If you are on social media platforms where appraisers hang out for any length of time, you are bound to see a version of the following, on a regular basis:
“I was just offered $275 to do a full appraisal in my hometown. Before I had time to email the AMC and tell them how ridiculous a fee like that is here, some other appraiser accepted it! Can you believe that? What kind of low-life appraiser does a full 1004 for $275?”
This kind of post is typically followed up by other appraisers piling on with their own stories of a similar nature or of hopes and dreams of leaving the profession soon and slamming the door behind them. To be clear, I do not do full appraisals for $275 either, but I am also not as critical of those who do. Why? I do not know the whole story.
Let me set this up with a scenario that recently happened to me. I have a rental property that was in need of some plumbing repairs. Accordingly, I called three, separate, companies for bids. Unsurprisingly, they all came back with different numbers. Two were fairly close in their estimates and one was substantially lower. Why is that? How is it that three companies can all look at the same job and not come up with an identical number as a cost to fix? The answer is complicated. Is it possible that the company with the lowest bid will also do the worst job? Is it possible that the technician will be less experienced, unprofessional, and will simply have a lower quality of work? Of course, but that is not the only possibility. It is also quite possible that the company with the lower bid has better tools, a well-trained support staff, and a streamlined business model; all helping them to complete the job more efficiently, with a higher quality, and still do it for less money than their competitors. These are the hallmarks of a company who will still be around tomorrow.
What does that have to do with an appraisal office, you might ask? Surely I am not comparing fixing pipes with valuing properties. You are right; they are different professions, but they are still both professions. Business is business whether you are cleaning out a drain or measuring a house. Better tools will indeed allow you to save time without cutting quality. Hiring, training, and managing a great support staff will allow the appraiser to focus on the things they should be doing rather than getting distracted by tedious work that could be delegated to others. Continually refining your procedures and streamlining the way you do business will not only allow you to do more work in the same day, but may open the windows to a better quality of work because you are more careful about how the product is moved, from inception to delivery.
When an appraiser’s peer accepts a full appraisal for $275, it seems like a travesty. To an outsider, it might seem as if they are scraping the bottom of the barrel, cutting corners, and giving the rest of us a bad name. Most likely, your judgments are correct. There are those appraisers out there and I have even reviewed a few. I have even met a few of those appraisers over the years. How they continue to keep their licenses, I do not know. However, their fees do not always tell the whole story.
Ever since HVCC and Dodd-Frank, appraisers have had a harder time making a living. There are real reasons for that. We should fight hard to overturn bad legislation and over-regulation. However, there is still a way to make a very good living as a real estate appraiser in today’s reality, and it does not mean we have to cut our prices so we can get more work than the next guy. Taking off our technician’s hat and donning our CEO cap once in a while will allow us to look at things from a whole different perspective.
The most successful business models I have observed do a good job of balancing three, main ingredients: investing technology, surrounding yourself with a well-qualified team, and streamlining your processes. This will allow you to do excellent quality work, but more efficiently than your competition. As for fees, I would not suggest you cut them and become, “that guy.” However, being open to getting outside the box once in a while and look at things from a business owner’s perspective, may allow you to remain competitive, accurate, efficient, and successful, all at the same time.
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Written by : Dustin Harris
Dustin Harris has been an active appraiser since 1996. For the first 12 years of his career, he was working 60-hour weeks for under $100,000 annually. Then, he radically revamped his business model using principles of success that catapulted his appraisal business to over a million annually, all within 20 hours a week consistently. Since 2010, Dustin Harris (aka “The Appraiser Coach”) has been guiding appraisers towards business mastery, enhancing both profit and efficiency. With “The Coach,” you surround yourself with hundreds of successful appraisers across the nation. Your investment isn’t just in guidance—it’s a blueprint for guaranteed substantial returns. It’s what you have always dreamed your appraisal business would be.
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Dustin
You fall into the same category as Mike Ford. You are preaching to residential appraisers who survive off of appraisal fees alone (they sit on a 1 legged stool). In the meantime Mike and yourself sit on 3 to 6 legged stools (you run multiple businesses or engage in commercial and residential appraising while doing litigation or tax work on the side. This simple fact serves as more than a minor disconnect between you and your audience.
It’s easy from your safe perch to say hire support professional, buy better technology, hire a chauffeur to maximize your time, etc. Let’s take a look at the real work numbers though.
Most of us know that AMCs (who provide the vast majority of today’s work) pay $350 on a good day for your average order. Subtract out the AMC kickback fee of $150 and your left with $200. Now subtract out your overhead (your spare bedroom in most cases today, MLS fees, E & O fees, license renewal, software upgrades, replacement technology, continuing education, gasoline, wear and tear on your vehicles, phone & DSL, utilities, license renewal costs, Marshall & Swift updates, etc
Now let’s look at how much additional work has been thrown on the residential appraiser’s back since 2009. 1004MC, UAD, Collateral Undertaker, and now the new HUD home inspection requirements. To say that the appraiser’s work load has doubled is a SERIOUS UNDERSTATEMENT. To say that his liability has increased ten fold would also be an understatement.
I recommend that you stick exclusively to doing residential assignments for your income for 1 year Dustin (drop the speaking commitments, the online classes, the rental properties, and everything else). Then pay for all of these luxuries that you are an advocate for using out of the $80 net paycheck that you receive from each assignment. We’ll touch base with you on September 21, 2016 to see how much income you were able to generate after you lived on rice and lived in a box for a year so you could hire a chauffeur.
Hi Dustin, thank you for writing this response! You forgot one very important, unavoidable cost! Income taxes!
Yeah……but Bonus=write offs
Thank you Retired Appraiser, but just to be clear…. I never mix income across businesses. My appraisal income (and the way I do business) is stand alone. What I preach is scale-able
.
Retired Appraiser – I have no extra side jobs like Dustin and I totally relate to what he is saying. I have simply gathered a good team, invested in better technology and streamlined business (semi paperless, no storefront, etc). I still charge $400 average but will take a credit union assignment for $350 (they simply do not ask for as much). Then I ask/get $600-$1000 for a tougher assignment. I have built a reputation for doing quality work and have received work even when my bid was much higher (yes higher) than others. THAT is what he is saying. Do the best you can to promote your business ethics, work and personal. Then those $275 jobs never have to be a consideration. Kudos that someone out there spends the time and energy to educate and unite us. Happy retirement, old dog.
I have also joined a local appraiser coalition group that meets regularly and discusses (not groans) about the industry and how we can be more consistent as a profession – $60 a year for great sharing and education. I actually have appraiser “friends”, not competition.
I’m glad that your little group provided you with a few appraiser friends but let me ask you one question. How’s that coalition idea working out for you so far? You’ve had 6+ years to solve the fee issue alone. That is ONE ISSUE OF MANY that has NOT been solved. Appraisers today earn roughly the same fee they made 20+ years ago with 10 times the liability and a work load that has more than doubled. Assuming you’ve made no headway on the fee issue (and you haven’t) how is that fee transparency on the HUD-1 fight working out for you?
Bottom Line: You can form and reform coalitions, sign and resign petitions, until the earth collides with Uranus but N-O-T-H-I-N-G is going to change for appraisers. If you haven’t solved it in 6+ years…trust me…you won’t solve the problem before AVMs kick residential appraisers to the curb. Do you honestly believe that they have been mining appraisal data for over a decade just to check the accuracy of your work? God help you if you are that naive.
Anything is better than making a living as an appraiser. I’m able to sleep at night knowing that I’m not kicking back fees to AMCs every month in exchange for work and I’m not working for the same wage that I earned in 1995.
Retired Appraiser – thank you for those comments.
Our fees in the early 2000’s were generally $275-$300 for a standard appraisal (non complex). Due to the efforts on our part to provide quality work and expect fair (reasonable and customary) fees, we now are between $400 and $500, the exception as stated before (Credit Union – $350 – a very small part of our business).
You make a coalition sound like a little friendship club. In our “club”, every individual is a licensed professional who meet just like any other professional group does. The biggest difference between your version and ours is that our club has lobbyists who have just recent helped with the acceptance of a new bill setting state level limits for record keeping. While it is only a small facet of the goals we are setting as a group, we are glad that our persistence is seeing positive results. The next bill will be for standardized reasonable and customary fees based on the region. The legislation is being drafted and will be out there soon for a vote. I can only speak for my state (maybe you were in a rougher area), but I can tell you that working together versus doing nothing seems like a better option for many of us.
I can tell you that the last 3 years have been amazing, financially and by working more closely with my peers. We are going to start working with our local real estate agents as well to make the whole process more smooth. I look forward to many more years as an appraiser and love what I do. I am really sorry (setting all humor aside) that you had a bad go at it. Maybe Lowes will be a better fit (just kidding).
Back in the early 2000’s our fees were in the range of $325 to $350 but have been stagnant to declining since even though our work is much better today. The lenders and the AMC’s (80% of work) control the game and have the ball that we are playing with. As I stated previously, in my area the expected game is turn times of 3 to 4 days and below market value fees. I’ve never given it much thought, but in reading what I would call the success stories in this industry today, (fair fees, backlog of work for weeks, time to complete the work) the issues we are facing are not the same.
No, the issues are the same. Finding the right AMC’s is the trick. Some are simply finding the cheapest appraisers out there to make the most money. If you are doing these, run. Really. If you all run from these and find AMC’s that have a better mindset about fairness, you will not only have allies in the industry (yes, it happens), but the bad companies will eventually fizzle out, leaving yet more work for the honest and reputable AMC’s (again – yes they are out there). You never stop trying to optimize your business model. That is, IF you are thinking as a business owner and not an employee. Employees whine about how unfair it is. Business owners look for ways to eliminate the waste. No, I have NOT taken any of Dustin’s classes or his seminars – it’s more common sense. he is offering this for those who just don’t get it. Kudos to Dustin for at least getting some to think. I would recommend his classes without ever taking one for the simple fact that it will likely stop 80% of this complaining.
To be honest…digging graves or shoveling cow manure is a better fit than residential appraising. How do you sleep at night knowing that you kick back thousands in fees each month to AMCs (banks) in order to stay in business? Were you raised in Sicily where this is the norm or are you just that desperate to make a buck?
I have more respect for street walkers than I do appraisers who pay extortion money to AMCs each month.
Am I the only that had a “bad go of it”?
Overnight our fees went from $400 to less than $300
We lost hundreds of clients overnight nationwide because of HVCC.
We were told that we could no longer collect our fee at the door.
We were told that we may be paid in 90+ days for our work.
We were told that if we wanted to stay in business we simply needed to kick back 50% or more of our fee to the bank’s AMC each month in exchange for orders.
We were told what we would be paid rather than asking our fee.
We were told to add on the 1004MC
We were told to add on the UAD crap
Since then you’ve been told to add on the Collateral Undertaker crap.
Since then you’ve been told to throw in a fee home inspection with each HUD appraisal each month.
I had no idea that I was the only one that “had a bad go of it”. Thanks for the education. The simple fact is that I am one of the few appraisers who had the guts and the intelligence to tell AMCs and the appraisal profession where they could go.
Wow, if we could just streamline a little more, work a little more efficiently, give up a little more, just hire some more help, work for a little less, maybe bicycle to those properties, take a course on PMA and grovel more with big smiles on our faces, blah, blah, blah … the CEO of that lending company could have an even better golden umbrella, huh?
Amen to that! We are tired of all the support for those who accept low fees.
We already work 6 days and week and part of Sunday. Vacation? What is a vacation?
Just as bad is placing the appraisal fee in the TIL/RESPA document which limits the ability to change the fee more than what, 10% or so? [If I am current on info] Appraisal fees can vary significantly for several reasons. Experience, education, reputation, and knowledge of the market and specific property [time, travel, and complexity] etc. And to top it off the AMC wants to manage my business, telling me how, when, where and how much. What other business allows customers to attempt to control/run your business & lives?? Thank goodness, I was able to decline the offer from many AMC’s. My fees are substantially higher than what is quoted in the article and I typically have 2 weeks to complete the assignment.
The Govt is slowly killing our business and something has got to be done. I used to Run an 8 appraiser office, it ran like a charm. Now if I try to do so because every appraiser is assigned work by the individual, what’s to stop all the employees from steeling the work? This is just another grouped in, major fault that has come out of all the Govt intervention. They have ruined not only the healthy compitition of the profession, but basically any means to grow an office under a traditional business model. They are literally treating us all like lap puppies while they smile all the way to the slaughterhouse. One last thing, this was all to get rid of the loan officers that unfairly choose the same appraiser over and over again because of that special bond they have formed. Dont be fooled for one minute by not thinking that the processors at the AMC’s have now come full circle and are now filling that role. 90% of AMC’s cannot show you an appraisal ordering rotation based on merit or experience, because why…..They just really like that quick guy with the low, low fees. ARE WE NOT RIGHT BACK WHERE WE STARTED EXCEPT NOW AMC’S ARE ROBBING US OFF THE TOP…..YOU BET YA WE ARE!
Dustin, appraisers do not live in a vacuum when it comes to streamlining a business or using technology. Lenders use AMC’s to outsource the appraisal process, thus pushing more time related issues back onto us at no fee to them. Lenders have access to public records, overhead maps, etc. that they use to often ask additional questions from (takes up my time). Lenders now have the CU platform that they use to again take up more of my time by asking for comments (20 provided closed sales, etc.). With the creation of HVCC and then Dodd/Frank, the resulting increase in regulation killed my investment into my company ( investing technology), resulted in the letting go of my employees (well qualified team) and with now a single person appraiser, killed my streamlining.
Dustin is right. Just say, “no” to clients or AMC’s that offer below market fees. It does not make any financial sense to provide appraisals for low fees when you have overhead and/or expenses. On occasion, when I say “no, that fee is not workable”, the AMC rep will ask me, “What will work?” and then ask the client. It may surprise you that sometimes they call back and say, the client is willing to pay my requested fee. Like most appraisers, we get many requests from AMC’s to get on their list. My first question is what is the fee structure? If they are not up to par, I politely tell them, “no thank you, the appraisal analysis is time consuming and demanding, and I expect to be compensated for my time, knowledge and expertise. Don’t be nervous about low volume. We do not discount our rate and currently are in need of another appraiser.
Exactly my mentality as well. Gosh, wake up everyone – you are missing the big picture. I make very good income at this and I do not cut corners. Just the opposite – quality reports and politeness to clients, homeowners. I decide the fee, not them. Our bigger clients understand fair and reasonable fees. The rest simply have a choice : pay what is fair or find cheapos. May you all retire soon.
Actually – yes they do. Appraisal fees tell you the
only story you really need to hear.
While many of us may like – or love- what we do, we do it to
make a living. It’s all about the money, all the time, every day. In
fact – if you tried to do this for free, you’d probably be investigated.
There is nothing you can do to improve, without the money to
do it. You can’t get new technology, you
can’t hire help, you can’t streamline.
I have all the best technology I want.
Could I improve it a bit further? Sure – to a point. Could I
streamline my business? Perhaps.
But these – really – are austerity measures. A good practice all the time, but should only
be a necessity when money is scarce and
profits hard to come by. If you are in
business, you should not have to maintain that frame of mind just to survive,
all the time and forever. If you can’t
build to a level of comfort – why do it?
Let’s look at our profession from a different point of view…
Let’s look at the income and requirements of this profession vs. others. Let’s look at the income vs. effort and risk
– parity, with other professions.
Is there any other profession which has the extent of regulation or the high
costs of operations? Any suggestions? Can anyone name one?
What other profession compares with appraisal? You
mentioned a plumber. I think that is a trade – not a
profession. But okay – the last plumber
I hired was just this weekend, and the bill for a little over two hours work
was $200. So, does a plumber have higher risk, higher regulation, greater
educational requirements – than an appraiser? I think not. How
is it that he’s paid ~$100/hour?
If appraisers were receiving $100 an hour for their work –
what would the fee be?
At a fee of $275, we’d have to be able to complete a full
1004, including all drive and inspection time – in 2 hours and 45 minutes. Show me a person who does that and I’ll point
you to a report in need of review.
What about CPAs? I have yet to find one with weekend office hours –
and like plumbers, their hourly rate would make most appraisers happy with their
work.
What education does a loan officer need? Escrow Officers? Title Company persons? I don’t know.
The thing is, if something does not exist – you don’t find
it when you go looking. Like looking
for ghosts, you can look a long time and end up with nothing. Does that mean it’s not there? Or did you miss it?
Realtors are regulated, though nowhere near to the extent of
appraisers. In California, sales people
need only have a high school education, a couple of classes and a broker to
work with. A total commission of 6% of
the sales price is standard. For a
$300,000 sale – that’s $18,000 before broker splits. Let’s be conservative and say the agent grosses
$12,000. At $275 per report, an
appraiser would have to complete 43.64 reports to make that same money.
Let’s look at the physical/mechanical home inspector in
California. This job has no specific
educational requirements, though there’s some classes available. It does not require a license is not required
to carry insurance; there are very few
tools involved, with minimal technology needed.
The inspector may shows up with a four-part, 14 page check-box
inspection form, finish his work in about 3 hours and get paid $350 right then
and there, the time of the inspection. No waiting to be paid; no
middle-men; no regulation.
Actually, the only fee I’ve seen that is less than an
appraisal report, is the termite inspection – which usually takes ½ hour or so.
How can anyone look at this, and then say that fancier
technology is the key to being okay with $275 for a full report?
So… let’s be real. Dustin – I do respect your opinion; you’re a sharp guy. But in
this you’re starting from a wrong premise – which is that $275 can be made
reasonable for a standard 1004, given the time and risks that go with it, in
this environment.
If we stop thinking in terms of a set “FEE,” and
start thinking in terms of an hourly, billable rate – what are appraisers
actually earning? How many hours does it take to do the job, start
to finish? 6 hours? 8 hours?
It depends, of course. At 6
hours, a fee of $275 is $45.84/hr. Let
say an appraiser is shrewd and only loses 1/3 to taxes – so you’re left with $30.26/hour. Then there’s business costs – which vary; but let’s say $10 an hour is lost to
expenses. And then there’s personal
costs, such as medical insurance; given so many of us are 50 years old, or
older – those costs can be very high.
Do the math. You’re
down to about $20/hour, or less, at $275 an hour. That’s just $5/hour above where some people want
the minimum wage set.
Parity? Well – frankly,
just about any factory job would pay that, and would also come with benefits like
some kind of vacation time and health insurance, and a five-day work-week.
So… at $275, what is
going to draw new blood into the appraisal profession?
What’s going to keep old blood from leaving?
In terms of the parity of income, regulation, risk,
responsibility – what other profession has been stomped on like this one? Rationalizing ridiculous fees will not make
them less ridiculous. It just feeds
those persons who are looking for a good excuse to pay less for our work.
… written in Word and copied here … this site appears to be editing my words in
unusual ways…
Less work for more pay! Repeat after me. Even if you’ve streamlined your business twice as well as your competitor, you are not doing yourself or anyone else a favor by undercutting their fee by 50%. Nobody should be doing appraisals for 50% of C+R. Do you see dentists or auto mechanics offering their labor for half price? Don’t devalue your profession like that. There are good clients out there trust me, find them and tell the bottom feeder AMCs to go pound sand.
Finally an appraiser who makes sense. Sadly many of the rest just don’t get it. Profit in a business is what you make it. Educate yourself, find the right clients and do quality work. The good fees will find YOU – banks, AMC’s, referrals, etc.
So you’ve managed to find a handful of clients who are willing to pay you $400 for an appraisal. After you’ve finished beating your chest and screaming like Tarzan explain to us how you are more intelligent than appraisers who walked away from the business. Explain how getting $400 fees (2009 fees) 200%+ more work (1004MC, UAD, CU, & HUD Home Inspections) makes you the mighty brainiac? In my opinion anyone who didn’t leave the business by 2009 scores extremely low on the IQ scale.
You are funny. I like you.
Except for the whining and jealousy part. I have no inheritance, only hard work and a cheerful attitude about life, family and work. Sorry you don’t. Now it’s my turn to go have fun. Goodbye, retired and unhappy guy.
Far from retired…I simply walked away from a losing profession (appraising) at the right time (2009).
I am making more money with less headache than prior to 2009. Remember all that lender pressure we used to whine about? Gone. My biggest gripe is that it’s not virtually impossible to have a trainee.
Dustin,
You have built a great business and most likely have increased your non appraisal income. That said, how can I learn to charge low fees and prosper?
I forgot, I can pay you and join your club hire chuffers and computer consultants and most likely a personal chef!.
I am not a hater but I very much distain people who take advantage of others like you and TV evangelists.
Pay Appraisal Buzz ( a pure advertising rag) a few bucks to promote yourself and your wares.
I have often thought of doing the same but I prefer to sleep at night.
So you are an appraiser like most of us? “He also owns and operates The Appraiser Coach where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth.”
Really Dustin!
Thank you, Dustin, for your insights into efficient business practices. But, I believe that is not the issue here. I’ve been appraising for about 15 years now, and have co-workers with many more years of experience than that and the consensus is that there are still many “sweat-shop” operations going on in our business (now maybe looking over their shoulders quite a bit more these days) that generate a lot of business and pay their worker-bees low wages, and that’s why there are still appraisals being done for less than $15/hr. in our industry. It really is a per hour type of job as most appraisals coming across my desk are about as similar as fingerprints. That being said, all AMCs take the lowest bidder and when someone is trying to keep a roof over their head, it’s all about volume, not quality or efficiency. Most appraisers who’ve been in the industry long enough remember the days of pasting down their photos and carbon-copy reports, so the efficiency thing has been improved, but with a fairly steep price tag. MLS fees, public records fees, software fees (of every type from auto-populate program, to basic form-filling programs), tablets, I-pad, cell phones, digital cameras and continuing education costs, not to mention just the costs to operate an efficient office (gas prices, ink and toner costs, paper, pens, pencils…shall I go on?). But, while everyone else in the world has upped their prices for the fruits of their labor, the appraisal industry has stagnated in comparison. Many of my co-workers who have been appraising for over 30 years now say the fees haven’t changed in nearly 20 years, and I can attest to at least 15 years of their assessment. When I first started, my boss paid me 60% of an appraisal that paid $350.00 for a standard single-family tract home, and the fee was based on the amount of the loan and not the work involved in the assignment. Now, at least, appraisers are beginning to catalogue their actual hours (honestly, not just for the state board) and seeing that they could just as easily (and without all the legal risk) make the same amount of wage as a service-sector job in a restaurant or department store (at least there you’re paid a tip or bonus for exceptional work).
The issue is “fair and reasonable” and all I really hear from BOTH sides of the peanut gallery is why this is such a difficult concept to accept in our industry. Fair and reasonable has already been determined by the Department of Veteran’s Affairs for years now and I really don’t hear a lot of VA appraisers complaining about the amount they’re paid, or the amount of time they’re being given to do a quality job. Again, not to mention they comply with current guidelines regarding geographical competency that AMCs could learn a lesson or two from. If the appraisal industry isn’t going to be represented by a “union” of appraisers that democratically vote on what is “fair and reasonable” across the nation and that voice become the determinate of fair and reasonable, then the default will continue to be, “…let the government decide”. And the result will always be short-sighted legislation (Frank-Dodd, HVCC) that purports to solve everything NOW, but only places a new spin on the old twist of the appraiser’s arm…appraiser’s are powerless to take control of their livelihoods.
The reality is, costs of doing business rise but appraiser’s fees do not because appraisers are not in control of their fees when they need to rely on AMC business to crack their monthly nut. I really don’t agree with the philosophy that with just a little more sweat and business acumen, you too can get all the lowest bid jobs because we’re not in control of that either. The AMC is in control of both of those aspects for the bulk of appraisals being done in our industry. It will be when appraisers are back in control of determining “fair and reasonable” for both fees and workload that we’ll see a diminishing need for 2nd and 3rd appraisals on a single property. I’ve done my fair share of appraisal reviews and forensic reviewing, and the quality does appear to coincide with the rate of pay and amount of appraisals an appraiser has to do to make ends meet. In my mind the answer is simple, treat an appraiser with respect as a professional business person, and quality in appraising will be the hallmark of the real estate industry because appraisers will be paid and treated like professionals (and accept all the expectations of that status), and let’s let the insurance companies and local law enforcement sort out the chaff from the seed.
In reading your post I came to the conclusion that Mr. Harris’s “Efficiency/Technology/Volume” seminars and workshops are essentially a “How To” course in transforming your practice into an appraisal sweat shop. I don’t think that I fully understood what he was doing until I read your post. Thanks for the insight.
You just don’t get it. Go play golf and relax. Leave the hard stuff to the pros.
Hopeful – you are a rude twit….
Not only did I leave the hard stuff to you (the pro); I left the minimum wage stuff to you as well (the 1,000 sf ranch appraisals).
An appraiser who wants to accept work for $275. Go right ahead. He and/or she will be swamped. That’s fine. When the AMC asks you to work for the same price. NO is the answer. I’ll do it for $375-$550 (New FHA rules), or reassign it. I know this is not going to happen: But appraisers need to start saying NO to “Slave Labor Wages.” They will pay up and everyone will make a decent living. How much more streamline can you do Dusting before you start violating USPAP?
Now that are good friend CORELOGIC….aka the devil… is buying up all the AMC’s and many others are moving into a strategic division of hiring nothing more than staffers to make you work for a gross of $150k+ worth of work… only to pay you about $60k – taxes(lucky $45k)…….it really won’t matter much more because over time big money makes more big money and the legislatures allow these companies to continue to produce these new entities and before long you will be subjected to most all your clients telling you….”we’ll we just got a great offer to join the Corelogic family and they are now handling all of our business orders”…..we hope you will continue to receive work but we can no longer send assignments to you directly….”okay well do you know what this AMC pays for a standard appraisal ?”…..i don’t know……oh, i’ll tell you….it’s like $250 for a 1004 and $170 for a 2055……it’s inevitable unless we act soon or all the business models are going to align perfectly for these ball busting, cold hearted appraisal machines……they have an agenda and what Dustin is saying is….you might “consider” looking at the $275…..for now, because these $350 and $400 days will not stay forever……well at least not in the mere 16 years I’ve watched it crumble……a national guild or union will have to happen in someway or another….these big money machines are making millions and do you think they are simply going to listen to a bunch of appraisers spread out all over the country bitching and complaining…..never got us anywhere and surely never will…….we need to unite and go to our state legislatures together and get the laws rewritten and take back our industry….many of you really could care less because the git-tins’ are good….but watch and see…..someone is going to take the $275 appraisal and you will get diddle squat……sure there are other ways to get non-origination work and some other non AMC work…..and you really thinking they aren’t locking that side of things up to….c’mon…..this industry is going to an automated platform already….why do you think there is only roughly 9% entering into this business and the average age is 53 per year from 39% 10 years ago……the platform will change and you will change with it or YOU will be out of a JOB……
Well….I just lost the very last bit of professional respect I had for “the Appraiser Coach.” Seems like he has went entirely over to the AMC dark side. Wait…is one of your “businesses” an AMC? Then this blog post makes perfect sense.
Your post is written from a “it’s all about volume” perspective. Streamline your process and increase your volume. That’s an AMC mindset. The truth is that the only appraisers I see taking these ridiculous fees are:
1. new appraisers who don’t yet know better
2. appraiser trainees who are are primarily concerned about getting their experience…any work is better than nothing
3. appraisers who have worked themselves into a corner so that he ONLY clients they have are the “AMC-Faster-Cheaper” crowd
4. appraisers who produce a bare bones report that is not of the best quality….but hey, they got it out in 24 hrs and do 20 per week.
I know ZERO appraisers who work as competent, capable professionals that will work for these fees. They have worked hard to grow a client base that appreciates what a quality appraisal is, and are willing to pay a reasonable fee. Your post basically says it’s ok to shop for the “cheapest-fastest” and you will still get the same quality, just a smarter appraiser that “streamlines” their process.
And by the way…there are TONS of people that were sorry they accepted the lowest bid on that plumbing job, and ended up paying TWICE as much for a better plumber to come back and re-do it. Hey….come to think of it, that happens with appraisals too. :)
Fees should be market driven. I refuse to follow “fee schedules” from AMC’s even though I have many. I consider fee schedules the least fee I will take. When my schedule gets up around three weeks ahead with appraisal appointments and write time, I start negotiating higher fees. I simply say, “I’m booked out” and that you can take it or leave it. When I give a quote, I say, “subject to first come / first served”. My average fee 2 years ago was $375, last year it was $440, and this year it is $730. I am currently booked out 5 weeks, currently all AMC work. I am still getting 5 to 7 inquires a day after a mid-summer peak of 10 to 12 inquiries per day. I tell AMC’s that fees are based on the theory of substitution: Why should I take less from you when I can easily get more from someone else? We are currently starting into the time of an Appraiser shortage. If any Appraiser feels that their fees are too low, I suggest you get on several AMC lists, and starting playing them off against each other. All the major AMC’s have paid me more than they will publically admit….
I always get a kick from reading posts like yours because I can’t help but wonder if appraisers like yourself have a clue that you live in an extremely rare area with no other (living) appraiser within 300 miles. Enjoy your membership in this exclusive club…just realize that you DO NOT live in the real world with other appraisers.
As I breathe the air and walk on the ground, I wonder what part of this world isn’t “real”. I am not in the heart of an urban area, but that does not mean that I have no competition. There are at least 50 Appraisers within 50 miles of my location. There is the start of an Appraiser shortage. It is being felt first in “rural” areas like mine. That has put me in the starting blocks of this race to higher fees perhaps a little sooner than anyone else. Please think of my market as time/distance and hours just like it would be in an urban area. If I charge more than what it would cost someone to drive an extra hour, then that other Appraiser can have the job if they want to under bid me. My “world” has just as much competition as any other “world”, it’s all about workload. Right now in Central Oregon, all the Appraisers are 4 to 6 weeks out in their schedule. If Central Oregon Appraisers aren’t increasing their fees, then, well, they are stupid.
Steve, appraisers like myself could in the past work large areas of territory in increase our workload, however the AMC environment of today tells me where I can work from my office (10 miles +/-). In my urban area you will not get any work if you can’t take and promise turn times of 3 to 4 days (I average 2.5 days). The reduced turn times results in a complete change in work/business model. I can take and hold on to no more than 3 to 4 appraisals at a time as any extra work will not get done in the expected turn times. The expectations are flawed, and result in wide swings of no work, to too much work. Consider yourself very lucky.
I agree retired appraiser. I also find it interesting when appraisers from the same state can live in areas where the medium home price (cost of living) are in ranges from $250,000 to $800,000 but AMC’s want to pay the same rate (sound familiar VA). One appraiser may be able to survive, while the other one qualifies for Obamacare and public assistance.
Dustin, I have worked under both business models. The high tech, uber-efficiency model with lower paid staff and high volume lower fees; and the one man office.
I do not know of one single local or statewide multi person lower-fee “high efficiency” office that has survived long term. Not one.
I know of several national appraisal management firms owned by designated appraisers where they pay no more than 50% of THEIR already lowered fees to the appraisers that are doing quite well. They are not however real estate appraisal firms despite the pretense maintained by a few select in house staff cherry picking jobs.
The model that DOES work based on past experience; and that would work in the future if allowed by lenders is the one where an experienced appraiser commands full fees and trains less experienced appraisers. An inherent requirement for that model is that the experienced appraiser does NOT have to personally inspect property once he or she believes the trainee is both adequately field trained, and reliable.
The mix that works is one raw trainee; a 6 month to 3 year novice to journeyman; and a certified appraiser (AG or AR) plus the owner / senior appraiser. The trainee is necessarily less than full time. The novice may or may not be the same. The owner markets with the intent to keep the senior and himself fully engaged but without taking on so much it overwhelms the less experienced appraisers.
In the old days we could turn on or turn off the work taps with our better clients that understood the model. It ONLY works today, because the senior appraiser is also collecting 1/3 to 1/2 +- of the lesser experienced appraisers fees for training and reviewing.
Of course as soon as an AMC markets itself as having all certified appraisers; or a lender says no one with less than five years experience can sign or that they must have a co -inspection, the model falls apart. These are also the PRIMARY reasons we no longer have trainees.
OF COURSE the trainee and 1 to 3 year appraiser go out and undercut fees at some future point. Hopefully NOT with your clients; and only until they realize what they are doing; and the true costs of operating business. THAT is also a part of the business. On a small scale, it is manageable.
Dustin – that is some ignorant slop!!!! Appraisers have been forced into a business model that ONLY requests FEE and then turn time… the ONLY way for us to market ourselves to the AMC parasites is to offer a lower fee. AMC’s have proven to be a powerful negative to the lending process while ripping of an ignorant customer – the borrower.. for higher fees and a less credible product. AMC’s have done NOTHING to add credibility to the appraisal – only extra spell checking for 50% or more of the fee they are charging. AMC’s should be abolished by a Federally mandated and then state maintained rotation panel following the VA model. That is is the ONLY fix for this complete debacle that Dudd-Fwank and the HVCC have created.
You are caught in the AMC grip – get out! AMC’s are here to stay – find the better ones and stop whining. If enough of you stop taking that low fee stuff then the company will shut down – read about it. Competition can be managed, both ways.
You’re just a bit arrogant and assuming Mr/Mrs Hopeful… AMC’s are NOT necessarily here to stay and I for 1,000 pray they are soon abolished for the abomination and parasitic way they run their business and abuse appraiser “independence”.
AMC’s should be abolished by a Federally mandated and then state
maintained rotation panel following the VA model. That is is the ONLY
fix for this complete debacle that Dudd-Fwank and the HVCC have created.
Minimum fees should be set along with geographical competency and appraisers should be given the opportunity to adjust those fees for complex assignments.
It’s an easy fix really, but AMC’s and lenders are making BILLIONS off of OUR FEES and overcharging borrowers so the “profession” is in quite a pickle under the current model and there is very little “Reality in Real Estate” because of this model.
I truly appreciate all of the feedback. You never know the impact a story will have till it hits the printers. Rather than respond to each and every post, allow me to please clarify a few things in general. First of all, what is written is my own doing and should not reflect on the Appraisal Buzz or the staff who are always generous enough to give publishing space to any and all ideas and opinions (no matter how controversial). Good journalist make space for ideas… even if they do not reflect their own opinions. Secondly, though I can understand why some of the feedback has been negative (it is a hot topic after all), I wonder how closely the content was really read by some. No where in the article does it promote accepting ‘low fees,’ nor do I believe in that kind of blanket approach to business. In fact I state clearly that, “… I do not do full appraisals for $275 either…” Further along in the article I say, “When an appraiser’s peer accepts a full appraisal for $275, it seems like a travesty. To an outsider, it might seem as if they are scraping the bottom of the barrel, cutting corners, and giving the rest of us a bad name. Most likely, your judgments are correct. There are those appraisers out there and I have even reviewed a few. I have even Tet a few of those appraisers over the years. How they continue to keep their licenses, I do not know” (emphasis added). The point of the article was obviously not to promote low fees. Rather, my hope was that appraisers remember, as the title says, “Appraisal Fees Do Not Tell The Whole Story.” There is much more to running a successful business than simply focusing on our fees.
Dustin, I like many in the group read the headline and thought the article was going to be related to the often indicated appraisal fee on the HUD-1 ($500, $600, etc.) but was going to dig deeper into the true payment to the appraiser. Loan officers, processers, borrowers, agents, etc. have NO CLUE what our gross fee is and have no understanding of what we do. Do you think any of these people care that I pay on average $3,000 a year to the AppraisalPorts, and Mercury Networks, etc. of the world? Do they care that even with no violations that my E&O has doubled in the past 10 years? With scope creep issues, do they care that I must work for 2 months out of the year for free just to add in their non-mandated extra stuff into the report? The streamlining you speak of to the appraisers business is cancelled out by the same streamlining the lender throws back at us.
WE have all heard the talk, if I don’t take it someone else will. At a recent get together with local appraisers’ one person stated, WE need to get the fees up, I said, you don’t have to accept those low fees. If everyone would raise their fees and stick to it, then our fees would increase. But as always there are bottom feeders is all types of businesses, ours is no different.
I have done several ERC’s for a management company over the years. Last year I raised my fee when they called to $600. (just using these numbers). The girl said your fee listed was $500. I asked when that was posted and she said several years ago. Well I informed her I raised my fee as of Jan. 2014. Just recently they sent me an appraisal with a fee of $500. I sent it back and again told the person via email my fee was $600, and could not accept the order. She email back that the increase was approved and to proceed with appraisal.
Most ERC appraisals require 2 appraisals and more than likely other appraisers are doing the work for a lower fees. However, they were willing to pay more for my appraisal. About 4 months later I get an email for the management company to do an updated value to see if market conditions were changing as the Company was going to purchase the home now. They called me and only me because of my quality of work.
This just goings to show that there are people out there who will pay more for quality work. So just say no to the cheep fees and you could be surprised what may happen.