How I Make $100 an Hour as an Appraiser

Most sources online estimate that appraisers make an average of $25 an hour. While this used to be accurate for me when I first started out as an appraiser, I have applied principles of prosperity to my business that have allowed me to make much more per hour. Much of what I have learned that has allowed me to be a better appraiser, I didn’t learn from other appraisers. Rather, I studied other successful businesses and business owners and adapted some of their key methods and principles for my own business.

 

Now, you may scoff when I say that I make $100 an hour, but I have had the opportunity to develop and mold a business model that helps me be more successful in my work. Today, I would like to share a little of this model so that you can begin molding your own company and making more money.  

 

There are different tiers or levels of work that we do as appraisers. Tier 1 would be considered basic data entry, Tier 2 would be more in-depth secretarial work, and Tier 3 would consist of the actual valuation component of appraising. Some appraisers prefer to do every task related to their appraisals rather than delegating, but I have found my business is much more effective when I delegate the Tier 1 and 2 tasks, so that I can focus on the Tier 3 tasks.

 

When you go to the doctor, the doctor doesn’t do the Tier 1 and 2 tasks such as checking you in, doing your initial workup, and sending you the bill. Rather, the doctor spends a short amount of time with each patient doing the Tier 3 work, while their staff completes the Tier 1 and 2 tasks. This allows the doctor to use his or her specialty to help more people.

 

As appraisers, we are valuation experts. I would strongly encourage you to spend more time focusing on your specialty and leaving the Tier 1 and 2 tasks to individuals you hire. I think you will be surprised as your volume and quality of work improves, and you will begin to make more money per hour.

 

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 318 – Setting Up Appraisal Office Systems

23 Comments on “How I Make $100 an Hour as an Appraiser”

  1. I’ve been in business 35 years. From mid 90’s to 2006, that worked. Now, the volume is not enough or consistent enough to hire someone. Also, with all the software available, I can do the tier 1 & 2 much faster. I am not in a large market. I only average about 20 appraisals per month. This is not to say I would love to hire for the tier 1 & 2. Thanks for your info.

    Jim Rogers

  2. I agree with Jim, software and paid subscription services has made Level 1 & 2 work much easier and less demanding than hiring. I’m doing 4-5 commercial narratives per month in my market with a moderate sized independent firm.

  3. What are the paid subscription services that you are using to make you more efficient for Level 1 & Level 2 Work.

    1. Hi Wade,
      I use Data Master, it fills out most of the report for me.
      I used to have a staff that typed my reports in, but the volume just isn’t there. It seems like a lot of clients are ordering desk top appraisals as opposed to full reports.
      I guess I’ll be retiring in a few years.

  4. I agree with Dustin. I too only do the Tier 3 work. I was doing about 30-35 appraisals a month when I decided to upgrade my business model to that like Justin’s. The most significant, immediate change was the extra time I had to work on getting more clients. I basically completed all of my appraisals in less than half the time. My turn time went from 7-10 days to 3-5 days. Conditions and corrections went down to almost none and the few that I do get are taken care of by my tier 2 person. I concentrate on the 2 most important things: 1. reconciliation of the final product and 2. customer relations and increasing business. My current clients alone increased their volume when they noticed my better turn time and I pick up at least 1 good 5 star client a month. If you think your clients don’t notice your turn time on appraisals and conditions, think again. They always know what you can and cannot handle. It’s been 5 years with the same business model and I average 80-100 appraisals a month and don’t work much harder than when I was doing half the volume. Thanks Dustin for your advice and insight. I appreciate you man!

  5. I’ve patterned my business after Dustin’s model. Evolved into what I have over the course of a couple years. Currently have T1 & T2 employees that allow me to focus on what I do best. Been that way for about 5 years now. Great business model. I can understand how it doesn’t work for all..but has been a game changer for me. Thanks Dustin.

  6. I been appraising for 25 years. Due to the regulations at that time, I was able to get my license without ever doing an appraisal. My first few months was working under an appraiser I knew. It was great the first month and then refinancing dried up . I then teamed up with a cousin who was also an appraiser for 3 years. That was OK but not great so we parted ways. About that time the subprime lenders and mortgage brokers went crazy and I am a glass half full type of appraiser so I was getting all the work I could handle. Within two years I was up to 30 people and ran $1.3 million through my company. I took home $45,000. The problem is that mortage brokers didnt always pay and I was owed over $300,000 of which I got very little. One day, looking at what I was making, the headaches of 30 people driving me crazy, every one of the 10 people I helped get licenses quitting the day they got their licenses, and the do not use lists I was getting on because my 2 employees that were to look over every appraisal to make sure they were good appraisals and they were not doing their job, I decided to downsize. I went down to a jack of all trades person in my home office and me. With the little money I could afford to pay him, I got what I paid for so I parted company with him. The market went to hell and I just stayed a one man band since them. When the market started picking up, I thought maybe I should give growing my office a try again. I didn’t want another employee in my home office again, I tried just having trainees doing everything from start to finish and I would review the appraisal. The headaches returned. The training time was killing my production so I stopped that. Then I tried one of those companies that had people in the Philippines doing the comp searches and typing the reports. They said the people were trained. They were not. I tried to train remotely but, again, my production fell to nothing. So, I have ended up getting the faster computers I can, hooking up six monitors, importing MLS data into my reports, using Inspect-a-lot to do my field work. They help but not that much. I did train my daughter, who was home schooling her four kids, in how to do desktops. She is smart, easily trained and does a superb job. She is much quicker than me and more accurate in her typing. I would immediately hire someone like her, but, most wont work for what I can pay. I was paying $15.00 a hour and no benefits. I would love to pay a good person more but I cant afford to pay more on the production I am doing now. My daughter was a tax lawyer for BP before she left them to raise her kids so she was an above average hire. Her kids are mostly grown now. She was thinking of just doing the desktops but I have been pushing her to get back out there with her law license and tax law knowledge. I get $100 bucks for a desktop and give her $75.00. She does all the work and I review them. She can make way more than that with her law license and knowledge so she has found a part time position that probably would grow into full time. I would never encourage anybody to go into this business. There is no money in it. I used to do much better but now I do three time the work that I did in the 1990’s for about the same fee I got back then. I am too old to really consider anything else as I am well past retirement age but I have no desire to retire. I am in my late 70’s and still do 15 to 20 appraisals a month. It pays for a lot of living expenses I would have to fund out of retirement income. I would expect my story is familiar to many of you

  7. Great thoughts! We implemented a similar system 10 years ago. Also, everybody went home and with cloud tech, etc we were able to cut out the office expense. I have been at this 22 years. I am a generalist so we appraise it all. I have a right hand person that has been trained to do everything that is on a salary. No split involved. When someone is on a split you are limited on what you can ask them to do due to pay. When they are an a salary you can teach them everything and our production skyrocketed. I hate to hear comments like no one should ever be in this business. I am an MAI and an SRA and my wife is an appraiser. I can only hope my boys would want to join the family firm as I think the opportunity for the next 25 years is great. Granted our roles may change slightly but if you adapt to the change you will make a good living. Remember if you are not willing to change then you are already out of business, you just don’t know it yet because the younger group that is tech savy understands billable hour and not total fee. They understand how to implement the tech to make them more efficient. We never worry about total fee. We estiamte total billable hour. Although fees have not increased much over the past 20 years my time has been cut in half due to advanced tech. So, I got a pay raise.

  8. Novice here. Only wish I had experience you all have. Very disheartening to hear Mr. Lynch opinion of profession. I was under impression a one man show could easily net 200k after a year or two of being certified. Is that me being naive? Any thoughts from you kind alfolks would be appreciated.

    1. Yes, 200K is being naive. Very, very few make that sort of money as a one-person show. You would need to be a superstar in a superstar market or, one of those appraisers that make us all look bad. The person who said there is no money in this business was not wrong. It has come to the point if you do not think outside the box and work an angle (such as what Dustin does), the money may not be all that good at all.

      Dustin is happy to make $100 an hour by skimming labor from less-skilled workers. My electrician bills $120 an hour. My plumber bills $90 and hour and $30 for the apprentice. Yes, they show up in a truck filled with tools, but so do we. They do not need to hire a swarm of less-skilled people to delegate, rather bill these amounts all day long for themselves (or company). When one considers the education & experience requirements to get licensed, then the actual experience needed to be competent ant subsequently competitive, this is not a high-dollar job as compared to other industries. 15 years ago was different story.

      Do the math. Due to competition, fees for a 1004 are as low as $250 and not often as high as $400. Lets call those the two “typical” extremes in typical markets. From there lets settle on $300 for an appraisal, reconciling to the lower side of the mid-range due to the current climate of competition. Now, lets consider how many man hours it takes to complete an order from start to finish. The order starts when the phone call or email comes through and the initial research and quote happens, through the time when the check gets cashed and the books are logged. Further to consider would be the time it takes to complete continued education (though a small consideration). In today’s climate of enhanced support, commentary and revisions (scope creep is real), most appraisers agree a one-person show can competently complete about 4-5 1004 orders in a 40 hour week, an average number that considers a typical mix of typical assignments in typical markets. So, that’s somewhere between $1200 to $1500 per week, assuming a person were to remain busy throughout the week, month and year, which does not happen (remember, there are only so many hours in a day, so when a person attempts to catch up after a slow period by working more hours when the work is there, there is still only so much that can be made up). But lets just let that one slide for now. Best case of $1500 a week at 52 weeks a year is $78,000 gross. So, assuming a person can stay that busy consistently throughout the year, lets now subtract expenses. Insurance, software, portal fees, data subscriptions, vehicle expenses, computer and office expenses – while an appraisal business is not exactly a high-overhead type of business, the expenses are still significant. I have written off as much as $12,000 in a year and I know many others spend more. I usually spend less than that, so lets call it $10,000. So, in a “perfect” year, the average and typical person could expect to gross about $68,000. Not horrible, but not that great either.

      Now, lets consider what really happens to many appraisers, which is that most do not remain steady throughout the year. Many markets die at Thanksgiving and pick up again late winter. Markets fluctuate according to sales volume and refinance volume too. There are only so many hours in a day, so only so much catch-up can be made. O by the way, want to take a vacation? – I did not factor that in either.

      $68,000 a year equates to about $32.70 an hour. Factor in the likely hood a person will not work 2080 hours in a year and it is probably closer to $25 an hour or less. This is why when Dustin boasts a $100 an hour return, people take note of what he is doing.

      Your $200k estimate comes in at $96.15 an hour – lol. Yup, likely naive, though maybe you live in one of the few markets where this happens.

    2. Likely naive. That’s a superstar person in a superstar market, likely working far more than 40 hours a week (maybe I should call it a unicorn). Or, it might be the sort of appraiser that makes us all look bad. You are probably looking at closer to $50k-$75k as a one man show, assuming you stay consistently busy, which is also tough in a fluctuating type of business.

  9. For me the tough challenge always has been the requirement to select the most physically, functionally and locationally similar sales (talking mortgage work here) and, take a picture of these from the street. This is the one requirement that if truly done to the letter, can put a monkey wrench in efficiency. Some appraisers try to pre-select comps, some appraisers try to pick them from the field and some just make a second trip. And then others, pre-select a few “decent” comps and just go with them no matter what, requirements be damned (these same often re-use comps as often as possible). I think a well trained office staff using the tech of the day, could possibly help with this by doing comp searches while the appraiser is in the field. This requires good tech and great communication, as well as staff in-tune with how to pick possible comps.

    I have been toying with the idea of tag-teaming. This would be getting a second licensed appraiser to work in the office, likely alternating days in the office and days in the field. With a licensed appraiser doing comp searches, I would have a person who truly understood what a good comp is and, no one could ever come back and say the tier 3 work was not done by appropriate personnel. Further, the person that answered the phone would be an appraiser qualified to have meaningful conversations with current and potential clients, rather than just taking a message for the appraiser. I think this would also be a good way to plant the seed for a larger business model like Dustin and others have going, where alternate persons are eventually trained to do some of these sorts of things competently.

    Scaling in today’s climate is likely both difficult and easy. On the one hand, there are too many appraisers in most markets and as more appraisers begin to delegate and scale, less work is available for each appraiser, possibly affecting the competitive climate. On the other hand, much of the client-side of the industry is shifting to a scaled model, where large companies do high volumes of orders – I think an appraisal firm that could do the same would be appealing to these larger client types.

  10. Great feedback everyone. I appreciate you all taking time to respond. I have enjoyed reading through the comments here. I think we all can learn from each other. Cheers!!

  11. Thoughtful article and comments- I recognize my need to have someone at least to do tier 1 duties and some of tier 2 but I don’t have the volume to support a full-time person and a part-time person is difficult to find… mostly because it would just be a few hours a week and I don’t want to hassle with paying taxes etc. What are your recommendations on this? I’ve heard of the overseas assistant but I’m afraid to try that , afraid of wasting time and money with someone who really doesn’t know what the heck they’re doing nor care nor have any accountability. Thanks.

  12. Goodness! For anybody reading the comments, do Not let Dennis or ‘M’ be the comments you focus on! Likely both very cool people to hang out with and drink a beer, but not the folks you’d take business advice from! While $200k may be naive in the first few years and somewhat dependent on location, well over six figures is not at all naive. Further, I think Dustin is being nice when he claims $100 per hour! We operate somewhat similarly, although no employees, just virtual assistants who are quite happy to be paid for what they do (no ‘skimming’ required). A well trained appraiser with some decent help from tech and an assistant (as in, just 1virtual assistant) can easily do 2 to 5 appraisals per day. Again, dependent on location and travel time, I can easily inspect 3-5 properties in 2-3 hours (travel time included). When I arrive back at the office I have the 3-5 orders I inspected yesterday waiting to be finished by me since my assistant has already completed page 1, entered comps that I chose, inserted maps, inserted pertinent assessing and market data, filled up the workfile with the important info, and left important notes within the file for me to pay attention to. How did she get all the info you ask? She got it from me right after each inspection via the cloud. We use tablets for the inspection so all of the pics are already in the report, much of page 1 is filled in, key info from the inspection is in the report, and all of the comps were chosen before leaving the office while doing our due diligence on the subject property. Yes, you can pick a whole bunch of ‘extra’ comps to be narrowed down at the observation and they’re all on your tablet. If you need to pick better once after obtaining new info on site you simply pull up the MLS on your tablet and pick new ones. To finish up a report, on average, takes us between 30 to 60 minutes. Consider that 75% to 85% of the report is already filled out when I start working again on the report. The 30 to 60 minutes is making adjustments, using software to do a regression analysis, doing some matched pairs calculations and depreciated cost calculations for adjustments, writing narrative using Dragon software and a headset, adding a few extra things to the report like Google aerial maps and additional market data, and a very well developed and well supported report is done. On to the next one. When you calculate time on site at the subject property, drive time, research time, and desk time, a typical report takes 2 hours or less. At our fees in our market that is easily a $250 hour. Subtract out some costs and you’re still well above$150 an hour and much closer to $200 an hour or more. Fully understand that this is market and geography dependent. But don’t let anybody tell you that this is a bad business to be in. You can easily make what some attorneys make if you get the right mix of business and you run it like a business. You don’t have to be a bad appraiser or a form filler either. I would stack are appraisals up against the absolute best with no question or fear. Technology has allowed us to build extremely solid reports with all of the support you could possibly need extracted from the market. Do I need to mention that attorneys go to expensive universities for 8 to 12 years or more before they start making $200 to $400 per hour? This is one of the few businesses a person can get into where the bar is relatively low for entry, the costs are extremely low relative to the income potential, and what’s good systems and leveraging technology you can easily make six figures working less than 40 hours per week. Don’t listen to the may sayers! They simply haven’t figured it out yet.

    1. Hi B I read your comments and agree 100%, I just need some help. How and where do I go to hire a virtual assistant. Also are you using Alamode sofeware?

  13. Whatever works for you all. I do no tract built work anymore. None as in never!
    My Fees are much higher than most, but I work for it.
    Cannot use other folks work to fill in the blanks as the properties are over the top.
    I do whatever I can to be able to defend my work product should these projects go into a court room setting.
    Its important to know how you thought the process through.

    There is a time for everything. I accept only what I know I can handle and account for.
    Computers are great, but the State and attorneys do not care how FAST or how many appraisals you get done.
    Only about the ONE they are investigating.

    Computer Appraisal tools are great when used carefully. Check the CU data when using it to fill your forms which we will be able to do shortly. Especially on huge custom homes, and water front properties! Most of those are loaded with errors.

  14. Thanks Dustin we have hired out out T1 and T2. My office i have an apprentice and a full time assistant. It is no where near skimmed work. In some cases they do better T1 and T2 work than I do and Im not affraid to admit it. I work in rural area of Idaho. The great part about having employees is I get to see my kids grow. Im home most days about 4 pm and never work a Saturday or Sunday. The other huge benefit is the turn times 4 biz days

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