Working for national firm vs. yourself

[MASSAPP]

"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."

Not true. But still blessings to you!

 

[Deleted member 126639]

"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."

Not true. But still blessings to you!

You never have any contact with NCREIF members and likely don't even belong to the organization.

Do you understand why Paul Volker increased interest rates as high as he did at that time? Are you are aware the Bretton Woods Agreement Act of 1945 was heavily amended March 27, 2020 effectively ceding our monetary sovereignty to the IMF/World Bank Group once again? Do you actually think those interest rates are going to continue their downward trajectory path into infinity? Do you have an explanation as to why it is impossible interest rates can't be increased to 18% in a month?

The Federal Reserve has already announced they will be increasing interest rates next year.

This is why no one respects appraisers. You see numbers, but you do not understand that economics (and real estate appraisal is applied economics) is a social and political science. The social and geopolitical factors that drive those rates are unknown to you.

 

[Deleted member 126639]

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.

I've reviewed hundreds of reports. Fabrication of data includes just using whatever is in Costar. And errors of omission are just as bad - oh half the land is designated wetlands and can't be developed? Oops? Oh the subject property is in a flood zone, I'll just put in Flood Zone X.

Since 99% of appraisers don't understand what an equity return is, they can't even really understand the cap rate even if a broker tells them. I have a bunch of friends who broker multifamily properties in the mid-cap range, and every time I see a cap rate from Costar, call said friend and find it is way off.

Most appraisers don't even understand interest rates, like the poster here who thinks interest rates just went up to 18% for no reason and will continue a downward trajectory, forever. As for why the increase to 18%? who knows.

There is a reason fiduciary have given up on national firm branding and focus on specific individuals. It is because they don't take quality control seriously.

 

[PL1957]

I've reviewed hundreds of reports. Fabrication of data includes just using whatever is in Costar. And errors of omission are just as bad - oh half the land is designated wetlands and can't be developed? Oops? Oh the subject property is in a flood zone, I'll just put in Flood Zone X.

Since 99% of appraisers don't understand what an equity return is, they can't even really understand the cap rate even if a broker tells them. I have a bunch of friends who broker multifamily properties in the mid-cap range, and every time I see a cap rate from Costar, call said friend and find it is way off.

Most appraisers don't even understand interest rates, like the poster here who thinks interest rates just went up to 18% for no reason and will continue a downward trajectory, forever. As for why the increase to 18%? who knows.

There is a reason fiduciary have given up on national firm branding and focus on specific individuals. It is because they don't take quality control seriously.

Trying to figure out where the irrational venom is coming from ... throwing 99% of your profession under the bus doesn’t make a lot of sense.

Cap rates are in they eye of the beholder ... if you ask a buyer/seller/buyers broker/sellers broker/lender/underwriter for a cap rate on a sale, you’ll get a whole series of different answers, depending on whether they’re using income in place, trailing 12, pro forma, with reserves, without reserves, with vacancy, without vacancy, etc. The important thing is making sure the comparisons are apples to apples.

Approving individual appraisers is nothing new - its been bank policy since the1990’s. Having been to a lot of NCREIF sessions, I can assure you that your worship of those clients/appraisers is misplaced. Some of the biggest wh@res I’ve met live in fear of losing institutional accounts ...

 

[Mark K]

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.

I do quite a bit of court work and I've encountered some of the best and some of the worst appraisals are from large firms and their MAI's, I think for the reason above. A few totally lacking in reality, made-as-instructed reports, complete nonsense/garbage, but well presented.

I think a large firm would be a good fit for a lot of appraisers; not so good for others. It all depends on the level of independence you want. Do you want only do appraisals or do you want to be the marketing dept., bookkeeper, IT guy, and appraiser?

 

[Mr. Chad]

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 for both national firms and local shops and my situation was a bit unique in that I started at a local firm that grew to one of the largest in the area and then became an IRR franchise which later joined up with one of the national firms. I worked with these guys for about 15 years and was happy with it and IRR didn't change the autonomy of the firm and the work we were doing. IRR provides a good tech platform and a national database, which can be useful if you need that type of data. The large corporate environment changed everything and it did not go so well. Personally, I didn't like the corporate environment and their tech was highly touted but did not deliver. I started my own firm and I can say I prefer this much more than a national firm. For those who say you will be doing more bookkeeping and other business chores, they are correct to a point. I decided when I started I wanted to focus on the core part of the business of appraising and use as much tech as possible to automate most of the business. Having had the opportunity to use many of the platforms out there for data storage and report writing I decided to use Realquantum, which makes the process so much easier. It really depends on how much freedom you want and whether you have the client base to stay as busy as you need. Also, what kind of work do you want... NP_MAI is correct, I can't get institutional assets or any multifamily in this market but I don't mind the typical bank work or mom and pop appraisals. Lastly, quality is most assuredly a product of the appraiser and not the firm. Good luck to you!

 

[The Warrior Monk]

I used to work for a firm back in the day when I first started off. For me personally, I hated it.

As other noted, the data at these firms tend to be very good, and there always tends to be a steady flow of work, maybe excepting specialized firms dealing with specific property types that can cyclical. These larger firms are also a great way to get started in the business; the exposure and ability to very experienced individuals is excellent.

I've personally bowed out of working with other firms simply because I'm fortunate to work in a niche market and have been doing it for decades, and have all the contacts.

 

[DJayG]

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.

$150k part time? Where do I sign up?

 

[Deleted member 126639]

Obviously a gross figure. But getting 4 $2,500 jobs a month isn't hard. Depends on your market, and how willing you are to embrace technology. And of course marketing, quality of your work, knowledge and expertise and so on.

 

[Alamo Cowboy]

Obviously a gross figure. But getting 4 $2,500 jobs a month isn't hard. Depends on your market, and how willing you are to embrace technology. And of course marketing, quality of your work, knowledge and expertise and so on.

You are 100% IMHO. I was able to generate similar amount over 25 yrs with slightly different mix (commercial, city/state contracts/1-8 plexs).