Take Some Time OUT of Your Appraisal Business

It wasn’t so long ago that, like many real estate appraisers out there, things just didn’t seem to be adding up for me. I was working plenty of hours, but I was still living from paycheck to paycheck. It was like that for most of the first twelve years that I ran my real estate appraisal business.

Go Create Some Value WorkshopEventually I decided that enough was enough, and I needed to make a change. I started to study successful business people, both living and dead, and found the common threads: principles that, regardless of the industry, were a key to every person’s success. I called these the ‘principles of prosperity’.

Out of all the principles of prosperity which I identified, OINII was the single most important one. OINII is an acronym I invented, which stands for ‘on it, not in it’. The ‘it’ in question is your business.

I meet a lot of real estate appraisers in my role as The Appraiser Coach, and time and again I hear that there simply ‘isn’t enough time’. Well, I’m here to tell you that there is enough time; it’s just a question of how you use it.

If you spend all your time being a ‘technician’ – doing inspections, setting up appointments, finding comps, and so on – you can get lost in that work. You’ll always be more of an appraiser than a business owner. To truly see where your business is going, identify the problems your business has, and work out ways to fix those problems. Periodically, you need to get above everything. You need to rise above the proverbial canopy, and take a 30,000ft view of the situation.

So, how do I actually do this? Throughout the week I’m constantly making notes. Every time I have an epiphany, or think of a problem, I’ll write it down. Each Monday I wake up at the crack of dawn and head to a quiet place in my house. I turn off my phone and, although I take my computer, I make sure the internet is off: I don’t want any distractions. You can find more info here on utilizing the internet for your benefit and learn so much.

I then go through all the notes I made, one by one. If the notes relate to a problem, I work out solutions to that problem. If it’s an epiphany, I work out how to turn it into practice. Later that day I have meetings with my staff. We’ll go through everything I came up with that morning, then immediately start putting the new processes into practice.

Ladies and gentlemen, I’m not exaggerating when I say that, if it wasn’t for OINII, there’s absolutely no way I’d be where I am today. OINII makes me work on my business, not just in it. It’s crucial to looking at the bigger vision, setting goals, and dealing with issues. Maintaining the discipline to do this every single week isn’t easy, but if you don’t follow the principle of OINII, then I promise you any number of other principles will keep falling through the cracks.

If you want to make your business more effective and more efficient, and start working smarter, not harder, then OINII isn’t simply an option. It’s a necessity.

For way more information on Working On It; Not In It (OINII), see my Go Create Some Value Online Workshop.

For more information on this subject in general, please download and listen to The Appraiser Coach Podcast Episode 018 – Working On your Business Rather than In your Business

13 thoughts on “Take Some Time OUT of Your Appraisal Business”

  1. Pingback: Take Some Time OUT of Your Appraisal Business - Appraisal Buzz

  2. Patrick Goebel

    Hi Dustin. I wish I had known some of the driving principles of Steve Covey, Michael Gerber and Greg McKeown before we plunged into a franchise “opportunity” that presented itself 3 years ago. We are negotiating the buy/sell on it now. Turning a profit, but at the expense of neglecting my bread and butter. Long and short is I will be laser focused on actually buiding my appraisal business post franchise funeral.

    I have been a residential appraiser full time (50-60 hrs) a weeks going on 27 years. I am ripe for positive change. Have trained 3 appraisers during this time and currently have 1 still with me for overflow going on 14 years. Have home officed most of this time. I am seeking solutions to get my technician hours way down and bottom line up. Does the “Go Create Some Value” workshop generalize methods and systems that can be applied universally? Or is it a la carte for the individuals business model? Almost ready to work on it, not in it! BTW, met you at an ATA conference in my hometown of New Braunfels, TX several years ago. Best to you ~ Patrick

  3. Great post Dustin. I totally agree with working on your business instead of in it. A quote I once heard but don’t have the source was, “I earn the most when I work the least.” To me, what that means is not be lazy, but focus your efforts on making the people around you successful. If you do appraisals, you can only make as much money per hour as the number of appraisals you do. If you help your appraisers be efficient through process and grow the business, there is no limit.

  4. For residential appraisers besides the repeal of the Dodd-Frank law is the elimination of the hated (AMC) or Appraisal Management Companies by home owners, realtors, mortgage brokers, bankers and appraisers. These terrible AMC’s have increased the cost of a real estate appraisal, while appraisers have been forced to accept lower fees than those from 2007 and AMC’s pocketing the actual higher fees.

    AMC’s have not only increased the cost, but have also lowered the quality of appraisals, by looking for the lowest fees, instead of the most knowledgeable, increasing turnaround times by having automated computerized reviews handled by e-mails instead of asking appraisers to change or correct the item in question by phone.

    Without knowing directly from the lender or realtors the scope and purpose of the appraisal assignments at the beginning, the appraiser quite often does have the correct information for an accurate appraisal report. Since 2008, appraisers cannot directly talk with the lenders, which are suppose to be their clients and often receive appraisal work for a single family home, instead of the actual 2-4 family (fourplex) zoned land use.

    It would be great if no officers of the Appraisal Institute and other Appraiser Professional Groups
    would not be paying board members of AMC’s. Dodd-Frank & AMC’s have casued 95% of residential appraisers (20% have left the profession) have not surpassed their 2007 net incomes and over 3% per year are leaving the appraisal profession. Most appraisers hope that President Trump can “Make Appraising Great Again”. Then we might be able to take some time off from our (future busy) appraisal business to attend your appraisal conferences.

    1. Luis:

      I’ve been doing this for almost 15 years. I do more non-residential work than residential work, but our firm has a residential department. When I started the residential appraisal fees were $250 to $275 and now they are $425. Some increase in fees, but for what we are putting in them, still not enough. Non-residential fees have come down because there are a number of individuals who are low-bidding assignments and doing a very shoddy job on those assignments. I’ve seen the low-bidders’ appraisal reports and I can tell you that the clients of those individuals got exactly what they paid for – crap. This is for both residential and non-residential assignments. No support for adjustments, no highest and best use summary, but instead just a bunch of numbers in a grid and a box checked on highest and best use. Putting it against USPAP, it doesn’t even begin to pass the test. Sad, but true.

      I’ve said this time and time again. Until we – those of us who do it the right way – file formal complaints and turn these folks in to the disciplinary boards of their respective jurisdictions, they will continue to put out shoddy work, give the rest of us a bad name, keep fees low, and drive many good people out of the profession. They will never charge higher fees because they don’t have the confidence in their own product to do so. I’m not sure what residential appraisals cost in your area, but in our area they generally run at about $425. I can’t tell you how many AMCs will send emails with a stated fee of $325 (the C&R fee for our area is $400 by the way). When I counter with our fee schedule then I get the response of “another appraiser has accepted the assignment for our proposed fee”. First, that shouldn’t even be possible since the stated fee is below C&R and secondly, they are probably one of the fools that has no clue of what they are doing. Show up, measure (if they even do that), take a few photos, come back to their work station, throw in 3 “comps”, throw a bunch of +/- adjustments, blow off the cost approach (for no good reason), blow off the income approach (too difficult to do), and send it on. Sad, but true.

      When I get those reports – and I get them quite often – I put them in a stack and will find the time to turn them in to the board. I tell all appraisers in our office that before they send out a report to assume 2 things: 1.) it will land in more hands than just those of the client, and 2.) that it will be send to the appraiser’s board. I’ve trained or other appraisers in our office have trained people who take the approach of “I know this bank and they don’t really care about he value, they just need something for their file”. That’s the wrong way to think about it. The Uniform Standards of Professional Appraisal practice are just that – UNIFORM. It doesn’t matter if you’re doing the appraisal for the bank, the United States Supreme Court or your next door neighbor whom you’ve known since high school. The Standards apply to everyone for all appraisal assignments – thus the use of the term UNIFORM. You may do it for a lender, but how many times does the borrower get it? How many times does it get reviewed by another appraiser (a peer)? It’s very possible it could even be sent to the disciplinary board if someone chooses to take the time to do it. So, assume it will be. Can you defend it? Is it USPAP compliant? If you can’t then it isn’t, and it’s not leaving this office until both questions can be answered with a “yes”. Most appraisers don’t think that way. Some may not think that way because they haven’t thought about it along those lines, but many won’t do it because they don’t care. Remember, show up, measure, photos, 3 “comps”, throw in some random numbers, 1 approach, send it. Sad, but true.

      Don’t let anyone tell you that you can’t talk directly to the loan officer. You can, but you can’t discuss specifics about the assignment. I’ll see loan officers all of the time at lunch or run into them at a ball game. If I am working on something for them they will sometimes ask “Did you get everything you needed on that assignment?” I’ll respond with “Yes. If I need anything else I’ll email Jane Doe with your bank” or “I’m still waiting on (insert something), but I emailed Jane Doe with your bank and let her know. She said she’d get it to me sometime today”. We each go our separate ways. No wrongdoing at all. That is a huge fallacy with Dodd-Frank or Best Practices that some folks have totally gotten wrong. You are more than welcome to talk to the loan officer. Just don’t talk value to them or anything else specific to the assignment.

      The one thing we can all do to “Make Appraising Great Again” is to get rid of those in the profession who have no business being in it. If you see a bad report then send file a formal complaint and send it to the disciplinary board in your state. When we get rid of those people, the playing field will become equal and more quality driven. The result of that will be better fees and more confidence in what we do. If we don’t get rid of those people then you can expect more of the same and possibly worse. That is the state of our profession. Sad, but true.

      KY Appraiser

      1. In San Diego (15+ years ago) our firm at the time charged $400 for conventional loans, $450 for FHA, and $700 for units. With no state enforcement of C&R fees, and with around 80% of all residential business now going through AMC’s, the typical fee from the typical source after the typical split fee is around $325 for conventional loans, $375 for FHA, and around $500 for units. With the rush to do non-lender work by many appraisers, REDUCE those numbers by about 10 to 20% for civil use assignments. These fees are from my primary zip codes (Ocean influenced areas) where year to date the typical market value is near 1.1 million.
        Now the good news. After what was in essence a VA hiring freeze for the last 10 years, the VA is s l o w l y adding appraisers in our area. While Dustin is in the top 1% of our industry, I’m sure the typical appraiser, is in the typical market, where typically a high percentage of the work available is filtered by way of AMC’s.

        Seek the truth.

  5. Dustin Harris

    Patrick

    Thank you for the comment.I’m not sure if I understand your question entirely regarding the workshop, that it is a workshop very specific to appraisers, but there are many general principles of good business taught therein. I hope this helps. Let me know if I can help further.

  6. Fake news alert! You’ve said that prior to your revelation that you used to make $100,000 a year (10 to 15 years back), but yet you live in or near Idaho Falls Idaho where the cost of living is extremely low. If you lived a typical life style then compared to what Bankrate says are the expenses of today (typical mortgage less than $1,000, rent near $600), the facts may not support your paycheck to paycheck living. Your idea of reality is jaded by you winning the location lottery as many parts of the country may be twice as expensive to live in, but may only pay a fraction of what you get locally.
    Dustin, you have done and are still doing more harm to this industry than you are helping. Your relationship with the bigwigs (Joan Trice, etc. / Valuation Expo) gives them the impression that every appraiser can do 3 to 8 appraisals a day as you have claimed in the past. If you outsource 90% of the appraisal process to non-licensed office staff while you do a quick 30 minute review before sending off, do not advertise to the world that you have found the fountain of youth. When you say “If you spend all your time being a technician …. FINDING COMPS, you can get lost in that work”, it is you who has become lost in this profession ($$). I know, I know, you have consulted all of the experts and even though you turn squares into circles, they all say your game of shells is legal.
    Seek the truth.

  7. Patrick Goebel

    Bill Johnson,

    I have decided you irrationally fear Dustin. We are all individuals with different skillsets and tolerances. He is sharing his. He is not taking your livelihood and is not endangering you in any way. You spend alot of energy worrying about his business model. I have been driving since I was 15 and like driving (even fast). I do not aspire to be an indy racer, so I don’t spend time worrying about what they are up to. Some of them do really well financially and use every tool in the tool box to win. I am not mad at them for succeeding. I don’t worry that they will interfere with my driving from day to day. Think it over.

    1. Patrick, you don’t get it. Go place the following headline in your search engine of choice “Record Bank Earnings, Basel Update; Appraisal and Collateral Trends” and it will lead you to Mortgage News Daily. The author Rob Chrisman, either runs in the same circles with Dustin, or with there common presence at such things like Valuation Expo, I would bet Rob knows of Dustin. I think in part, because of Dustin’s preaching’s, (3 to 8 appraisals a day / tax returns at $500,000+) the most widely viewed mortgage website (insert loan officers & lenders here), freely believes some of the following as it relates to appraisers. From the article, Rob paints a picture that appraisers on average complete 600 appraisals a year at $700 a pop and gross $420,000 a year. I would bet Dustin is in the top 1% of our industry (gross fees / individual), but yet via his platform the message from the likes of Mortgage News Daily seem to want the Dustin’s of the world to be the norm and not the 1% exception. I would respect Dustin more if he used his platform to take a hard look into the real issues of your industry, versus the path he has chosen to take.

      My two cents are worth a dollar.

      Seek the truth.

    2. Patrick, check out this statement “On November 11th, 2016 Rob Chrisman will join other appraisal industry stakeholders in kicking off Valuation Expo in Las Vegas giving the keynote address” (Dustin had a booth). You have people like Rob Chrisman who in the prior article I mentioned, thinks the typical appraiser grosses $420,000 at $700 per appraisal. The industry demands that the 99% (perhaps you and I) (not Dustin / gross pay per year) speak up about the reality of our dying profession. The people who are giving keynote addresses about our world, are ill informed and quote those at the very top (Dustin) instead of focusing on the realities as outlined by Joan Trice’s annual survey.

      Seek the truth.

  8. Thanks for the insight. I have spent the last 5 years as an appraiser “like a long tail cat in a room full of rocking chairs.” I am taking on my first trainee and it is forcing me to take a step back and look at my own career and where it is going. Most of my time was spent “in it”. Now I am beginning to realize how much fun and satisfaction “on it” can be. Nothing like taking on a new phase in your career and realizing the rut you get into.

  9. A land appraisal can be a nightmare for inexperienced appraisers, but with our humble years of experience, whether it will be used for agricultural, residential, or commercial use, we will be able to put the right valuation on your land and give you the right market price it currently has.

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