Appraisal Fee vs. the Cost of Gas
Two decades ago, gas cost about a dollar per gallon. Let’s face it – almost everything (milk, eggs, etc.) was cheaper, including obtaining and maintaining your appraisal license. But surprisingly, one thing that has pretty much stayed the same is the amount you charge for an appraisal. In 1994, the average appraisal fee for a residential property was $320. Today, the average appraisal fee is $350. This is a 9% increase over 20 years, far below the rate of inflation. In inflationary terms, this means we are currently being paid less than we were 20 years ago.
Let’s compare the average appraisal fee to the cost of gas during the last 20 years. … Gas has increased 239% over 20 years while the amount appraisers collect on average over the last 20 years has increased only 9.375%. This is a pretty scary picture for appraisers. After factoring in the AMC percentage (25-50%) and our overall higher operating costs, it’s amazing that any of us can survive in this business.
My comment: Interesting analysis. I have been setting my residential non-lender fees based on what borrowers are paying for loan appraisals. I am still slightly under those fees. But, if prospective clients call around, some appraisers are charging much lower fees, even close to typical AMC fees. Why? The same reason many appraisers have always worked for low fees, even prior to hvcc. Fear and Greed. Afraid they will never get another assignment (Fear) and don’t want to turn down any assignments (Greed). This applies to all types of businesses, not just appraising. Remember the Primary Rule of Business – There is Always Someone Cheaper. Sometimes competing on price works out, such as Walmart. But, for most businesses it is a death sprial to the bottom.
Click here to see the graph, read the full commentary and comments, and post your own comments!!
Why You’re Not Charging Enough For Your Work, And How To Change That
Source: Forbes magazine. It’s not just appraisers!!!
“If you’re making $50,000 or less in your business, it’s not a business, it’s a job, and it’s not a good job either.” … If you were working for someone else, and had to toil for 18 hours a day to make ends meet and still generated less than $50,000, you’d say something would have to change, right?”
4. Develop stronger boundaries. Start saying “no” to outlandish requests for your time and effort. Know what your time is worth, and demand respect for that.
6. Charge 20% more starting today. Just do it. Then figure out what the right number is within the next few months, and start charging it. You can transition your existing clients to your higher fees in a more gradual way, but new customers and clients need to pay you more, starting now.
Worth reading. Thanks to appraiser John Carlson for posting this most interesting link!!
There isn’t any better diet app – interval.
Ann, Thanks for your newsletter and blog. Your “fear and greed” points are valid but I think the major reason we are taking low fees is “desperation”. I’m getting some social security so I am not so desperate, and I can get by with refusing jobs for less than $500. But most appraisers can’t get up the nerve to tell AMC’s to stick it. They are desperate for work. Course instructors and board members here in New Mexico have admitted to me that a full residential appraisal should be at least $750. A good appraisal should take 15 hours….that would be only $50 per hour…..less than an auto mechanic, a plumber, etc. I think appraisals should be well over $1,000. A location survey is in that range; title insurance is often over $1,000, an individual Realtor’s cut is usually over $1,000…..why isn’t an appraisal worth as much to a real estate deal? Because AMC’s have found a way to game the system, thanks to the idiots in the federal government and their ill-considered regulations establishing AMC’s, and individual appraisers just take it in the chops.
THIS MIGHT HELP: There is a way, via the state appraisal boards, to put the squeeze on AMC’s:
State boards all issue regulations for AMC’s operating in their state. There is no reason the regulations can’t include this:
“AN AMC MAY NOT OFFER AN APPRAISER LESS FOR AN ASSIGNMENT THAN THE AMC RECEIVES FROM THE CLIENT.”
This provision would force the AMC’s to seek payment for their services from the client for which they are working rather than from the appraiser. Appraisers are now being subjected to what amounts to a shakedown or extortion racket (being forced to pay to get a job).
(This was the highlight of a pitch I made to my state (NM) appraiser board on April 15. Of course they haven’t done anything yet and probably won’t unless pushed. I plan to keep on pushing).
“Customary and Reasonable” is a joke….appraiser associations appear to just want appraiser’s money like everyone else….individual appraisers should get on their local state boards directly, and keep it up till something is done.
— Keith Robinson, Certified Residential Appraiser, Santa Fe, New Mexico