Thinking about getting back into commercial appraising

[P.Johnson]

I have been doing residential form reports for about the last 12 years or so, but I am getting burnt out by the lender pressure and low fee rookies that have become prevailent in the past three years. I have not done any commercial work since we made external depreciation adjustments due to the '86 tax reform act. Are most banks and lenders ordering form reports or narratives? For the most part, are they asking for complete reports or limiteds? I have a chance to get 'updated' on my experience working for another appraiser for a 40% fee split. Is this the going rate? What are the latest pitfalls I can expect?? Should I quit complaining about the residential world and just be satisfied??? Thanks all!

 

[Paul Ness MAI]

Go for it. IMHO, 40% is ok if you are hired as an employee with benefits like insurance and 401k, but it's on the low side if you are an independent contractor and have operating expenses too.

 

[Steve Owen]

What banks order will depend a lot on your market area. Banks in my local market mostly want complete appraisals in self-contained format, but some of the large chains try to order a limited appraisal every time and don't know when it is appropriate. I personally prefer working for the smaller local banks and have always managed to have enough business that way, so far.

When I started, I got a 50% fee split, but I had a lot of my own expenses. I agree with Paul, 40% is a little low if you are not getting benefits.

Pitfalls, like the types of reports being ordered, probably depend a lot on your local market. I have kept my hand in residential to get through soft periods, but haven't done much of it lately. This can be a very satisfying career if you get the personal aspects worked out just right. I'd say go for it, and good luck.

 

[Anonymous]

I suppose the area typical report here would be a narrative, summary (but half the ones I think are no more than summary call themselves "self-contained) My last self contained report was 100 pages or so. My summaries are in the 30-40 page range. I don't use the form because of the poor layouts of the typical ones.

Really want to torment the competition? About every 10 commercial reports or so, do one at for say $300. Then the bankers tell all the other comm appraisers who start foaming at the mouth. Take a little extra time and do a bang up job, too.......I do that occasionally just to torque their shorts.

I have one competitor that is always wanting to know what I charged for such and such. He charges $100s more than me but does not work steady. He goes into an apoplectic lurch every time he sees one of those lowball invoices!!!
Terrel

 

[Steve Owen]

I never lowball one, Terrel, but I do something else that piques the competition. I keep my prices within a range that causes me to always have a backlog. If the backlog gets too deep, like it is now, then I rasie the prices a little; when things slow down I lower them a little. That way I always stay as busy as I want to and never have to do a report for too little money unless I just miss with my fee estimate.