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Training a newbie or two

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Mwilliams

Freshman Member
Joined
Mar 11, 2002
OK, Im going to bite the bullet and put a couple of guys on the payroll (I think). One is a friend of a client (potential problem, maybe) one is a friend of mine (I know its hard to believe appraisers have friends, as many deals we have screwed up for everyone you know)

Anyway, man what a pain in the butt this is, not that I cant deal with it and adjust to the new work parameters but I was thinking I might even be able to make some extra money.

The questions I have are these. Fee splits, and or review / supervisory fees. Since there is no way a trainee can be an Independent contractor. I must withhold FICA, Social Security etc. So 40% fee split? For business I provide them and let them keep all the income from the business they bring in on their own (charge a fee for reviewing, signing work?)

Or

Make them employees with no guarantee of assignments, % fee split based on their performance as well as a small bonus % for new business.

I need some help here, been independent for 10 years and never thought about it much till the resumes and phone calls got to over 10 or 20 a month.

I keep very busy with FHA work but it has started to come at expense to all my conventional clients, thus the apparent need to add some people.


Mark
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
First, take a real estate independent contractor form and rewrite it for an appraisal business. Second, I would pay them $X per hour for how much they actually work. Third, you want to give them assignments and have them complete them, not DIRECTLY supervise them. Contractors work as needed and not necessarily set hours.

You don't want employees, you want independent contractors. Dealing with quarterly filings, withholdings, etc, is a real pain. Just be sure you keep them as contractors and not employees.

Now, that being said, the first thing they should do is at their own expense (unless you feel generous) is send them to AI or NAIFA newbe appraisal courses. I recommend them for the beginner as opposed to the ones offered by Bob's Real Estate, Appraisal, and Inspector School. The AI 210 class is very good for the residential appraiser. It discusses residential appraisal from a case-study basis. I took it back when it was the SREA class. I came to the conclusion that if you took as long as their appraiser took to complete an appraisal, a) you'd never make any money, and b) your clients would fire you for taking too long. But it's just an in-depth study, not reality.

For the first year, they will be relatively useless. Data research for your appraisals, accompanying you on inspections and holding the dumb end of the tape will be their primary duties unless they're fast learners.

Hope this helps

Roger
 

Mwilliams

Freshman Member
Joined
Mar 11, 2002
I agree that Independent contractors are the way to go, however, wouldn't it be techinally impossible for trainees to be contractors?

If I am to act as their supervisor that puts me in a position of dictating how they do the work, thus killing the idea of the contractor.

The company already has a payroll responsibility. (sec, receptionist, book keeper etc) Adding a couple more entries in the books is not a big deal, how much to pay em is.

Hourly would be fine with me but I am not going to pay someone to drive around and look lost.

A set fee per assignment would at least force them to work more effeciently to get paid more, dont you think. I mean, that is what I do.

Someone has got to train them, figuring out how to make money off of them is going to be the hard part.

Mark
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Mw ~

I do not envy you.

I could not do what you are planning on doing for love nor money. Again!

Having a tattletale to the bank and a bud's friend around will drive you right into the ground trying to figure out where the leaks are.

Who are they loyal to: Take a tip from Dubya: 'if you rat on me, you're not a loyalist.'

The hardest part of appraising is getting people to do things your way before they learn the ropes and can do things their way.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
RStrahan

you ole rascal you, SREA, do you have anything saved from that era :?:

and by the way, your thoughts on the question, good answer.

8)
 
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Montana
Mark:

Under the scenerio you outline, there is no way to create an independent contractor relationship. Refer to the IRS publications regarding Independent contractors and consult a knowledgeble attorney/CPA. That you exert any supervision or management throws the possibility of IC status out the window. You also have to deal with local and state laws. Most appraisers thinking they have an independent contractor working for them are not and are left wide open for all kinds of trouble when it comes to unpaid witholding, overtime, workers comp, unemployment and liability.

There is a simple solution. Figure out the split. Set up with a temporary help outfit and rather than agree on an hourly wage, tell them you will tell them the gross and have them work backwards. They will take a fee, pay all the taxes, unemployment, fica, medicare etc and issue the W-2 at the end of the year. The newbie receives net wages with taxes deducted and you have a tax deduction for "outside services." You then are IRS and State audit bullet proofed.

Go cash rather than accrual. Only turn in money collected now owed. You can go broke paying out if your receivables lag. Keep an hour log at a minimum. Your newbies should accurately turn in their actual hours. The newbie might conceivably try an end run to claim overtime and you will need records to fight that assertion. If you office in the home, check your household policies for coverage of temporary help. If you office in an office you need to check the liability portion of your office tenant's policy.

Remember, friend or not, we live in a society where you can be sued at the drop of a hat or turned in to any number of government agencies. When it comes to money, people who earn money from you can turn on you at any time, making a worker's comp claim, an unemployment claim or overtime claim. Sure you can make money off the newbie; you better have a better reason than that and know well the risks.

For other information about the risks and challenges of the mentor relationship, see my article in the January Appraiser's E-Gram at NAIFA.com "Mentoring Tomorrow's Appraisers."
 
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