By Ryan Lundquist www.sacramentoappraisalblog.com
I do lots of private appraisals. Lately my ratio is probably 80-90% private easily. I have a pretty good sense of what the market will bear for private work, namely estate appraisals. In no way am I saying to charge more or fix prices, but remember that consumers are used to putting down a good chunk of change for mortgage appraisals. We know the appraiser does not see the full fee, but the consumer pays the full fee. Thus I find it puzzling why an appraiser would quote well below the market rate.
One other thought. There are always clients who want to pay less. I used to put up weekly posts on Craigslist years ago to try to attract private work. But you know what I found? Everyone and their mom wanted a big discount. It was like I was competing for the lowest bid, so I stopped posting their entirely. The moral of the story? As business owners and professionals, we choose our clients and we are in charge of our fees too. Just know the market and price accordingly (which is what we would tell Realtors to do with their listings).
Here is an image I made to help show the real cost of accepting lower fees from AMCs as well as undercharging for private work. Again, this is not about price fixing, but rather the financial consequences of the current AMC situation, accepting lender work at a below market rate, and charging under market rate for private work. There is a huge cost. When looking at the numbers, if we charge below market, we might end easily working for weeks more each year (some well over one month). Yikes.
Many thanks to Ryan for these great comments and graphs. He posted this on Facebook and an appraiser email chat group.
Hi, I think your blog might be having browser compatibility
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some overlapping. I just wanted to give you a quick heads up!
Other then that, great blog!
thanks for the info. I very, very seldom use IE but will check it out.
I have been preaching this for over 5 years however there are appraiser that need to generate income to survive so it is difficult to raise your fees and get very few assignments. The other mistake that appraisers make is when they respond to surveys for their fees. If you are doing most of your work for AMCs you probably should not respond to any Fee Survey. If you do respond to a Fee Survey, do not put in what you are getting paid from the AMCs, put in what you would like to be paid if you were working directly for the lender. Dodd Frank regulations state that Fee Surveys which are used by AMCs to justify the fees paid to appraisers must NOT include fees paid by AMCs, do not help the AMCs by quoting low fees in any survey. Remember that the borrower is now paying anywhere from $ 550 to $ 650 for a typical appraisal and the lenders do not seem to have any problem with figure.
It must be nice to be able to charge whatever you want for a fee but that doesn’t really work in my area. I can “want” $415 for an appraisal, but if clients don’t want to pay that, or other appraisers will take $350 then your graph doesn’t work, as I will earn $0. Do you also have a graph showing the cost of holding out for higher fees?
Ryan excellent information and great perspective! May I have permission to repost with property attribution of course?
Hi Mike. Feel free to share. No problem at all. A link back to my blog would be great.
I thought I’d have to read a book for a dicsrveoy like this!
I Am Going To have to come back again whenever my course load lets up – however I am getting your Rss feed so i can read your site offline. Cheers.
If the manager can’t make a decision and is forcing it on Borman, fire the manager and promote Borman to the position. A manager refusing to make a personel decision would be like a reporter refusing to write.
Ryan this is great…..We all have goals of income to achieve every year. This puts it right in front of us.
Thanks Joe. It’s amazing how chopped fees here and there can really add up.