Dear Appraisers, Why do You Care about Your Competition’s Fees

As appraisers we often wear at least two different hats. You have heard me talk about the business owner cap versus the technician cap. While we often play both roles, I like to think of myself, first and foremost, as a business owner. As a business owner, I am constantly trying to think outside the box for ways to improve the success of my appraisal business. It is interesting to me as I am involved in many different appraiser groups and discussions, fairly often I hear a conversation where someone is complaining that their competition is not charging enough. I think the idea behind this complaint is that since the competition is not charging “enough” (whatever that means), the expected price of an appraisal goes down and they will lose business if they do not lower their own fees.

Let’s unpack this. Whenever you complain about someone else’s fees, you are making a judgement about someone else based on your own mindset. Fees only tell one part of the story. You do not know the scope of work, the determination of the client, or their office setup, etc. For example, my office is currently set up in a way that is quite different than most of my competition. This setup allows me to do appraisals with less overhead costs per appraisal. Which means I could (notice I said “could” not “do”) charge less for appraisals and still make approximately the same amount as my competitors. 

Fees are ultimately a business decision. More importantly they are mine and your business decisions to make. If it makes sense for your business to charge more or less than what is “normal” (again, whatever that means), then good for you. I stand behind you. 

Ultimately, a business owner should not be thinking in terms of fees in relation to everyone else’s. They should be thinking in terms of what decisions make sense for their own business. I’ll say it again: fees only tell one part of the story, so it is a waste of time to judge your competition based on fees or really to judge them period. Focus on your business and charge the amount that makes sense for you and your business. 

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode:

6 Comments on “Dear Appraisers, Why do You Care about Your Competition’s Fees”

  1. You should know what the “market” will bring for your product as to NOT leave money on the table. Once I’ve established a range of “market” fees for an order (what my peers would do), I will adjust based upon other factors. Am I really slow or overbooked? How does this client treat me, do they pay quickly or require babysitting, lots of silly revisions etc.? Is it close, is there available data? Is there an AMC involved? I agree that many worry about this to much… Know what your worth, research the property and what the market will bear and go make a living….

  2. If a business owner cares about profit, it is wise to know where the competition lays.

    If you are an employee with a fixed salary, it doesn’t matter what the market charges. You make no more or less as an employee.

    In our market, there are a countless number of appraisers not charging enough for their services and they are leaving money on the table through not knowing their market and what the market can bear for fees.

  3. The market in the Greater Boston area has been nuts for a few years. In this type of market, I will charge as much as possible and oftentimes get the assignment. I have heard from various clients that appraisers are booked out for weeks. I book out about a week, so that I can address the OTHER thing that clients want, which is turn time. Right now my mantra is high fees and reasonable turn time. Each appraiser can fine tune that approach. Get as much as you can today. Tomorrow your client might forget about you. Especially the AMC’s.

  4. I pretty much agree with everyone who posted. Dustin has an important point, we are all running businesses first and foremost. I have been in the business for 50 years and have seen many cycles. Sometimes you get hammered and sometimes you have clear sailing. Right now it is clear sailing. It is critically important for appraisers to pay attention to fees now as much as possible because there will be the inevitable down cycle that will be coming. You will suffer the valleys so you can’t afford to clip off the peaks. Also, focusing on the competition beyond just basic awareness is usually a waste of time. Thinking about them won’t pay your bills.

  5. I really like Greg’s comments and I operate like he suggests. Right now, I like to average $75 to $100 / hour so I try to factor how many hours an assignment will take and price accordingly. We are seeing the best fees that I have ever seen in the appraisal profession. Hopefully we will be in this environment for a couple of more years……….

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