Customer: Thank you for responding to my need for winter firewood. How old are you?
Woodcutter 1: Twenty-Three
Woodcutter 2: Forty-five
Customer: How much experience have you had cutting wood?
Woodcutter 1: Two years.
Woodcutter 2: Twenty-seven years, sir.
Customer: What credentials do you have?
Woodcutter 1: None.
Woodcutter 2: I am certified by the State Woodcutting Board, a member of the Woodcutters Association, and the Chair of the Regional Woodcutting Coalition. Due to my certification, I am required to go the extra mile. Before I begin cutting, I will cordon off a fall area so no one in the area gets hurt. I cut with a saw that has passed a 72-point inspection. I will personally inspect each and every cut to verify the integrity. All blocks of wood I stack will be visually verified pest-free. Oh, and I am also licensed and bonded.
Customer: Can you both do a good job?
Woodcutter 1: Yes.
Woodcutter 2: Yes.
Customer: The job pays $120.
Woodcutter 1: Okay.
Woodcutter 2: But, I will get extra because I have more experience, am licensed, and follow a set of ethics that make my scope of work much larger than that of Woodcutter 1, right?
Customer: The job pays $120.
Estimates vary, but currently there are approximately 10-15 BPOs or Evaluations ordered for every full appraisal. The fees paid out to those completing alternative valuation products are in the billions (with a B). Appraisal fees are estimated at $850 – $950 million (with an M) annually.
For a variety of reasons, most appraisers are not doing these types of products. One of the biggest challenges is the extra scope of work put on appraisers that is not put on others who can also also complete this type of work. As “appraisers,” we are required by law to follow the Uniform Standards of Professional Appraisal Practice (USPAP) whenever we complete a property valuation for a client. This adds extra scope of work that is not placed on the shoulders of others completing the same type of work.
When asked, most clients would rather use an appraiser for their valuation job than another, less-qualified and less-experienced person, but an appraisal comes with extra hoops to jump. Which woodcutter would you hire? Woodcutter 2 comes with age, experience, certifications, and other qualifications. She would likely do a better job than Woodcutter 1. Yet, Woodcutter 2 – by nature of their title – must do more work than Woodcutter 1. Perhaps the Customer should consider paying Woodcutter 2 more for the extras, but the extras are not necessarily needed. He just needs a little wood cut and stacked. The payment is the payment. Woodcutter 2 just cannot afford to do all that is required of her to do for the payment offered.
Is it time to carve out some state law exceptions for appraisers who desire to complete alternative evaluation products?