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Working for national firm vs. yourself

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The General

Freshman Member
Joined
Aug 9, 2017
Professional Status
Certified General Appraiser
State
Louisiana
Anyone MAIs have experience working at a national appraisal firm (CBRE/Valbridge/IRR/Colliers/etc.) versus running their own shop? The big guys tout colorful reports with high commissions plus benefits, but I wonder about the reality of the situation and the overall happiness of their employees. Is the grass really greener?

I'm sure a lot of people have opinions about the quality of work put out by these firms, and I am very interested to hear those as well.
 
I have worked in a small shop, briefly for myself, as a staff appraiser with national bank, as a county assessor, and now at a national commercial appraisal firm. Happiness is what you make it and there are benefits/drawbacks to most situations/ jobs. I will say that the data/quality is better with national firm. I just searched our database...there were 208 sales entered and 69 leases entered....just today. There is plenty of data to do regression or data analysis etc. I recently worked on an estate value where effective date was 04-15-2020...i was able to search for the words "pandemic, covid, etc" in transaction comments and read about 40 data points or market participant perspectives....notes on discounts given, transactions cancelled, etc...that was with the retail/shopping center filter on.....I love having the large sales database at my fingertips so i guess in a sense i am happier...:giggle:
 
Anyone MAIs have experience working at a national appraisal firm (CBRE/Valbridge/IRR/Colliers/etc.) versus running their own shop? The big guys tout colorful reports with high commissions plus benefits, but I wonder about the reality of the situation and the overall happiness of their employees. Is the grass really greener?

I'm sure a lot of people have opinions about the quality of work put out by these firms, and I am very interested to hear those as well.
That’s a super broad question that also mixes apples and oranges ...

First, there are national firms (CBRE, C&W, Newmark, Colliers) that are part of larger, full service real estate firms. Generally, appraisers at these firms have access to resources that others don’t, primarily data bases of comps, research groups, specialty brokerage groups, capital markets groups, etc. They also have access to some of the most experienced and knowledgeable professionals in the business, making it highly unlikely that they’ll run into a problem that no one has seen before. Usually, the tech available at these firms is top notch and continually being updated. They also have access to portfolio work which can be very profitable if set up the right way. Benefits are commensurate with major firms, and if you’re in the right place at the right time, compensation is really good.

Valbridge and IRR are more akin to franchises in that they’re essentially independently run, but under a single umbrella. Some offices are outstanding, some are so-so. Because of this, the type of work they do tend to be very office specific, with some doing a lot of eminent domain and litigation, others heavy into tax work, etc. Quality/reputation and compensation will also vary widely depending on the office. Again, if you’re in the right spot, you’ll have a great career.

There are a few boutique firms that do work on a national basis, often focusing on either a client niche (pension funds, etc) or a property niche (apartments, retail, etc). Those can be great if you’re a good fit for the specialty.

Having your own shop can mean a whole bunch of different things as well. If you’re looking to build a company with multiple appraisers, etc. you will have a much different set of challenges than someone who is satisfied with being a one man shop. Regardless of which one you chose, having your own firm means you will be spending a significant amount of time doing “business“ work instead of appraisal work. Marketing, bookkeeping, etc. take a lot more time than you expect.

As to quality, you can find good everywhere and mediocrity everywhere. It all depends on the person writing the report.

I started my career with a local firm, went to a national firm, started my own firm, sold it, then went back to a national firm until I retired. For me, the national was a better fit - your experience may be different.
 
The brokerage firms are used exclusively because of there major E&O policies. Theoretically, the brokerage firms should be well integrated with the rest of the departments of those firms, but the problem is those departments operate in the realm of reality while appraisers largely report fiction to satisfy client needs. The national independent appraisal firms do the same, but they don't get the same clientele due to their lower E&O policies. Of the four national brokerage firms, C&W is the only one that operates with any semblance of ethics. The rest just drive fees and fee splits down the point it's just not worth your time. IRR has never recovered from offices defecting largely to Newmar, but also JLL and to a lesser extent BBG. Valbridge has wasted 8 years producing what is arguably the worst report writer conceived. Virtually all offices, with a few exceptions like Kansas City, are C level firms at best.

If you have an MAI, it is far better to partner with 1 or 2 other MAIs and work for smaller banks and law firms, especially with the tax appeal market booming. Especially with software such as ValCRE, which is superior to every report writer the national firms offer, the national firms with their fee splits and deducts are just not worth your time. You can do four $2,500 jobs per month working part time and make what the average MAI makes working for a national firm.

Don't believe anything about their research or comp databases. I've done multiple litigation assignments where nationals all reported different lease terms for significant comparables. Are there a few guys at C&W and CBRE who do nothing but office buildings all day long and just use whatever the office brokers tell them Sure. But, at the height of Covid-19, every national firm was actually trying to claim Downtown Manhattan was 90% leased. Of the nationals, Colliers is the worst - reviewing their reports is literally painful to the eyes with their color schemes. .

The greed of the few at the tops of the nationals has resulted in a unique situation where by and large, clients who desire fictitious appraisal reports go to the national firms, and the staff fabricates comparables, rates, and whatever else is necessary to satisfy client demand. Institutional clients have a list of the appraisers who are considered reputable at the national firms (they do exist) and smaller banks increasingly go to independent or small groups of MAIs who got sick of the lies, the low fees, the low fee splits, etc.

In reality, the national firms by and large routinely violate USPAP, undermine the public trust in our banking and financial system, discredit valuation as a serious profession, and operate as a cartel in violation of the Sherman Antitrust Act.

In the same way that residential AMCs have started to fade away to the point you can make more appraising houses than working at CBRE, the nationals are losing competent MAIs. We have reached the point where they must pay their staff more, but the greed will never truly be swept away.

What is required is something akin the SEC where the right of the entire firm to offer appraisal services can be revoked for serious violations of USPAP. If CBRE could lose their license to offer appraisal services as Arthur Andersen did, not only would our profession gain immediate esteem once again, the national firms would likely collapse. I still see reports all the time with 3% growth rates across the board in Argus - GDP growth hasn't exceeded 3% since the 1990s? maybe 2006/7? Virtually all investors are projecting 7-year holds due to uncertainty regarding interest rates, yet 50 basis point increases over the going cap rate is still the norm even though everyone who is not an appraiser knows in 7 years interest rates are going to be significantly higher meaning terminal capitalization rates are going to be 200-300 basis points higher at least.

And the we have the flagrant violation of Appraisal Institute Guidenote 12, which makes it abundantly clear that any time market conditions are unstable, a Level C fundamental market analysis is required. We are now 1 year and 3 months since the pandemic commenced, and the number of reports with real supply and demand surveys and forecasting are rare.

Really, the work product of the national firms is largely criminal. If you want to make $150,000 lying day in and day out, go for it.. But you can easily make the same amount working half the hours, iif you know how to market, have maintained relationships, and refuse to participate in any dutch auctions
 
That was a very pessimistic view on the national firms. I've worked for small, regional, and national firms, and I personally prefer working at a national firm. I have never wanted to run an appraisal business as there simply wasn't enough incentive involved for the extra time. You can't really leverage yourself to not be "the business." You are saddled with administrative and billing headaches and it will be difficult to attract talent that will want to stay on after you train them.

The splits at the nationals are favorable, you are fed as much work as you can handle, the fees are great, and you will have an opportunity to make much more than you would in most other settings. Also, having the tech support and every available data resource is a major bonus.
 
The brokerage firms are used exclusively because of there major E&O policies. Theoretically, the brokerage firms should be well integrated with the rest of the departments of those firms, but the problem is those departments operate in the realm of reality while appraisers largely report fiction to satisfy client needs. The national independent appraisal firms do the same, but they don't get the same clientele due to their lower E&O policies. Of the four national brokerage firms, C&W is the only one that operates with any semblance of ethics. The rest just drive fees and fee splits down the point it's just not worth your time. IRR has never recovered from offices defecting largely to Newmar, but also JLL and to a lesser extent BBG. Valbridge has wasted 8 years producing what is arguably the worst report writer conceived. Virtually all offices, with a few exceptions like Kansas City, are C level firms at best.

If you have an MAI, it is far better to partner with 1 or 2 other MAIs and work for smaller banks and law firms, especially with the tax appeal market booming. Especially with software such as ValCRE, which is superior to every report writer the national firms offer, the national firms with their fee splits and deducts are just not worth your time. You can do four $2,500 jobs per month working part time and make what the average MAI makes working for a national firm.

Don't believe anything about their research or comp databases. I've done multiple litigation assignments where nationals all reported different lease terms for significant comparables. Are there a few guys at C&W and CBRE who do nothing but office buildings all day long and just use whatever the office brokers tell them Sure. But, at the height of Covid-19, every national firm was actually trying to claim Downtown Manhattan was 90% leased. Of the nationals, Colliers is the worst - reviewing their reports is literally painful to the eyes with their color schemes. .

The greed of the few at the tops of the nationals has resulted in a unique situation where by and large, clients who desire fictitious appraisal reports go to the national firms, and the staff fabricates comparables, rates, and whatever else is necessary to satisfy client demand. Institutional clients have a list of the appraisers who are considered reputable at the national firms (they do exist) and smaller banks increasingly go to independent or small groups of MAIs who got sick of the lies, the low fees, the low fee splits, etc.

In reality, the national firms by and large routinely violate USPAP, undermine the public trust in our banking and financial system, discredit valuation as a serious profession, and operate as a cartel in violation of the Sherman Antitrust Act.

In the same way that residential AMCs have started to fade away to the point you can make more appraising houses than working at CBRE, the nationals are losing competent MAIs. We have reached the point where they must pay their staff more, but the greed will never truly be swept away.

What is required is something akin the SEC where the right of the entire firm to offer appraisal services can be revoked for serious violations of USPAP. If CBRE could lose their license to offer appraisal services as Arthur Andersen did, not only would our profession gain immediate esteem once again, the national firms would likely collapse. I still see reports all the time with 3% growth rates across the board in Argus - GDP growth hasn't exceeded 3% since the 1990s? maybe 2006/7? Virtually all investors are projecting 7-year holds due to uncertainty regarding interest rates, yet 50 basis point increases over the going cap rate is still the norm even though everyone who is not an appraiser knows in 7 years interest rates are going to be significantly higher meaning terminal capitalization rates are going to be 200-300 basis points higher at least.

And the we have the flagrant violation of Appraisal Institute Guidenote 12, which makes it abundantly clear that any time market conditions are unstable, a Level C fundamental market analysis is required. We are now 1 year and 3 months since the pandemic commenced, and the number of reports with real supply and demand surveys and forecasting are rare.

Really, the work product of the national firms is largely criminal. If you want to make $150,000 lying day in and day out, go for it.. But you can easily make the same amount working half the hours, iif you know how to market, have maintained relationships, and refuse to participate in any dutch auctions
Working at a national is not for everyone, but I firmly reject most of the above. The nationals that I’m familiar with take risk management very seriously, as they should, because they have deep pockets and are targets to be sued in any dispute. ANY instance of fabrication of comps or data would result in immediate termination, not because of some higher sense of integrity, but because it could put the entire enterprise at risk.

Again, quality, etc. is always 100% dependent on the professional writing the report, whether it’s at a national or local. If someone wants to game the system, they’ll find a way.
 
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Not an MAI but I know a group of them that work together as one smaller firm (think there are five MAIs and a few CGs and a trainee) on a regional basis. They have an extremely solid reputation and a long standing client list. Think everyone there is quite happy with the set up as they have been working cohesively without turn over for at least twenty years. Seems to me to be the ideal way to run a business, each having each others back, but without the large corporate structure consigning them to cog in the wheel tasks?

Anyway, I also know some MAIs who are not successful and scrabbling for work. It probably comes down to the individual.
 
Not an MAI but I know a group of them that work together as one smaller firm (think there are five MAIs and a few CGs and a trainee) on a regional basis. They have an extremely solid reputation and a long standing client list. Think everyone there is quite happy with the set up as they have been working cohesively without turn over for at least twenty years. Seems to me to be the ideal way to run a business, each having each others back, but without the large corporate structure consigning them to cog in the wheel tasks?

Anyway, I also know some MAIs who are not successful and scrabbling for work. It probably comes down to the individual.
There are a lot of paths to success in this profession. Like any other profession, unexpected disruptions will come and be embraced by some and fought by others. In some scenarios, small firms will be able to be more agile than behemoths and will be able to take advantage. In others, resources and deep pockets will carry the day. Regardless, large firms will have their place (even if some want them burned at the stake), as will smaller providers. One of the things I'll always be grateful for is the opportunity I had to go to my kids games, plays, etc. while I was running my own small firm. But I'm just as grateful for the large firm opportunities which have let me be secure in my retirement. Find what your comfortable with and throw yourself into it full blast.
 
That was a very pessimistic view on the national firms. I've worked for small, regional, and national firms, and I personally prefer working at a national firm. I have never wanted to run an appraisal business as there simply wasn't enough incentive involved for the extra time. You can't really leverage yourself to not be "the business." You are saddled with administrative and billing headaches and it will be difficult to attract talent that will want to stay on after you train them.

The splits at the nationals are favorable, you are fed as much work as you can handle, the fees are great, and you will have an opportunity to make much more than you would in most other settings. Also, having the tech support and every available data resource is a major bonus.

Every piece of software you need is at most $2,000 per month, it's cheap, and it's usually better than what the nationals offer. Compared to ValCRE, the software at every single national is a joke. CBRE still uses OLE linking, first introduced in 1990.

I will gladly take a $2,500 job I can do in a and keep all the money versus doing a $7,500 25-tenant shopping center at a 40% fee split.

The national firms are structured such that a few make maybe $250,000, and that's only if you kill yourself. I'd rather make $150,000 working part time, and diversify my real estate practice.

You have to understand, after Covid - appraisers have absolutely zero respect. I've reviewed so many reports that pretend as if Covid never even happened. Appraiser fiction lasted only for as long as interest rates kept falling and values kept increasing. Now, it's over and 99% of appraisers have o idea what supply and demand means, let alone how to forecast demand. What are appraisers going to do when interest rates keep rising? Just keep on coming up with BS cap rates and using 50 basis point increases for terminal capitalization rates?

Are you following any of the geopolitical discussion of exchange rates and interest rates that institutional investors are following? How are you determining your terminal capitalization rate?
 
Every piece of software you need is at most $2,000 per month, it's cheap, and it's usually better than what the nationals offer.

I will gladly take a $2,500 job I can do in a and keep all the money versus doing a $7,500 25-tenant shopping center at a 40% fee split.

The national firms are structured such that a few make maybe $250,000, and that's only if you kill yourself. I'd rather make $150,000 working part time, and diversify my real estate practice.
I'm not arguing with your point, just telling my experience. When I worked at a small firm our average fee was $2,1XX per job and I am sure that I could go out on my own and attempt to get those jobs. I just don't want to; I don't like working on mom and pop stuff. I'd rather work on large assets with institutional investors and you simply cannot get those appraisals as a one-man shop.

We actually forecasted lower terminal rates on some of the stuff in Florida during the height of the pandemic as there was a spike in going-in rates prior to the governor opening everything up. Now, its business as usual....actually, the real estate market is better than I have ever seen it in Florida with the exception of hospitality and movie theatres.

When Europe and Canada open up, I expect things to get even more insane in Florida, but that is my best guess.
 
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