There’s a whole-lotta-cryin’-gowin’-on-out-there! I subscribe to (and actively participate) in several online appraisal forums. There has been a common theme over the past several years. The common complaint from my peers is that scope is a creepin’, but the fees are a droppin’!
Now, I do not think there is any doubt whether or not ‘scope has creeped.’ Indeed, unless you are doing no-lender work at all, you are completing much more per appraisal than you ever have in the past. From extra pictures, to additional forms, to more lengthy explanations; the appraisal process simply takes longer now than it did four years ago. Fair or not; that is just the way it is!
The question I want to tackle in this particular article is, are appraisal fees REALLY dropping along with the scope creeping up? I posed this question several weeks ago on a few of the online gossip centers that I actively participate in. Specifically, I asked for hard evidence that could answer the question one way or another. Surprisingly, I found none. Oh, I got plenty of feedback—but no statistics, graphs, scientific studies, or the like. Rather, I received mostly anecdotal evidence. “I used to get paid a bazillion dollars per appraisal when I worked for the local ABC Bank, but now that they use XYZ AMC, I get $3 per assignment.” Stuff like that.
I also received a plethora of comments similar to this one, “My fees have not dropped, but my average dollar-per-hour of work has dropped because of scoop creep.” To anyone doing AMC/Lender work, this is a no-brainer. I think it would be a rare exception to find an appraiser these days whose dollar-per-hour pay has actually increased over the past four years. Mine has, but I am a ‘rare exception.’
I began thinking about this issue when I received an article from my good friend, Dave Towne in Washington state. Dave writes, “…fees appear to be increasing. I track all orders in an Excel spreadsheet and have seen fees creep up this past year” (CLICK HERE for the entire article). Of course, that got me thinking, so I did some unscientific, completely biased, one-sided, and skewed to support this article research of my own. What I found was that Dave is right; appraisal fees have been on the rise (if ever so slightly) this past year. In fact, my average appraisal fee took a slight dip just after HVCC, but has actually been on an almost imperceptible rise ever since!
Again, I am not talking about pay-per-hour here. I get the whole, “My requirements per assignment have gone through the roof” thing. Believe me, I do. What I AM suggesting is that we be careful of our language. To say, “What is required of us on each appraisal is increasing, all the while our pay per appraisal is decreasing,” may not be completely authentic.
I was going to close this article, but I am on a roll so…. here’s the other thing that drives me nuts. Can we stop using the old line about how we have not received a raise in 20 years and how unfair that is? It is just not true. Sure, we may be getting the same (or a slightly higher) fee we received per appraisal in 1999, but my income has gone through the roof. So has yours—if you are intellectually honest about it. Even after you figure inflation, scope-creep, and the bad economy, we are still making a ton more money than we were two decades ago (maybe not 3 years ago, but definitely more than we were in the 1990’s). Why? Better efficiency, increased data access, and HUGE improvements in technology. If you are not doing twice the volume in less time than you were 20 years ago (even with scope creep), there is something very wrong.
Do I think there is room for improvement in our industry? Of course. The purpose of this article is not to discredit those who are calling for reform. Rather, it is my firm belief that if we are to achieve real change, we must at least start with an honest conversation. Let’s begin with our language.
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.