Appraisal Scoop

Real Estate Appraisal in the US Industry Market Research Report from IBISWorld has Been Updated

Excerpt from the IBISWorld industry Report:

The top five firms in the Real  Estate Appraisal industry account for less than 15.0% of industry revenue  with the largest having a market share of just 6.2%. The larger participants in  the industry are generally subdivisions of large multinational property,  brokerage, and global real estate service firms. The vast majority of companies  operating in the industry are small, independent firms with few employees or  single-owner operators.

According to the US Census and IBISWorld estimates,  75.3% of establishments are nonemployers. From 2008 to 2010, the total number of  establishments in the industry was decreasing. The number of nonemployer  establishments was decreasing at a faster rate than employer firms. This trend,  however, has reversed recently.

According to Jose, the total number of  enterprises began increasing in 2010, and the number of nonemployer firms is  projected to grow at a faster rate than employer firms over the next five years.  This shift will likely result from mergers and acquisitions as well as a trend  of appraisal professionals leaving firms to become independent contractors as  demand for their services is increasingly filtered through appraisal management  companies.

For more information, visit IBISWorld’s Real Estate Appraisal in the US industry report page.

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Dave Towne Offers Appraisers. . . "Some thoughts to pass along"

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals.  16422 Britt Rd., Mount Vernon, WA  Phone: 360.708.1196   eMail: dtowne@fidalgo.net Web: http://www.TowneAppraisals.com

 

Some thoughts to pass along:

Attorneys –

Attorneys will attempt to get you to do work for free.  They can be subtle about the way they ask for info.  I learned via the school of hard knocks this year to be extremely cautious in the future.  I strongly recommend whenever an attorney contacts you about an appraisal assignment [that is not a legitimate
engagement] or request for info (which normally requires research time), that you start with a retainer (payment in advance) prior to doing any work.  They charge their clients for similar work – you should also.

 AMC assignments –

When I was graciously accepted as a trainee by my mentor, we were paid “X” for each assignment, and
more if the property was complex.  Once AMC’s began to proliferate, we were paid ‘less than X’ for doing the same work … the AMC’s were stealing part of our customary fee to pay their overhead.

 But since the Dodd-Frank law was passed, most of the better AMC’s now pay customary fees to
appraisers.  My income per assignments is now back to “X” and in some cases ‘more than X’.  But I ABSOLUTELY REFUSE to accept assignments for less than X.’  Those clients who don’t want to pay “X” can find someone else.  That means ‘you’ who are afraid to charge more, but could earn more
if you would only ask for a higher fee.

 I know appraisers in my area who are getting ‘better than X’ … in other words, paid more now than they were just a few years ago.  This is because they stand firm on their fee.

The point of this is to evaluate your business practice.  Then go to the foundry to get some brass.  You can and should demand to be paid a fair fee today that is at least equal to or above what you were paid a few years ago before the stealing began.

 Review assignments –

Many desk and field review assignments are being placed these days.  Foreclosures on loans made in
2006+ have caused the GSE’s, FDIC and banks to re-evaluate the appraisals that were initially used to justify the mortgage loan.

Review assignments are not difficult, but they are more time consuming.  Thus, your fee for doing a
review should be AT LEAST what your “X” figure is.

Doing 1.5 – 2x+ the work for .5 to .75 (or less) of a customary fee, and to take on the additional
liability, is ridiculous.

Too many appraisers have agreed in the past to severely low-ball the review fee, and that has rippled
through the industry.  Frankly, if you are unwilling to charge – at a minimum - what your customary “X” fee is, then let someone else do the assignment.  Only when all appraisers wake up to this will be when the review fees will move higher at the time of the initial request.

And from first-hand experience the FDIC and GSE reviews have increased reporting requirements.  So be sure to carefully read the engagement instructions before agreeing to a fee in advance.  These assignments often require extra data documents to be included within the report.

Associate with other appraisers –

Resolve this coming year – as early as possible – to get outa your bathrobe, bunny slippers and basement and actually interact with other appraisers.  They really are nice people!  Join your state appraiser association, join a national association, and try to meet with your local appraisers casually over breakfast, lunch or dinner during the year.  (I can help you learn ‘how to do that if necessary.’) 
Don’t discuss who the individual clients are, but do discuss challenging assignments and the type of work your peers do.  Your peers are your source for referrals – both in and out.  So don’t be afraid! 
Associating with your peers is really a positive experience.  Really!

 

Hope your 2013 is as productive in terms of income (or more so!) than ’12 has been for most
of us.

 

GUEST AUTHOR: Dave Towne, Certified Real Estate Appraiser - Towne Appraisals.  16422 Britt Rd., Mount Vernon, WA  Phone: 360.708.1196   eMail: dtowne@fidalgo.net Web: http://www.TowneAppraisals.com

Why AMC’s May Be Built on a Faulty Business Model

GUEST AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc.  Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets.

It’s hard to believe but it has been over three years since the appraisal profession was turned upside down by the Home Valuation Code of Conduct (HVCC).  While HVCC has been relegated to the ash heap of history, its primary intent is alive and well thanks to the adopted language within the Dodd Frank Act and subsequent regulation that it continues to produce.

Now that some time has elapsed, appraisers are becoming more accustomed to the realities of a post-HVCC world and can hopefully speak more rationally about the impact it has had. It is clear however that new dynamics are in play.

The use of Appraisal Management Companies (AMCs) was not directly mandated but their proliferation was the natural result of a system that redefined who appraisal clients were supposed to be.  Appraisers did not have much say in this outcome and were left struggling to find an identity and more importantly, a business model that was profitable. As appraisers strive to adapt to ever changing processes, it is unlikely to alter the fundamental flaws that remain with the AMC-based model.

An Ever-Expanding Role

AMCs may offer a perfectly viable service for outsourcing appraisal ordering and processing functions to investors, however their role could be growing far beyond that.  Lenders appear to have accepted the AMC as a kind of underwriting function.  After all, if an appraisal has two comparables under 90 days, two listings, all lines are bracketed, and it has all the required canned comments, then it must be a quality report; right? Well, as any practicing appraiser knows, every assignment may not look the same yet this is what AMCs are promising their clients.  Quality control departments routinely generate stipulations that have little to do with quality and more to with demonstrating that their place in the process is justified and beneficial. This will ultimately lead to lenders having a false sense of
security regarding collateral valuations.

The AMC Role Wrongly Defined

Generally speaking, AMCs are not really appraisal providers in the sense that independent fee appraisers are. They would more accurately be defined as appraisal facilitators. That is, a secondary party that locates and handles ordering and delivery. The local appraiser is the one who provides the market expertise, has the required tools to produce a report, has the credentials to complete assignments, pays the costs of all required expenditures, and most importantly has the liability that lenders desire. The AMC serves primarily as a transit system and yet they collect a high percentage of what borrowers think is the appraiser’s fee. This of course is easy to disguise since appraisal
invoices are often submitted separately to the AMC.  Fees to the consumer have clearly increased as
appraisers have been relegated to the wholesale end and the AMC has become a retailer.

Lack of Transparency

The HUD-1 settlement statement has historically only disclosed a singular appraisal fee but recent regulatory actions are changing this. The Consumer Financial Protection Bureau is proposing adding a line for appraisal management fees which does offer a bit more transparency but will likely not change what AMCs are paying independent appraisers. AMCs state that the fees they collect are customary and reasonable however C&R actually has nothing to do with them. The reason why the concept of customary and reasonable was fought for in the Dodd Frank Act was due to appraiser outrage over slashed fees. When these changes are finalized in the HUD-1, will AMCs charge a separate fee and support appraisers receiving the full fee that has been paid over the past few years on the settlement statement?    

Scope Creep, Slashed Fees, and Unreasonable Turn Times

The AMC model has also allowed a tremendous amount of scope creep to occur without fee increases to offset the additional work. This adds further stress to an industry that has already seen significant fee reductions from pre-HVCC rates. In order to streamline their processes, when a lender client demands a
particular requirement for an appraisal, AMCs often make it standard for all reports which increases workload across the board. This results in more hours of work to produce the same pay and the net loss of revenue gives birth to other problems.

Disgruntled Appraisers

By reading any appraisal forum, trade publication or blog post, it’s not hard to see that the vast majority of appraisers are not big fans of AMCs. Many feel they are taken advantage of or taken for granted. This is the natural outcome of a system that typically does not foster a communicative business relationship. If you are just another reference in a large national database, then you will likely be treated that way. If AMCs are to be the standard for years to come, then it is in their best long-term interest to address this
concern. Treating appraisers equitably should be their goal as well as to reduce the “fast and cheap” mentality that permeates many AMCs.

A Future Generation of Appraisers

There is a lot of talk about the difficulties of getting into the appraisal business. Since the financial collapse, HVCC and Dodd-Frank, the number of licensed/certified appraisers has dropped off dramatically. These estimates also do not take into consideration the additional numbers who might be keeping their license active yet do not actually work in the business any longer.  With the average age of an appraiserapproaching 60, AMCs and lenders will likely be a catalyst in how we address this concern.

While reduced volume, slashed fees and expanded scope of work may have contributed to a decline in the number of active appraisers, oneissue does not get discussed often. That is the difficulty in hiring and training new appraisers by local appraisal firms. Once licensed, fewer appraisers are willing to work in a fee split arrangement for a local firm when they can simply sign up for AMC work and have enough work to keep busy. This results in local firms having less flexibility to develop new services and
efficiencies.  AMCs probably benefit most from working with one-person operations that have a small pool of clients andlittle flexibility to turn their work away.

Firewall Fallacy

During the buildup to the sweeping changes, there was a lot of talk about needing a barrier between loan origination and appraisers. Regardless of the merits or pitfalls of this theory, the AMC in no way serves as a firewall. If a conflict of interest existed before, how does placing a for-profit entity in
the middle solve anything? If origination could pressure the appraiser, then surely they can pressure the AMC by threat of taking business elsewhere. If the AMC’s profit becomes at risk, then the possibility certainly exists for pressure to filter down to their appraiser contractors.

Volume Will Hurt AMCs

Refinance activity has picked up in recent months and AMCs are seeing a significant increase in the number of orders that are being declined. If the economy and housing begin to rebound, increased volume will work against AMCs. If an appraiser has so much work that affords them the luxury of choosing clients to work for, the AMC will likely be on the bottom of the list of preferred clients. The positive in this is that fees could rise and turn-time expectations might soften.

Inevitable Outcomes

With AMC legislation enacted in many States and pending in many more, AMCs are also in an ever-changing landscape. Hopefully they will realize that their survival is dependent on the health of the independent local appraiser. The concept of local appraisers doesn’t always mesh with the global view of large scale appraisal users but nonetheless is essential to a sound appraisal process.  AMCs are clearly in the driver’s seat if their relationship with appraisers is to improve. It’s really very simple; AMCs don’t even have a business without local appraisers. They must come to grips that some of these outcomes are inevitable unless they alter their business model to some degree.

AUTHOR: Micheal W. Armentrout, VP AM Appraisals, Inc.  Mike has been involved in full time real estate valuation since early 1992 and has experience in numerous Central Ohio markets. He served as a staff appraiser at several local firms before forming AM Appraisals, Inc. with business partner J.M. Massey.

e-mail:marmentrout@amappraisals.com web address: www.amappraisals.com

 

"Factoring" Accounts Receivable, or . . . .Where's My Money?!

GUEST AUTHOR: Ramir Rodriguez is a business development officer for Treasure Valley Factors. He helps real estate appraisers understand what factoring is and how it can help grow their business. He has a B.S. in Business Administration with an emphasis in Management from Eastern Oregon University. For more questions about factoring accounts receivables, please email him at rrodriguez@treasurevalleyfactors.com or visit our blog www.factoringhelps.wordpress.com or our website www.treasurevalleyfactors.com

Appraisers have shared a common concern with me when I visit with them and learn more about their businesses – “When am I going to get paid?” Many tell me that on average they do not collect their fees for 45 to 60 days. You have financial obligations to meet: payroll, taxes, travel expenses, etc. Cash flow delays can cause great stress for you and your appraisal business.

You must understand and be aware of the importance of cash. Cash is the lifeblood of any business and without it your business will fail. One of the main challenges that appraisers face is how to maintain a consistent cash flow in order to survive and grow.

Factoring is the solution!

What is Factoring?

This effective financial tool is selling your accounts receivables or invoices to get paid sooner for the work that has been done. Factoring accounts receivables is an effective way of improving and increasing the cash flow of a business. Factoring allows an appraiser to collect their fees easily and quickly. A factoring company can fund an appraiser 95% of the value of the invoices or accounts receivables submitted and such transactions are typically approved and funded to the appraiser within 24 hours (rather than waiting past 30, 60 or even 90 days).

Factoring Allows You to Do Much More

Receiving your fees much sooner allows you to meet your financial obligations. Most creditors require you to pay within 30 days and some charge interest. Having the ability to pay expenses and bills on time reduces or eliminates interest fees and improves the financial condition of your business. You can take advantage of early payment discounts in some cases also.

Factoring also helps you grow your appraisal business. Instead of spending time on the phone, email, or face-to-face to ask your client when you can expect payment, getting your fees paid quicker allows you to focus on what you do best, gives you more time market and sell yourself, and make more money!

Selling your invoices to a factoring company and receiving your fees within a day or two rather than an average of 45 to 60 days can reduce or eliminate stress of running a business. No more worrying about how you will pay your bills or how you will meet payroll if you have a staff.

Finding a Factoring Company

Not all factoring companies are the same. It is important to find the right factoring company that will customize a factoring program that fits your appraisal business. Good and experienced factoring companies can fund your business typically within 24 hours. There are factoring companies that do not require you to be in a long-term contract – meaning you are not locked in a contract where you have to factor your invoices for 6 months, 1 year, or longer. In addition, find a factoring company that has “no minimum volume” which means you are not required to submit all of your invoices… just those that historically pays slow. And finally, ask a factoring company if they offer “non-recourse” factoring. This means that once an invoice has been verified and approved the factoring company takes 100% of the collection risk. You can wash your hands of that invoice completely and move on to the next order.

GUEST AUTHOR: Ramir Rodriguez is a business development officer for Treasure Valley Factors. He helps real estate appraisers understand what factoring is and how it can help grow their business. He has a B.S. in Business Administration with an emphasis in Management from Eastern Oregon University. For more questions about factoring accounts receivables, please email him at rrodriguez@treasurevalleyfactors.com or visit our blog www.factoringhelps.wordpress.com or our website www.treasurevalleyfactors.com

2010 "Net" Annual Income from Appraisal Related Services Poll by AppraisalPort

 AppraisalPort has posted a new Weekly Poll as a follow-up to last week's.  THIS week, appraisers are asked to respond with how much Net Income they made (income after expenses & taxes).

  

Visit http://www.AppraisalPort.com to vote in the poll and be SURE to read and add YOUR comments below! 

The graph below shows last week's AppraisalPort "Gross Income" survey results (with 5,000 votes cast) from last week.  Check-out how the results compare!

CoreLogic VP speaks on upcoming changes to "Reasonable and Customary" appraisal fees

HousingWire author Jacob Gaffney interviews David Feldman, vice president, government affairs at CoreLogic Valuations. Feldman sat down with HousingWire to talk about the impending deadline on appraiser fees under new regulation.

• HousingWire: On April 1, the new "customary and reasonable" appraiser fees under Dodd-Frank take effect. What are they and is the industry ready?
• HW: How are your clients going to determine "customary and reasonable?"
• HW: What kind of operational issues will this create for AMCs and clients? How real are the risks of fines?
• How much will this increase the cost of appraisals and who will pay for the increase?
• HW: Over time do you see appraisal business shifting to AMCs or away from them?

Click here to read find the ANSWERS to these questions !

 

 

2010 Gross Annual Income from Appraisal Related Services Poll by AppraisalPort

 

AppraisalPort has posted their Weekly Poll and it's generating a LOT of interest. Having watched the poll for the past couple of days the percentages haven't really changed much, whether there were 500 votes or 3,000!

• Are YOU surprised to see that over 30% of Appraisers Gross over $100k?  
• Wonder what an Appraiser "Nets" on earnings of over $100k?
• Wonder how many hours an Appraiser grossing over $100k works per week?

 Visit http://www.AppraisalPort.com to vote in the poll and be SURE to read and add YOUR comments below!

A Reality Check for the Appraisal Industry - Embrace Collaboration

GUEST AUTHOR: Ron Stickelman, Jr., MRICS, SRA -  President of Stickelman, Schneider & Associates, Founder of the Ohio Coalition of Appraisal Professionals (OCAP)

 "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change." Charles Darwin

A few weeks ago I visited an old appraiser friend at his office in a nearby city. Like me, he owns and operates a moderately successful regional operation. This office, once the spawning ground for some the best appraisers in the state is now virtually empty. The only occupants are a small team of processors and my friend who sits behind a massive computer monitor, talking into a headset while the stock prices run silently on a TV in the background. Wondering through this office in search of a cup of coffee I came across the “appraiser workroom.” Battered metal filing cabinets lined the walls, between shelves lined with ancient MLS books, long-expired flood maps, defunct binding machines and standing proud in the middle, a vast tall solid wooden table. The table was scarred, chipped, etched, colored and marked by time; a symbol of collaborated individualism that was and may never be again.

The Hybrid Appraisal Firm

The appraisal “firm” I visited that day no longer “employs” appraisers. The company is owned and operated by a state certified and nationally designated appraiser. The company “contracts” with all the appraisers that perform appraisal assignments for the company. Several of these “contract” appraisers have been with the firm for over 20 years and some less than six months. All are state licensed or certified, some designated but all work independently and non-exclusively for my friend. He employs no trainees or non-certified appraisers. The company is an example of the new “hybrid” appraisal firm, both AMC and Appraisal Firm. The evolution of the Hybrid Appraisal Firm is a direct result of, not only economic forces, but the potentially destructive individualism that pervades our industry.

Outsourcing

The business model of “outsourcing” labor is common to many industries: it provides a buffer to economic cycles permitting a readily liquid work force; reduces the costs of labor and goods; contains the costs of real estate; allows growth and shrinkage to occur with minimum interruption and minimizes the expense of management. Independent contractors are free to diversify their work with multiple clients; operate on flexible schedules; individually own and operate a company and expand and contract as work flow demands. But this is a short-term fix to a long term problem.

In reality, most independent appraisers will never grow their business because of insurmountable economic barriers. For many, appraisal is a lifestyle and not a profession; an opportunity to work “around” the demands of life. Work schedules expand and contract based upon the demands of their clients, not as a result of business planning or development. Few independent appraisers employ office support, other appraisers or appraiser trainees. They operate from a home base, take minimum continuing education and have little or no contact with their peers.

Customary and Reasonable Fees

As appraisers, it seems that we cannot open an e mail without being barraged by yet another “fee survey” on what is a customary and reasonable fee for appraisal services. Since the first mention of this concept in the Dodd-Frank Act, appraisers have clutched to this phenomena as the great savior for the industry. But, appraisers are mistaken if they believe that Dodd-Frank will be the proverbial goose that lays the golden egg.

The recent Interim Rules are very clear that “the marketplace should be the primary determiner of the value of appraisal services and hence the customary and reasonable rate of compensation for fee appraisers.” The rule specifically excludes a fee appraiser (or organization) paying another fee appraiser (a state-licensed or state-certified appraiser). But, what constitutes a fee appraiser or organization under the rules and more importantly within the business model that hybrid appraisal firms operate?

The Interim Rules define fee appraisers (organizations) as entities that “employ” state-licensed or state-certified appraisers to perform appraisals. The definition of an appraisal management company includes the terminology, “recruit, select, and retain fee appraisers” and “contract with fee appraisers to perform appraisal services.” Furthermore, there is no minimum size requirement for an AMC under the rule. Consequently, the same mandate for customary and reasonable fees applies to an AMC that contracts with a panel made up of a single appraiser or one with a thousand appraisers. By definition, the fee appraiser that “contracts” with a hybrid appraisal firm should be paid a customary and reasonable fee.

In reality the definitions of Appraisal Firms and AMCs has very little to do with the reality of customary and reasonable fees set in the marketplace. For example, and this is controversial, I believe the “true billable appraisal fee” for a URAR residential appraisal report in most markets is between $200 and $250.

My friend’s company will receive a $350 fee for an appraisal and pay the appraiser a 65% split ($227.50) that represents the true cost for appraisal services. The company gets paid for and bears the expense of managing the service (managing, reviewing, processing, delivering etc); the appraiser gets paid for performing the appraisal service and bearing cost of performing the service (data sources, E & O, software, licensing, education etc.).

My company (that employs over 50 staff appraisers) may receive a fee of $350 for an appraisal assignment, we in turn could pay an employee a 50% split ($175). Again, part of the fee is for management but we bear the cost to employ the appraiser (health care, workmen’s compensation, retirement etc) and perform the appraisal (data sources, E & O, software, licensing, education etc).

An appraiser who performs appraisal services for an AMC may receive a $200 to $250 fee for appraisal services they bear the cost for those services and not management. In reality, and on the presumption that it takes approximately 5 hours to complete a URAR, the billable rate for residential service is approximately $40 an hour. That compares to $75 per hour for a plumber or contractor and $150 an hour for an accountant.

Change

I believe this disconnect is a result of the default structuring of our appraisal industry and how we do business. It is unrealistic to expect the federal government to legislate fees that will compensate appraisers for their competency, ethics, experience and education. Fundamental change must occur in how we operate, organize and master our business. Appraisers will survive if they shrug off the cloak of individualism and are willing to embrace collaboration.

This can be achieved in two ways:

1. Through a dynamic shift in business practice that challenges the hybrid appraisal firm, contracting of labor and splitting of fees.
2. Through willing and active cooperation in appraisal organizations, groups, and coalitions.

The business model for the appraisal industry has always revolved around a “lump fee” and how it is carved up or “split”. Few other industries or professions operate in this capacity. Appraisal firms and talented professional appraisers must re-examine the dynamics of employment structure, costs, profit and time-management. Eliminating the concept of fee-splits will liberate the appraisal professional and allow them to consider compensation in terms of scope of work and billable hours.

Traditional appraiser-client relationships have changed and the appraisal profession must adapt to a restructured monopolist and anonymous client base. .Appraisal firms hold the key to maintaining and preserving an appraisal profession faced with the reality of extinction through attrition and alternative, cheaper methods of valuation. Appraisal firms provide mentoring and training to new appraisers; guidance, benefits and services to existing appraisers and a career-path that allows appraisers to grow in their profession.

Appraisers remain unconvinced and ambivalent about the necessity of belonging to a professional organization or coalition. Until they change, appraisers will never realize their true professional potential. Traditional appraisal organizations such as the Appraisal Institute provide excellent education and guidance. Designated appraisers (rather than just state-licensed or state-certified) command the highest fees and professional respect. Grass-root organizations have successfully lobbied state legislators for the passage of appraiser-friendly legislation. Appraiser Coalitions sponsor education, seminars, and chapter meetings. Appraiser blogs, forums and message boards are available 24 hours a day for guidance and discussion. As Appraisers we must be active participants in our own profession.

 It is time for our profession to evolve from individualism towards unity, strength and cooperation. Only dead fish go with the flow.

AUTHOR: Ron Stickelman Jr., MRICS, SRA President Stickelman, Schneider & Associates, LLC 1130 Channingway Drive Fairborn, OH 45324  Phone: 937-879-6900 (office)  eMail: realitycheck@stickelman.com  Website:  http://www.stickelman.com

HVCC gone! Now what? - Setting Goals for 2011

GUEST AUTHOR:  Ms. Lore DeAstra, MBA, SRA, CDEI, ACB, CL has been involved in the real estate industry for over 24 years as a commercial and residential real estate appraiser, instructor, investor, sales person, and property manager. She has written many articles and courses, published nationwide. Her mission is to improve the real estate industry by offering practical information for real estate professionals and consumers. To contact Ms. DeAstra, please send an email to Lore@continental-appraisal.com.

Since last spring, most appraisers have been on a roller coaster ride unlike any other.Now that the HVCC has sunset, have you thought about your next steps? After all, this is a great time to plan your goals for 2011, while thanking your current and previous customers. First, you will need a target, right?

Diversification is the key to survival and prosperity in the new real estate world. This article gives you easy ways to set measurable goals that will increase business to diverse target markets. As a result, you will keep an eye on your goals, help others, and increase your income. Start where you are, really?

Questions to ask:

How much more business do I want?  Set a realistic goal that is measurable. For instance, “I want to increase our appraisal business 20% within the next 12 months” The easiest way to accomplish a goal is to break down the task into believable steps.

 

As shown, you will need to complete two additional appraisals per month to increase your business by 20%. Breaking down the task into small increments makes a daunting task believable.

Are you willing to spend ten minutes a day to increase your business? Start small so you can obtain effortless victories such as one phone call a day.  Earning new business has a 10% success rate, while referral business has a 65% success rate according to Tom Hopkins, the most successful sales trainer in the world.

Who do you contact?  Open up your database and contact everyone you know who fits your target market such as your attorney, banker, accountant, insurance agent, sales agent, or friends/neighbors.

What do you talk about?  According to Hopkins*, “Never begin any selling cycle until you have taken a few moments to put yourself in the shoes of the other person”.  (* Tom Hopkins, SELLING FOR DUMMIES. Foster City. CA. IDG Books Worldwide, Inc. p. 15.) 

For instance, ask them how they are, and how can you help them* per assignment or based on an hourly rate such as:

• Attorney: Appraise properties involved in estates and trusts.
• Banker: Appraise or review properties in their portfolio.
• Accountant: Appraisals for tax or trust purposes.
• Insurance agent: Appraise real estate via cost approach for their policies.
• Sales agent: Measure homes for their listings, complete a pre- listing appraisal, review their Competitive Market Analysis, or offer to answer questions at a sales meeting.
• Neighbors: Complete a market analysis of their home for tax and insurance purposes. If you are competent, offer to compile an energy audit for a small additional fee to help them save on utilities bills.

* Make sure you apply the competency rule according to USPAP.

Bottom line: you will receive a better reception with less effort by contacting people who are familiar with you and your work. If you are like me, rejection is demotivating.

Are there any meetings that your target markets will attend?  Search in your area for functions this year and 2011 based on your target market.  Functions might include conferences or luncheons attended by real estate sales agents, appraisers, attorneys, paralegals, bankers, accountants, government agencies, or mortgage companies.

What else can you do? 

• Deliver candy attached to your business card to everyone in office. 
• Do you blog?  Offer to mention them and their company.
• Send an eCard to those in your contact list. 
• Use the social media sites (Facebook©, LinkedIn©, MySpace©) to keep in touch, advertise or send information that interests your target market.
• Ask your target market who they can refer that will benefit from your services.

There are many books, classes, seminars and others available nationwide: many online that will help you with various topics. You may learn a new skill and earn continuing education (CE) at the same time. As your confidence and script improves, so will your pocket book. How do I know? While writing this article, I made three phone calls that took about half an hour. Within a few days, I received an appraisal assignment from a referral. Besides the extra income, it was easy and fun to re-connect.

Take a few minutes, NOW, to determine the type of clients you have, who you want to work with, and how you can diversify while developing mutually beneficial target markets. Many of the software programs used for our bank accounts compile a report in seconds. Determine a believable amount of money you want to earn and let your fingers go crazy! Who knows, you might even enjoy catching up with folks you have not connected with for awhile.

Last, if you pass along your success stories to: Lore@continental-appraisal.com , I will compile a follow-up article that is a win-win for everyone. Make sure to let me know if you would like credit, or not. Thanks!'

AUTHOR: Ms. Lore DeAstra, MBA, SRA, CDEI, ACB, CL has been involved in the real estate industry for over 24 years as a commercial and residential real estate appraiser, instructor, investor, sales person, and property manager. She has written many articles and courses, published nationwide. Her mission is to improve the real estate industry by offering practical information for real estate professionals and consumers. To contact Ms. DeAstra, please send an email to Lore@continental-appraisal.com.

When are Usual and Customary Fees’ applicable to appraisal assignments?

Appraisers…….

I spent time Wednesday 8/04/10 discussing the Dodd-Frank law, and the “Usual and Customary Fee” mandate within it, with an experienced appraiser on the east coast. Also Wednesday, two e-mails arrived which ask appraisers to fill out a ‘fee survey.’

The basic question is ‘when are Usual and Customary Fees’ applicable to our assignments? The actual answer is July 22, the day after the President signed the bill. That fee implementation language is contained in the bill and is separate from Appraisal Independence issues that regulators will define up to 90 days later.

Some people are under the impression that there is a 90 day waiting period before fee implementation. In my opinion, that is incorrect, because the ‘up to 90 days’ as mentioned in the bill applies to the Appraisal Independence aspects of appraisal ordering only, not to fees. It is designed to allow the new “Bureau” time to write and distribute their new Interim Final Regulations (which is an oxymoron!) concerning independence issues. Those probably will be very similar to FIRREA, HVCC, FHA, and other regulators’ policies.

So what are “Usual and Customary Fees?” The answer: It Depends. There is NO one mandated fee that must be charged by the appraiser. “U&C” fees vary by region, and frankly, between appraisers in the same region.

The bill does say that “U&C” fees “may” be based on ‘evidence…established by objective third-party information, such as government agency fee schedules, academic studies, and independent private sector surveys. Fee studies SHALL EXCLUDE assignments ordered by known appraisal management companies.’ The bill says ‘lenders and agents SHALL compensate fee appraisers at a rate that is customary and reasonable….in the market area…’ Complex assignments can have a higher fee than a typical basic assignment based on difficulty and additional scope of work requirements.

So, in my opinion, appraisers are free to consult various fee schedules, and decide for themselves what they will charge any client for a particular service. But I will tell you (from personal experience since July 22) that AMC’s are still ‘shopping’ appraisers to find the lowest fee.

For 20+ years, the agent business model for assignment fees has been ‘mandated’ by lender agents – for those assignments in which an agent is involved. In effect, it’s been price fixing, which is illegal. But nobody had the gonads (or desire) to seriously challenge this, and individual appraisers were powerless to reject it if they wanted to continue working for particular lenders who were using agents. Now, with the Dodd-Frank law, that model has been overturned. And with it, if the agent or lender refuses to pay a “U&C” fee to the appraiser, they can be heavily fined.

As a result of this legislation, agents and lenders are renegotiating their contracts now, anticipating that appraisers will begin asking for fees more in line with what they would normally charge local clients that don’t use agents for order placement.

There are currently two ways to research “U&C” fees in your area…VA fee tables and the alamode anonymous survey for the entire country, broken out by county.

Two other established companies are also attempting to collect fee info. One is entirely anonymous, but based on an entire state only.

The other is designed to collect contact info of the survey participant and you cannot fill out the fee survey until you provide contact info….but the survey drills down to the county level in each state and includes several different report types. I don’t appreciate this data collection aspect used to promote the sponsoring company. You can decide for yourself how accurate of required contact info you want to provide, but it may be interesting to see what kind of fee data they obtain. The other aspect of this survey is a ‘subscription’ feature which will allow lenders and agents to gain access to the data……..and possibly the contact info of the survey participants who provide the fee data. That makes me very uncomfortable.

AUTHOR: Dave Towne Towne Appraisals dtowne@fidalgo.net Washington State 360-708-1196 & Appraiser Education Service