems before they become big ones.
Just my thinking.
Just new to the Real Estate Appraisal Industry, but been doing equine and commercial equine and recreational ranch appraisals for the past 30 years. How ever with that said, I have had a number of articles publish and been interviewed by trade publications on the subject of doing business, the cost of business and on setting fees and what you should be charging clients in another industry. (You can see some of the articles at www.horseshoes.com in the business articles section. Also at the AFA Journal website and my web site www.saddlefitting.net . Have been in that industry for 41 years. Just now retiring to the Real Estate Appraisal Industry for another 15 years I hope.)
This thing about fees and wages plagues every industry. However I have found you can talk about in general, you can talk about how to arrive at a fee. You just can’t talk about setting a fee and having everyone agree on it. Then it becomes price fixing. I have had this on advise of legal council. I want to know where I stood before, I was interviewed and did my own articles for the associations.
I have found it to be very simple. You figure your cost of doing business, all of your overhead related to business. Then the days you want off, vacation time, sick days, personal days, holidays. You take this number of days and subtract it from your forty hour work week. Then you set your gross net income, you need. Then you add your income to the overhead expense and divide that figure by the number of days you will work. This will give you the number of gross nuts you need to make each day. Then you figure what each work product that you do is worth in the amount of time it takes you to do. This then should give you the rate for that project.
If you employee people you do the same for them and always add in your time with them and how much profit they are making you about there cost.
You do you project budgets for the coming year, which include cash flow, income and expenses. As each business will be different the fees charged will be a bit different. I find if you review weekly your budget and cash flow, you should have no problems in business. You can also take care of the little problems before they become big ones.
Just my thinking.
Steve Owen
Elite Member
- Joined
- Jan 16, 2002
- Professional Status
- Certified General Appraiser
- State
- Missouri
Bill-NC, you apparently know a lot about me from my post. I hope you aren't jumping to the same kinds of conclusions in your appraisal reports. Most of your assumptions about me are humorous (I wasn’t doing this back when we had film - but I’m an old timer who can’t change my ways?!?), a few of your assumptions about me are actually kind of insulting - but that’s okay, I have a fairly thick skin.
USPAP: (Lines 288 - 292)
It is not just my opinion, it is also the opinion of the MREAC (it came up at their annual meeting last year) and of every single USPAP instructor I've ever had. If you are charging based on the value of the property (even in ranges) you are in violation. Period.
There are ways you can ethically charge for larger, more valuable properties, but it should be based on complexity of the appraisal problem, not the value of the property.
I did not say appraisers work under the farm model. We work under an economics model (econ 101, by the way) called "the farm problem." It exists anytime a large number of sellers of relatively homogenous product sell to a relatively limited number of buyers.
There is little question that much of what you say about e-mailing files is true. However, you entirely misinterpreted and missed the basic point. You said
My first digital camera cost $1,000. I had spent about $2,500 in photo processing alone the previous year. However, the basic economic fallacy you (and maybe Terrel) buy into is trading variable costs for fixed costs. The cheapest high speed internet connection I have been able to find was $40 a month (congratulations if you really got one for $30). Then you have to have a firewall (if you are smart) and anti virus, both of which require annual subscription for update. I haven't put up a web page yet, but that is probably next - with an ongoing monthly cost. You have to have software for mapping, which also creates a monthly fee for update (to keep current) and, if you don't scan in flood maps, you need a service there, which probably is monthly. I saw recently where Wayne is offering an e-mail service, on a monthly cost basis, that will handle the large files that usually occur. Thesse costs go on and on, and every time you turn around, there is something new. Did I say you shouldn't do this and keep up with the competition? No. I just said you should consider these costs when deciding how much to charge for pdf reports.
Unlike the cost of paper, ink and film, these costs go on regardless of how much business you do. If you are sick for a couple of weeks or go on vacation, fixed costs generally continue. Also, if there is a business downturn you cannot easily lower these fixed costs. In those kinds of environments, e-mailing actually becomes more expensive than printing - it is for me, because a large volume of my work is in narrative reports that cannot be handled that way.
Treating fixed costs like variable costs was one of the main contributing factors to the bust of the dot com bubble (along with a few other economic fallacies like forgetting the necessity of making a net profit). Taking on new fixed costs has caused problems in many industries - especially farming - at various different times. It may be a major underlying problem with the low profitability in many industries today.
One of the problems with fixed costs, is that they can be hidden and difficult to calculate. You know how much it costs for paper and ink per report, but do you really know how much e-mailing costs?
There are some other costs involved with e-mailing reports, most of which are hidden. Do you really know how much extra time you spend keeping your computer system running smoothly now? Also, a lot of people on this forum gripe about AVM's, but the lenders being able to strip comps out of electronic files is the basic fuel the keeps AVM's going in many parts of the country. That imposes a new economic cost on our industry that didn't really exist before.
Now, I didn't say you shouldn't e-mail reports. What I said is you should charge a premium for giving your clients this service. It is the product they want and it takes an appraiser with extra skills and equipment to do it. To charge less, looks only at the ease of production for yourself, and not at the larger picture. (Actually, I charge the same whether a report is pdf or hard copy - we work under the "farm problem" model, after all.)
USPAP: (Lines 288 - 292)
It is not just my opinion, it is also the opinion of the MREAC (it came up at their annual meeting last year) and of every single USPAP instructor I've ever had. If you are charging based on the value of the property (even in ranges) you are in violation. Period.
There are ways you can ethically charge for larger, more valuable properties, but it should be based on complexity of the appraisal problem, not the value of the property.
I did not say appraisers work under the farm model. We work under an economics model (econ 101, by the way) called "the farm problem." It exists anytime a large number of sellers of relatively homogenous product sell to a relatively limited number of buyers.
There is little question that much of what you say about e-mailing files is true. However, you entirely misinterpreted and missed the basic point. You said
I never said that digital cameras and e-mail cost more. However, I implied that there are underlying costs that have to be supported. Earlier in this thread, Terrel said
The cost per report is indeed probably less for anyone doing sufficient volume.
My first digital camera cost $1,000. I had spent about $2,500 in photo processing alone the previous year. However, the basic economic fallacy you (and maybe Terrel) buy into is trading variable costs for fixed costs. The cheapest high speed internet connection I have been able to find was $40 a month (congratulations if you really got one for $30). Then you have to have a firewall (if you are smart) and anti virus, both of which require annual subscription for update. I haven't put up a web page yet, but that is probably next - with an ongoing monthly cost. You have to have software for mapping, which also creates a monthly fee for update (to keep current) and, if you don't scan in flood maps, you need a service there, which probably is monthly. I saw recently where Wayne is offering an e-mail service, on a monthly cost basis, that will handle the large files that usually occur. Thesse costs go on and on, and every time you turn around, there is something new. Did I say you shouldn't do this and keep up with the competition? No. I just said you should consider these costs when deciding how much to charge for pdf reports.
Unlike the cost of paper, ink and film, these costs go on regardless of how much business you do. If you are sick for a couple of weeks or go on vacation, fixed costs generally continue. Also, if there is a business downturn you cannot easily lower these fixed costs. In those kinds of environments, e-mailing actually becomes more expensive than printing - it is for me, because a large volume of my work is in narrative reports that cannot be handled that way.
Treating fixed costs like variable costs was one of the main contributing factors to the bust of the dot com bubble (along with a few other economic fallacies like forgetting the necessity of making a net profit). Taking on new fixed costs has caused problems in many industries - especially farming - at various different times. It may be a major underlying problem with the low profitability in many industries today.
One of the problems with fixed costs, is that they can be hidden and difficult to calculate. You know how much it costs for paper and ink per report, but do you really know how much e-mailing costs?
There are some other costs involved with e-mailing reports, most of which are hidden. Do you really know how much extra time you spend keeping your computer system running smoothly now? Also, a lot of people on this forum gripe about AVM's, but the lenders being able to strip comps out of electronic files is the basic fuel the keeps AVM's going in many parts of the country. That imposes a new economic cost on our industry that didn't really exist before.
Now, I didn't say you shouldn't e-mail reports. What I said is you should charge a premium for giving your clients this service. It is the product they want and it takes an appraiser with extra skills and equipment to do it. To charge less, looks only at the ease of production for yourself, and not at the larger picture. (Actually, I charge the same whether a report is pdf or hard copy - we work under the "farm problem" model, after all.)
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