I was talking with one of my All Star Team members on the phone, when the subject of bidding for appraisal jobs came up. This person was struggling to reach a balance between going in too high or too low. They wanted to know if I had a system in place for working out how much to bid for each job.
The answer is yes, I do have a system in place… sort of! In short, I follow my gut. Now, before you all tell me how silly that sounds, allow me to interject; I know it sounds silly! You might be surprised to find, however, that there’s a solid amount of science which backs up this approach.
Malcolm Gladwell, for example, based his book Blink around the concept of “following our gut.” He even gives numerous case studies from history of renowned leaders who did exactly this as they were making some monumental decisions. His argument, ultimately, is that we often make the best decisions when we simply trust our instincts.
After all, our brain is an amazing tool: it absorbs and processes an enormous amount of data, which it can then spit out at a moment’s notice in the form of a “gut decision.” It’s when we ignore that gut decision, and pore over our choices for hours and hours, that we end up going wrong more frequently. Gladwell offers empirical evidence to back this up, and I bet that if you look back at the gut decisions you’ve made in your life, and how they worked out, you’ll agree.
How does this relate to bidding in real estate appraisal? Well, this is one area in which I believe you really need to start listening to your gut. Think about something, for a moment. Last time you bid for a job, and you got it, how did you feel afterwards? If your heart leapt a little, and you were excited to get started, you probably bid the right amount. If your heart sank – and you thought, “Boy, this is actually a pretty tough job. I wish I’d bid more!” – then you obviously underbid. Factor this into your decision when you’re working out how much to bid. Ask yourself, “If I bid this amount, and I get the job, how am I going to feel afterwards?”
For the record, I am not telling you to complete disregard actual information. If we’re being asked to bid for a job in the first place, instead of just being given a figure, then the chances are there’s something unusual about the property. Maybe it’s a waterfront property; perhaps it’s simply much larger than the average property in the area. Whatever it is, find out what distinguishes this particular job and factor that into your decision-making process. After you’ve done that, however, you should leave it to your gut to have the final say.
Let me give you an example, from a couple of years back. I was given the chance to bid for a job, but very little information was provided. I ran a Google search, and quickly discovered that the property in question was extremely large compared to others in the area. It was a fair distance away from my office, meaning it’d take a while to get there, and it also seemed there was a little black mold which could prove tricky. I had a little time to think, factored in what I’d discovered through my research, estimated the time it was going to take me, and came to a price of $650. I didn’t spend hours dwelling on it; I just went with my gut, and settled on that as a fair price. I got the job, and afterwards felt my heart leap a little. In that moment, I knew that my gut call had been a good one.
As real estate appraisers, we all know there’s nothing worse than getting started on a job and quickly realizing, “Jeez, this is going to be harder than I thought! I could’ve finished three regular jobs in the time it’ll take me to finish this one. I really underbid here.” It’s an incredibly frustrating scenario, and one that should be avoided at all costs.
My advice to stop this happening? Follow your gut. It sounds simple, but there’s solid empirical evidence showing that it works. You’ve got a powerful brain up there. Sometimes you just need to let it do its thing, and get out of the way. More often than not, your instincts will steer you true.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 74 – How to Bid an Appraisal Job