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Typical Fee Split?

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blimp66

Thread Starter
Freshman Member
Joined
Feb 14, 2002
I know that this has probably been asked here before....and I even searched for it.....but I'll ask again. What, in your informed opinions would be a typical fee split? Also one more factor for the equation, the appraiser I'll be splitting with is providing a significant data source and years of expertise so I feel that that should be considered as well.

Thanks, and goodnight!
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
blimp66,

Are you an appraiser, years of experience or are you just starting out?

Sounds like your just starting out with no experience. I started out at 20% split for the first few months then went to 25% and up until license where the typical fee split here is 45-50%. The increase should be laid out in writing and agread upon by you and the appraiser you are working under as to what is required for increase of fee split. That is if the appraisal firm you are working for is providing all the required data, orders, E&O and software.

That is my opinion some state that they will pay an hourly rate for the first few months having the trainie working in the office so they can see all that is include. I'm sure that there are several in this forum that will give you good information as you start the best advice that I can give is get it all in writing.

Ryan
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
It was about the same in our shop. New trainees started at 30% with a supervisor watching every move. After licensed, the split went up every 6 months until it was 50/50 after a year. That included everything needed in an office, with a two full time secretaries; MLS and Realtor fees; and half of education tuition, as long as you were upgrading your license status or going for a related designation (not CE). But like Ryan said...GET IT IN WRITING.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I made my comp data base available to my subs, but after experience they are expected to work somewhere besides my office; buy their own software; pay for their own MLS service; pay for their own access to on-line courthouse records or go to the courthouse on their own. They make and keep a copy of their work in their files as well as provide me a copy when I co-sign. They are truly independent. They can turn down any assignment I offer them. They can take any assignment from other appraisers they want. We constantly exchange data gathered from our own work, such as land sales, interior descriptions, sales info.

I get 1/3, they get 2/3rds.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
There is no common or set fee split. So much depends on the individual trainee and the supervisory appraiser.

In my shop (when I was training) most newbies would start at 40% and work up to 70% when fully trained and licensed. We would provide software, MLS access, secretarial support. The appraiser was expected to provide their own computer, digital camera, and printer. Soft costs including ink carts and paper were shared as was postage and over night delivery charges.

You should have a contract (independant fee contractor) or an employee agreement in any event. Spell out what is expected from both parties. Set standards of performance and compensation. Many will include an non-compete clause which may or may not be enforceable in your state.

Consider this.....you are required in most states to serve an apprenticeship. It is important to be trained by a competent supervisor. He or she will be giving you a valuable education. They will also be training their future competition, so expect them to be well compensated for it. The is no shortage of "trainees", at least in my market, but there is a major shortage of those who are willing to take on the obligation of a trainee.

I wish you well....thus sayth the old guy. :D
 

jeffreyabigail

Freshman Member
Joined
May 28, 2002
Professional Status
Certified General Appraiser
State
New York
In my shop (when I was training) most newbies would start at 40% and work up to 70% when fully trained and licensed. We would provide software, MLS access, secretarial support. The appraiser was expected to provide their own computer, digital camera, and printer. Soft costs including ink carts and paper were shared as was postage and over night delivery charges.
How is this possible? Am I reading this correctly? Fee appraisers got a 70% fee split and were provided with software, MLS access, secretarial support and shared soft costs. It would seem to me that on a typical $300 fee, the appraisal shop owner would have an after tax net income of about 15 bucks!!!

Anyone else getting a 70% fee?
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
I started at 35% as a new licensee and then went to 45% when state licensed. The appriaser I worked for paid for E&O, MLS, license renewal, computer, software, office space, office supplies and staff, personal printer and some toward CE.

I took care of all car, gas, personal insurance, etc.

Seemed about what the market is in these parts.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
>>should have a contract (independant fee contractor) .....you are required in most states to serve an apprenticeship<<

Therein lies a rub....

If you are an apprentice, the IRS is loath to accept that you are a truly independent fee contractor. If you are not truly an independent fee contractor, you may be treated as an employee, and thus the employer may have to pay payroll taxes and withholding.

While I have not heard of any appraiser except Henry Harrison admit the IRS took a chunk out of their hide, I did see that exact scenario play out years ago when I worked as an independent well sitter for a Petroleum Engineering Company in Grand Jct., CO. "Newbies" were hired as trainees and sent out on jobs as consultants, paid by the day. One such Newbie came up to the end of the year without money to pay Uncle Sam his share. The IRS determined that he was in fact an employee and charged the company with $35,000+ back taxes for the employees they deemed to be trainees, which nearly sank the company. Employees went 2 months without a paycheck.

These laws requiring trainees to be subservient imply we are employers. Check with your tax attorney on how to handle this right.
TER
 

Stone

Elite Member
Joined
Feb 1, 2002
Professional Status
Certified General Appraiser
State
Wisconsin
When I started doing appraisal work with my father, our accountant and lawyer both recommended forming an LLC because of the training issue. There was no way the IRS would buy the independant contractor theory. When I worked for other appraisers, however, I was a contractor. I believe the IRS has a worksheet that helps decide whether you can claim to be independant. I suppose it doesn't matter unless you get audited.
 
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