I am fuming. Thanks in advance for letting me vent and virtually ‘throw-up’ my frustration all over you. My Personal Assistant accepted an order for a Forensic Investigative Field Review the other day. Originally, the AMC had offered a fee of $350. We countered back at $500 and crossed our fingers… that we would NOT get the order.
These types of orders are becoming more and more popular. As the market has dropped across the nation, lenders cannot sell the collateral they loaned on between 2005 and 2008 for a fraction of the appraised value. Naturally, it must be the appraiser’s fault. I have had an influx of investigative reviews, and 90% of them are from the boom years. 50% of those are currently listed for well under the appraised value just a few years ago. Accordingly, the banks are asking, “What gives?”
Those of you doing these types of assignments have noticed a marked increase in scope requirements over the past several months. Not only do the lenders want to know if the original appraiser used the right comps and made accurate adjustments, but they want you, the reviewer, to prove every aspect of everything said and unsaid (both in the original report and your review report). Much to my chagrin, the AMC accepted our fee and sent us the order. Ugh! I immediately went to work and many, many hours later finished the report. It totaled just over 100 pages by the time I was done putting everything in that the client required. No, I am not kidding. Oh, I am not done. As you probably already guessed, once the report was turned in… out came the revision requests. Six back-and-forths (and lots of cursing coming from my back office) later, I am done with the assignment… for now.
Now, don’t get me wrong; in today’s difficult appraising world, I am happy for any work I can get. What I am not happy with is the fact that I only charged $500 for this assignment. A regular, non-review appraisal on this type of property (multi-family) would run approximately $600 in this market. I charged less than the going price to basically redo the original appraisal (including interior inspection) AND do a review. Oh, and I agreed with the original appraiser’s value!
Between cussing, screaming and throwing things, I vowed I would never accept another order like this again. After I had calmed down a bit (which took a significant amount of time), cooler heads prevailed, and I had an idea… what if we charged a per-hour fee like so many other professionals?
Now, before you start to lecture me, hear me out. I have been in this business long enough to know that you are not going to be able to start telling your clients, “Yeah, send over the order. I will keep track of my time and bill you when I am done.” I am also not advocating that we run our business like a taxi cab and start the meter the minute the engagement letter comes in (that would be nice, but it ain’t in the cards). What I am saying is that we may want to consider running our business like an auto-repair shop. Just yesterday, I took my car into the mechanic. He looked at the problem, looked up the approximate time to repair in a handy-dandy guide and gave me a quote. Now, I do not know if the actual job took him more or less than he quoted me, but he charged me the same number he quoted up front when I picked it up.
How much are you worth per hour? Rather than having a set fee for every assignment, it may be very possible to look at each assignment’s scope of work, quickly calculate the estimated time to complete, and quote the fee based on this information. This is easier accomplished than it sounds as most assignments will still fall into your standard fee range. The process I describe will only take place for unusual assignments.
The fact is — though I thought some of this particular client’s requests were Re-Dik-U-LUS — they were what the client wanted. Like it or not, they are the employers, and we the employees. They want what they want, and whether or not we agree with their mental status, we are here to serve those who send us a paycheck. The question is whether or not we are being compensated appropriately for what we are doing. And that, my friends, is OUR decision.
Now, go create some value!
Dustin Harris is a multi-business owner, but he has found most of his success as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and consultant. He owns and operates The Appraiser Coach (www.theappraisercoach.com) where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth. He is also the Founder and President of Your Appraisal Office (www.yourappraisaloffice.com) which implements some of the systems he has developed to help lower costs and free up time for real estate business owners. He and his wife reside in Idaho with their four children.