“I would never do an appraisal for less than $250.” That – or a version of it – is what I hear many appraisers saying when the idea of a desktop of evaluation is mentioned. “Furthermore, those who are doing these are shooting themselves and the rest of us in the foot. If they would just say ‘no’ to these, the clients would have to order full appraisals.”
These are not bad arguments. I respect both of them, but I don’t see it the same way. Here’s why:
As appraisers, we are held (and hopefully hold ourselves) to a high standard. When we have our appraiser hat on, we are required to follow the standards of USPAP, for example. It does not matter if we are doing a full, URAR-UAD with MC Sheet and original comp photos, a 2055 Drive by, or an evaluation. The standards are the same. What is not the same, however, is the scope of work. Scope can make all the difference in the world when it comes to what we charge for our services. For example, I do not charge the same fee for a drive-by as I do for a multi-family with rental schedule and operating income statement. Why? It is not that the ethical standards are relaxed, it is because my time to complete the two are much different.
Appraisers are used to seeing things through the paradigm of fees. “How much are you getting on average for a full appraisal?” is a question I frequently hear appraisers asking one another. What I almost never hear among them is “What is your average pay per hour.” Well, that is not quite true among my All Star and Dream Teams. These are made up of individuals who see themselves as first, a business owner and second, an appraiser. Professionals work from a per-hour perspective and not a fee-based one.
How much do you charge for a final inspection? When you are asked to drive back out to a property and make sure the chipping/peeling paint got taken care of properly, what is your fee? I am going to make a prediction that it is not more than $200 (if it is, can I come work with you?). Why do you charge so much less for a final inspection with paperwork than you do for a full, 1004? Of course the answer is obvious; the time to complete such assignments is not even comparable.
What if I told you that you could complete an appraisal (and follow all of the USPAP standards) in less time that you could complete a final inspection? Would you be willing to do it for the same fee as a final? But what about liability, Dustin? Good question, and one you should take into account.
It is true that I am an advocate for relaxing the USPAP standards for evaluations. Clients want appraisers to complete these assignments, but many appraisers do not see how it can be done and still follow all of the USPAP requirements (including keeping a full workfile) for the fees the clients are willing to pay. Consequently, these types of assignments are going to others who are not bound by USPAP requirements (no, they are typically NOT being escalated to drive-by or full assignments). A small handful of states have already passed laws exempting appraisers from USPAP when they are doing evaluations. I hope more will follow suit. Evaluations are a multi-billion dollar industry and appraisers need to be allowed a bigger door to entry.
Evaluations have been around a long time, but they are becoming more and more popular for things like HELOCs and portfolio assessment. As appraisers, refusing to do them is a respectable business decision, but it should be a decision we each make individually without unfairly having to complete with others who are far less qualified to complete them.