As appraisers we tend to see the world from the perspective of what we are exposed to. Our sources of information come from those that derive a profit for us, through the sale of software, subscriptions and dues.
Software providers, appraisal organizations and vendors tend to focus on the mainstream of our work . . . the lending industry. These companies allow us the ability to discuss the applicability of their service as it relates to their revenue generation.
As we squabble over our ever reducing source of our own revenue and discuss applicability of BPO’s, AVM’s, AMC’s that compete on the basis of fast and cheap services More so than not our conversation of what are the minimum acceptable standards are, what are the expectations of our clients, and what is legally correct as oppose to prudently correct get emphasized. Although the opinions and explanations of our leaders sometimes creates even more confusion based on the answers and interpretations we receive. Even more frustrating many times the opinions of our leaders tend to reinforce their own revenue stream or the revenue stream of their association.
"Because most appraiser revenue comes from the lending industry, we tend to overlook the niches in which the quality of our analysis, the reliability of our reports."
That said, there are other markets, niches we can provide that are not so concerned with prices, speed and cost. They are more concern with accuracy, reliability and professionalism. Appraisers can extend beyond the mainstream of the industry, to capture a market by doing what we do best. Gather information and coming to a conclusion.
My personal quest to determine how can an appraiser sell quality? This search brought me across Gary Crabtree’s site http://www.affiliatedappraisers.biz .
Gary provides a trend analysis, similar to what many people are learning for the first time through several wonderful providers of education, products and services. He provides it on a regular basis and charges a fee. Download 07_08_Monthly_Housing_Report_Crabtree.pdf
I asked Mr Crabtree if I could interview him for this article and he agreed. The result of our conversation is posted below.
ME: Gary, what are you providing, what do you charge and who are your clients?
Gary: My report is a monthly report of market conditions in Bakersfield, CA (my area of expertise) for which I charge my clients $350 per year for 12 issues. My report addresses the market trends of supply, demand, pricing, marketing times, and strength of market.
More recently, I have added the impact "distressed" sales are having on the market and the competition between new and existing homes. My subscribers include Realtors, other appraisers, builders and developers, economists and building trades. I have also reported upon the impact that mortgage fraud is having on the market. The report is quite successful.
Gary:I started doing a short trend analysis as a public service about 3 years ago and was "giving it away". After word had spread around the community I became "overwhelmed" with requests for the data. That's when I decided it had value and I started marketing the report through the local association of Realtors and through the press when I gave interviews about the data, plus during speaking engagements to Realtors, brokers, service clubs and trade groups.
ME: Who are you clients and why are they willing to pay for your service?
1. Realtor use it in their listing presentations to give their clients "the truth" about the market, thus preventing them from "over listing" the property.
2. Builders and developers use it to track the market and their competition.
3. Lenders use it as a check and balance for their appraisal and loan underwriting.
4. Economists use it to track a single market that has had a lot of volatility in the past four years.
ME: What are the benefits and etc that get from providing such services beyond the fee you charge:
Gary: Benefits to me besides the income, is that my business is promoted to clients that want good quality and expert appraisal services and are willing to pay for it. (Attorneys, Relocation Companies, CPA's, Buyers, Sellers and Realtors).
The down side is that the lenders know of me and my ethics and standards thus I have been declared the appraiser "pariah" of my market - resulting in very little lender work, which is fine with me as they don't pay a fair fee (wage), like to hassle you, and pressure you in some way and/or form.
End of interview:
My conversation with Mr. Crabtree was insightful, and the process he followed appears to be consistent with what several people have conveyed when they develop their own niche. Consistently it takes time, hard work, some education and a commitment and desire to move outside the mainstream of business produced by the lending industry.
I am slowly coming to the conclusion that to survive I need to look for appraisal organizations, associations, and software companies that provide me the alternative of developing product and services to capitalize on my own niche. Some type of consistent format that would help me market niches in my area that are looking for quality of analysis and reliability of the report.
I believe as the number of appraisers dwindle, software providers, vendors and appraisal organizations are going to see a drop in subscriptions and memberships they will have to compete for the individual appraiser. Keep a look out for those companies that start to off us alternatives to the mainstream of our work which has been lenders. In fact promote it, bring it to their attention, and suggest to them it might be prudent to assist you in making money.
Also, be careful of being sold a pile of goods. Quick fixes will not work, only research and education like what Gary Crabtree has done will be necessary.
Two things as I close this blog:
First: Thank you Gary for not only for sharing your experience, but for presenting yourself as a professional appraiser to the public. You’re an inspiration to other appraisers that are looking to sell quality and reliability.
Second: If you or anyone you know is working a niche, selling related services other than what typical appraisers provide, please contact me.
Author: Jeff Patterson, owner of Residential Appraisals - Has been providing residential appraisals for most of southern and central Maine for the past 25 years. Jeff's clients range from private appraisals to working with brokers, banks, litigation support and expert court testimony.
477 Mouse Lane
Alfred, ME 04002