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.