trainee-supervisor compensation question

[itanium45]

hi,
I know getting a supervisor to work with a trainee is a very difficult task nowadays because the supervisor has no incentive to take on a trainee. It's like asking a restaurant owner/chief cook to give you a recipe and show you how to cook. Knowing that you will learn everything and will be a competitor one day, plus all the liabilities while training you, there's no incentives/motivations for any supervisor to take on this task.
I want to bring up my situation, my resolution, and I'm open to new opinions/suggestions.
A closed friend of mine, who is an appraiser, agreed to be my supervisor, and he wants me to tell him about the compensation. It sounds like he's expecting payments from me.
I got my 1st trainee license in 2005, and worked as a Trainee Appraisers for about 1 year. Then I found another job in high-tech industry and has been working there since then for the last 15 years. Now I want to get back to do appraisal (personal reason). I have a good knowledge about the real estate market in general (I have rentals, and I did flipped few houses), so I'm expecting myself to pick this up pretty quickly.
Base on my calculation, I'll need about 170 reports to get the 1000-hour requirements (from California).
Here's my rough estimation how he's going to spend his hours to train me
- The 1st 10 reports, he would spend about 5 hours each (including on-site inspection, writing reports)
- Next 10 is 3 hours each (still need on-site inspection)
- Next 10 is 2 hours each (may not need to go on-site)
- From the 30th report onward, I'm expecting to do everything by myself and he just need to review the reports.
- From 31th-50th reports: 1.5h reviewing each reports
- From 51th to the end: 1h or less per reports.
In reality, I'm expecting to do 90% of the work by myself after the 10th reports.
I'm OK to work for free to gain the experience until I got my AL license and I don't think I will pay him anything out of pockets because
- I will save him about 230hours for those 170 reports. If each report is $600, and it take an experienced appraiser 3-4 hours to finish or average $175/h. 230h x $175 = 40K. In another word, 40K is my tuition fee.
I have few questions
1. On average, how long it take you to finish a report (comps research, inspections, and writing reports)?
2. Do my assumptions/estimations above make sense? is there anything else I need to add/change?
3. Please let me know if you have a better approach in this case?

Thanks a thousand time for your patient to read all the way here.

 

[andrew81]

The way it usually works is the trainee works for the supervisors company whether as an employee or independent contractor. The supervisor will pay you anywhere from 0% to 50% per report fee. When deciding how valuable your trainee period is to the supervisor you need to know there are expenses.

software fees
E&O insurance
MLS membership
office supply expenses
computer and networking
office rent, water, electricity, internet, renters insurance ... etc
will you bring your own clients or complete reports for the supervisors current clients
Most importantly the time the supervisor spends teaching you instead of finishing reports.

I would expect to be paid 0% to 20% of the fee for the first reports that require direct supervision and you are learning the different report guidelines.
After you are able to produce a credible report with only a review needed by your supervisor, I would expect to be paid 30 to 50% of the appraisal fee.

Getting clients could be challenging. Some require a minimum of 5 years certified residential experience and do not allow for trainees to complete the assignment.
Why are you going for only a Licensed level, not certified residential or certified general? You are limiting yourself as most residential clients require a minimum of certified residential.

 

[Zephyr999]

The way it usually works is the trainee works for the supervisors company whether as an employee or independent contractor. The supervisor will pay you anywhere from 0% to 50% per report fee. When deciding how valuable your trainee period is to the supervisor you need to know there are expenses.

software fees
E&O insurance
MLS membership
office supply expenses
computer and networking
office rent, water, electricity, internet, renters insurance ... etc
will you bring your own clients or complete reports for the supervisors current clients
Most importantly the time the supervisor spends teaching you instead of finishing reports.

I would expect to be paid 0% to 20% of the fee for the first reports that require direct supervision and you are learning the different report guidelines.
After you are able to produce a credible report with only a review needed by your supervisor, I would expect to be paid 30 to 50% of the appraisal fee.

Getting clients could be challenging. Some require a minimum of 5 years certified residential experience and do not allow for trainees to complete the assignment.
Why are you going for only a Licensed level, not certified residential or certified general? You are limiting yourself as most residential clients require a minimum of certified residential.

Solid advice right there...on both choice of license level and how appraisal splits work.
Challenge may be supervisor license level not CG so wouldn't work for CG hours...meaning the 51% or above for commercial hours.

 

[Michigan CG]

as an employee or independent contractor.

A trainee working as an independent contractor is a violation of IRS rules.

================

First, why are you trying to do the minimal amount of work and get the lowest license level?

Why are you trying to become competition after a short period of time instead of building a long-term working relationship?

Finding clients that allow a trainee to inspect alone is not easy.

3-4 hours to do a report is not realistic for most. $175/hour? Yeah, that doesn't happen.

I have a trainee. I told her it would be a five-year process to get her license (CG). She will not see a form report for her first six months (I do farms, residential and commercial). She is starting off with farm and vacant land work writing narrative reports. Learning by doing narrative is the best way as it does not let you rely on the form. You actually have to write a Highest and Best Use, you have to actually describe the neighborhood, etc.

I am paying her by the hour for now while she learns. I take her with me to most inspections and we talk in the car about appraisal stuff. Today we had a computer/phone call that lasted over an hour just about Highest and Best Use.

I send her "Learning Opportunity" e-mails that she doesn't get paid for. The first one was about zoning. The second one was reading two terrible appraisals and trying to find the problems with them. Her third one is about Highest and Best Use.

Eventually, I am guessing in March, one of her "Learning Opportunities" will be to write a narrative appraisal for a single-family home. My trainee will not be a form-filler when she gets done.

1,000 hours is just enough to make one dangerous.

Finding clients will be almost impossible with almost no experience and some clients require a license for 2-5 years before they will send you work.

 

[andrew81]

A trainee working as an independent contractor is a violation of IRS rules.

thanks, didnt know that

 

[andrew81]

When negotiating your fee split, keep in mind that in the beginning your supervisor is not only doing you a favor, but is losing money. Spending time training you and not completing as many reports. Let's say it takes 3 months for you to competently produce a report on your own. During that three months how many assignments did the supervisor lose? Say he lost 30 assignments. Once you are capable of completing the reports on your own, except for a review, he will still want to be reimbursed for those lost assignments, plus his time, and any additional expenses.

Expect to make a small percentage at first until you "payback" your trainee period. Once you are licensed and in a position renegotiate your fee split, keep in mind all the expenses that are associated with running an appraisal business. Offer to pay for some of those expenses in exchange for a higher fee split. The best thing you could do is bring on some new clients. Then you will have good leverage in asking for more.