What is a typical fee split rate?

[spittman]

I hope he had this all reviewed by an attorney. Many non-competing agreements are not enforceable, even with employees. Others, such as those involving independent contractors, can be problematic for the company, because it may call into question the misclassification of the employment status, resulting in all sorts of fines and back taxes.

I'm sure he did, but an agreement is an agreement. Didn't have many options back then. I don't know the particulars, but from what I understand his sponsor (or I should say his partner once my brother became certified) was going through a divorce by the time he was leaving and didn't want to deal with both legal issues so they worked something out.

 

[NachoPerito]

Commercial 30-35% as a trainee or some sort of salary with minimum production levels. When you get certified you should expect split levels between 35% and 45%.

As you gain experience, increase production, become designated, and get your own clients you would expect split levels above 45%. These will all vary depending on whether you work for a local firm or national. Generally, local firms will need to offer higher splits as they will not be able to provide as much revenue for you to tackle.

yes, when I say 50-65% I am talking about small firm... much different than big firm

 

[Alamo Cowboy]

Back in the day when I did municipality work I paid tenured commercial appraisers 65-75% of the winning bid. The appraiser needed 15 yrs of commercial experience. The lower figure was if the independent contractor had minimum insurance and the higher fee if he/she had a higher amount of insurance. The insurance was liability and E & O. Most of my municipal contracts required $2M liability and E & O insurance. For example, If work was done say in or on airport grounds the amount required by agencies that run the airport would be about 2 times this amount or $4M (hangers, storage bldgs, terminals, etc.). For work outside the airport the immediate airport grounds (hotels, restaurants, etc.) it would be the lower amount. The appraisers resumes, liability & E & O insurances were part of my bid.

For some work the most important part of the bid process and a fee paid to an independent contractor was a background check not the liability or E & O insurance. This was for prison assignments (buying land inside the prison from say a county by the fed/state to put in a courthouse) or doing a rent surveys for mobile home outside a prison compound but behind the prison's fencing system for sex offenders that have no where to go when communities don't want them. I paid 70% of the winning bid to these appraisers.

For probate work I split the fee with the independent appraisers 50-50. In these situations I wanted an appraiser with 5 yrs of commercial experience. In most of these situations the appraiser used some of my data sources. Liability and E & O insurance was not a factor for non contested probates. For contested probates I paid 75% of the fee and 80% of the court appearance fees to the independent appraiser.

For church type of assignments I paid 60% of the fee to the appraiser.

I never hired a trainee as in my state they were considered an employee per my accountant. For non municipal work I let newbies tag along with me to gain experience hours but didn't pay them. This went on for 2-3 months or until they moved on.

 

[Tru Red]

When I was a trainee I worked with a commercial appraiser for 2 years. He paid me by the hour as well. In 2006/2007 it was $10/hour. At the time I had just left my job as a VP/SBA commercial lender with a regional bank and I already had a brokers license.......so I had some knowledge but I wanted to become an appraiser. My wife was/is an attorney so we could afford it.

 

[MsMFraser]

I worked for a large, national firm as a commercial appraiser. Your first three assignments were at 20% split. This then increased to 25% for you fourth assignment onward. Every year at review, your fee split would increase until you topped out at 40%. If you obtained the MAI designation, your fee split would increase to 45%. This was for a general staff appraiser. If you did internal review, pulled in significant clients or led a department (multi-family for example) the arrangement would differ.

As an employee of a larger firm, there was a department that wrote all the research for reports, a large comp database, a steady stream of work and paid time off, insurance, 401K etc.. So while the fee split was lower than at a small firm, there were many benefits. As someone who has no interest in pulling in clients and needed health insurance, the set-up worked well for me.

 

[Alamo Cowboy]

I worked for a large, national firm as a commercial appraiser. Your first three assignments were at 20% split. This then increased to 25% for you fourth assignment onward. Every year at review, your fee split would increase until you topped out at 40%. If you obtained the MAI designation, your fee split would increase to 45%. This was for a general staff appraiser. If you did internal review, pulled in significant clients or led a department (multi-family for example) the arrangement would differ.

As an employee of a larger firm, there was a department that wrote all the research for reports, a large comp database, a steady stream of work and paid time off, insurance, 401K etc.. So while the fee split was lower than at a small firm, there were many benefits. As someone who has no interest in pulling in clients and needed health insurance, the set-up worked well for me.

In the 80's and 90's the Appraisal Institute controlled about 80-90% of the municipal commercial marketplace. I just finished a 20 year military career. I, personally, didn't want to work as a slave laborer before going out on my own. So, I marketed myself with a non AI designation (NAIFA, IRWA) before licensing. It worked. In order to compete with the AI firms in the municipal market during this period I needed to have equally experienced and equally designated appraisers. So my fee split I paid an independent appraiser reflected this fact. My break-even point was 25%. My teams included MAIs, IFACs, ASAs, IRWAs, etc..

IMHO, this was the only way to break the AI hold of the municipal market until designations became a secondary influencer and not a primary factor which happened in the early 2000s. Licensing changed the playing field. One didn't need a MAI designation to be successful in the commercial marketplace. A license was now more important than a designation and experience was the driving factor.

Large AI firms made a killing off new appraisers during my years as an appraiser in the markets I worked.

 

[sputnam]

There are probably regional differences. Every shop I ever worked in was 50/50 to start. After I had earned some chops, not something a 1 year trainee has done, I've gotten as high a 65%. Any more than that, and there is nothing left to pay the bookeeper, the rent, etc.

 

[Tru Red]

"Sputnam" lives in his/her own little world.
Time for the ignore button to be used like several others have suggested before me.

 

[Deleted member 126639]

National firms, as a policy, are targeting an average compensation expense of 35% per employee. In practice, it depends on your market, your manager, and the services you provide.

Look at this as a learning experience. Endure what you must but do everything you can to work towards servicing NECREIF clients, right-of-way work, anything litigation support related, and master Argus Enterprise. Understand debt and equity and capital markets. Learn to appraise property using the methods market participants use, even if you cannot report it (FIRREA requires all cash capitalization and discount rates). Most market participants have a low opinion of appraisers due especially to the lack of understanding of debt and equity. You can get a lot of work from developers if you understand waterfall models and equity yields.

The MAI designation is not worth as much as it once was, but it is worth pursuing if you are young. It will open doors to really any other aspect of the business if you are smart. The best advice I give my trainees who are smart and productive is you can make a lot of money in your 20s. If you build relationships and skillsets, you can transition into any role in the future.

Right now, appraisal is complete turmoil. Virtually every report that goes out violates USPAP. For example Appraisal Institute Guide Note 12. We are required, by law, to produce a fundamental market analysis for every appraisal when market conditions are unstable. 99% of appraisers don't even know how to perform a fundamental market analysis. Most scarcely understand basic economic concepts like supply and demand. Guide Note 10 is similarly ignored. And then we have the near universal ignorance of debt, equity and global capital markets.

The money quote from Guide Note 12, which will undoubtedly come up in many courtrooms in the near future, is "The appraiser must decline or withdraw from an assignment if the client will not allow the appraiser’s scope of work to be adequate for the assignment. The level of market analysis performed must be appropriate for the assignment and not limited solely because the client wishes to reduce the appraisal cost."

In 5 years, I would estimate 75% of appraisal work as we know it will be automated, if only because systemic incompetence and data fabrication has rendered statistical analyses more reliable. As long as you can survive, focus on this inevitability.

 

[Joe Flacco]

National firms, as a policy, are targeting an average compensation expense of 35% per employee. In practice, it depends on your market, your manager, and the services you provide.

Look at this as a learning experience. Endure what you must but do everything you can to work towards servicing NECREIF clients, right-of-way work, anything litigation support related, and master Argus Enterprise. Understand debt and equity and capital markets. Learn to appraise property using the methods market participants use, even if you cannot report it (FIRREA requires all cash capitalization and discount rates). Most market participants have a low opinion of appraisers due especially to the lack of understanding of debt and equity. You can get a lot of work from developers if you understand waterfall models and equity yields.

The MAI designation is not worth as much as it once was, but it is worth pursuing if you are young. It will open doors to really any other aspect of the business if you are smart. The best advice I give my trainees who are smart and productive is you can make a lot of money in your 20s. If you build relationships and skillsets, you can transition into any role in the future.

Right now, appraisal is complete turmoil. Virtually every report that goes out violates USPAP. For example Appraisal Institute Guide Note 12. We are required, by law, to produce a fundamental market analysis for every appraisal when market conditions are unstable. 99% of appraisers don't even know how to perform a fundamental market analysis. Most scarcely understand basic economic concepts like supply and demand. Guide Note 10 is similarly ignored. And then we have the near universal ignorance of debt, equity and global capital markets.

The money quote from Guide Note 12, which will undoubtedly come up in many courtrooms in the near future, is "The appraiser must decline or withdraw from an assignment if the client will not allow the appraiser’s scope of work to be adequate for the assignment. The level of market analysis performed must be appropriate for the assignment and not limited solely because the client wishes to reduce the appraisal cost."

In 5 years, I would estimate 75% of appraisal work as we know it will be automated, if only because systemic incompetence and data fabrication has rendered statistical analyses more reliable. As long as you can survive, focus on this inevitability.

Are you still in DC?