How to Bid an Appraisal Job

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.

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.

33 Comments on “How to Bid an Appraisal Job”

  1. If you Dustin are only in the office on Mondays, and yet your team completes 4 to 9 appraisals per day, I think YOU personally don’t have the time to professionally evaluate a property like you should, thus you go with your gunt. Or your gut is code for, your office staff has the green light to respond in your name.

    Seek the truth.

  2. Pingback: How to Bid an Appraisal Job - Appraisal Buzz

  3. Dustin, I think your “team” does 95% of your work and you do very little except brag about what you get done… a report is gonna bite you right in the a _ _ one day wait for it…

  4. Hey Dustin, keep up the good work. My gut tells me that since Bill Johnson and Jim Shu are so critical of your suggestions, that their real problem is that they are JEALOUS! Envy is a tough task master and it’ll be they who suffer with a rotten gut before long! Thanks for all you do for our profession.

    1. Do the math Vic. Dustin’s in the office one time a week (Mondays), reviews and signs 4 to 9 appraisals a day, thus inspects 4 to 9 properties per day, drives by and photographs say 25 to 50 properties a day, works wide areas of the state, works out of state, goes to expos, writes blogs, has podcasts, and is head cheerleader for a bunch of all stars all while pedaling his coaching material. In my opinion, Dustin may be the head of the snake, but a snake none the less. Congratulations on buying his snake oil, and good luck getting all that done with a driver, and a digital tape measure. There is no envy, only reality.

      Seek the truth.

  5. Your Brain is a very powerful tool and we as Humans only use a fraction of the power available.
    Going With your “Gut” is an accumulation of years experience and analysis of the available data that many would consider “instinct” ( the idea that humans have instinct is a debate for another time).
    Though I do concur, I also go with my “Gut” when bidding on some jobs and it is a high and low thing. There is that leap of joy when the assignment is received, though there can be a low when you do not receive the assignment. Did I bid too high? Was my delivery date to far out? Do not dwell on this and move on, your brain will store the information and the next time you will have a more intelligent gut.

    *******Also one very important the term “BLACK MOLD” should be negated from our vocabulary and replaced with MICROBIAL GROWTH of a black nature. This a broader statement that covers Fungus, Algae, and Mold, and it will hold you less liable. Unless you have the test results from the lab ( that takes three weeks to cultivate) the type of Mold can not be determined by sight. All of the Microbial growth can be an irritant to the human body and some people more than others. Our Jobs as an appraisal Society is to assist in the Appraisal profession by helping each other to promote the public trust ( I sound like a USPAP instructor). So please remember Microbial Growth for your report…….and yes if you are wondering I do have a degree in Biology, I was a Certified Microbial Remediator, and before being an appraiser I worked for a large company cleaning up after Fire, Water and Microbial growth. Good luck to all and thanks for reading.

  6. My gut tells me to bid a “customary and reasonable” fee. I have never won a bid. Only Appraisers have to abide by Dodd-Frank. My advice after 22 years in the business is if you can’t make a good living doing non AMC work, find another profession.

  7. Hello Dustin I am glad to say I no longer bid on appraisals. This is a change I made recently(last month) and it has worked out great. I am a quality appraisal with very fast turnaround time and run a 1 man shop so I have more work than I can do. I cannot compete with a low bid model and that is what that is. I charge $325 to $350 per assignment that is in my primary coverage and I can tell you when I was bidding my normal fees I never got selected. I tested one time and bid $275 and that bid was unaccepted. At that time I realized I was doing a disservice to my great clients to give a low volume high demand client better service than my bread and butter. So I made the decision to stop bidding period and let anyone asking for bids know that I am a quality appraisal and they have my fees if they would like to engage my services at my fee on record I will give them great service and make them look great to there client, but if they want a lowball fee appraiser that is not me. If you look back I think you will see that is not your a and b clients asking for bids and they are most always more trouble than they are worth as the appraiser you had to already spend extra time receiving the email, researching the property, responding to the email and then sitting back and cross your fingers and hope nobody else lowballed the fee(which always happens). No I am not doing that anymore and am just not working with that type of client.

  8. I almost never get a bid job. I wonder why some appraisers are so desperate that they are bidding less than $300. I never do.

  9. Your fees are nuts. I do exceptional quality for $495 or greater always! Step up to plate and be respectable. You are only worth what you think you are worth.

  10. When quoting on an assignment several things must first be considered including but not limited to the intended use of the appraisal, the intended user of the appraisal, the requested delivery time,the type of value sought, other possible intended users of the appraisal report, date of value, Additional costs which may be incurred for data on special purpose properties, travel time, Opportunity cost for taking an assignment which may be lengthy, property type and difficulty, and Also other firms which may bid on the assignment .

  11. I have not read the book you referenced, but I think I understand your premise. I respectfully disagree. Use math, not your gut.

  12. I do a lot of rural properties which vary considerably. Most AMC’s don’t have a clue as to what they are asking you to appraise and request that I do them at the base fee of $700 for conventional or $750 for FHA. Almost all rural property appraisals need to bid. A research can tell you if you are appraising 1 acre of maybe 80 acres, 1500 SqFt of 5000 SqFt. Research and the gut instinct are usually my method.

  13. In our area we do a lot off bidding.
    If you really do not want the job my rule of thumb is to bid high with an extended turn time.
    If it’s a slam dunk go with a reasonable fee and turn time.
    I have an office with 6 lic and certified appraisers. The staff gets the lion share of the fee plus 401 match, all MLS dues and lic fees are paid for.
    My invoices average $750 .
    Bidding keeps your name in the hat.

  14. In our area we do a lot off bidding.
    If you really do not want the job my rule of thumb is to bid high with an extended turn time.
    If it’s a slam dunk go with a reasonable fee and turn time.
    I have an office with 6 lic and certified appraisers. The staff gets the lion share of the fee plus 401 match, all MLS dues and lic fees are paid for.
    My invoices average $750 .
    Bidding keeps your name in the hat.

  15. Hi Dustin, thanks for the article and everything you do. What you’ve mentioned is valid and true. One helpful approach I exercise is placing a yellow sticky note on my monitor stating “take it slow on quotes”

  16. 2 times I will go either high or low – (1) it depends on how busy you are at the time. If you are only working on 1 or 2 reports and it is NOT football season, I will bid low to get a job , if I am slammed, I bid high and if I get the report, then I am working late. (2) easy subdivisions work vs. rural work -I can do 2 or 3 cookie cutter subdivisions vs. 1 rural house out in the middle of no where. If it is in the middle somewhere, I guess you go with your gut.

  17. These comments are clearly why the appraisal profession is dying. So many cry babies. Some say you’re only worth what you charge and then say you only charge the typical amount for the area? Others say don’t do AMC work? Sheesh guys, grow up. I have over 120 AMC clients. Guess what, YOU DON’T HAVE TO ACCEPT EVER ORDER! Think about how many jobs you are missing out on. I have to reject from 5-10 orders a day on a consistent basis. I used to work 7 counties, then just 3, then just 2, then just my own, and now just one zip code in my own. I work ONE zip code, work only a few waterfront properties, do only the large developments, no land work, no farms, no manufactured homes, and no units. Yet, I still get all the work I can handle. Why, because I work for EVERYONE. Plus, I’m not even in a metropolitan area. My city has 15,000 people. The work’s there, you just have to want it and deal with the client. Charge accordingly, that’s what the entire article is about.

    1. In signing up with 120 AMCs Jay, be prepared for the possibility that many will kick you off their panel when each has to pay a yearly fee per each appraiser on their panel ((June/July 2018?). Good luck.

  18. Dustin, if you want to talk about appraisal bids, then why gloss over and assume AMC honestly and morality in the first place? Instead of providing another fluff piece, I dare you to provide a hard hitting piece on what is reality for many. Provide to all the following link (http://appraisersblogs.com/blast-email-bidding-4-cheap-appraisers), so many more can see how Appraisal Nation mistakenly forgot to BCC their blast requests. While there, I hope many a reader will seek the truth and read other articles. Blast e-mail bids are no longer just for complex properties, but rather hundreds of appraisers can be solicited at the same time for the same property. As I work in San Diego County where THERE ARE 954 LICENSED APPRAISERS ALONE within 30 miles of me, blast e-mails (bids) have nothing to do with the right candidate. I look forward to your response to my challenge next Monday when your in the office.

    Seek the truth.

  19. I got a better idea. How bout you and I have it out for good. Come on my podcast rather than continually using obscure blog post comments to preach your negativity. Let’s do this. Whaddya say, Bill?

    1. Dustin, my comments are anything but obscure, in fact they often have so many prominent points that respondents often ignore reality, and either play the negative card, or as Glen Crotch said “Bill Johnson will die an untimely death”. What’s wrong with outlining and detailing your work habits Dustin, and in turn questioning your gunt method to bid an appraisal job? Why challenge a commenter when they provide a counter point that brings to light (http://appraisersblogs.com/blast-email-bidding-4-cheap-appraisers), the negative underbelly of blast e-mail bids from many AMCs? Do you really think bids are only used for rural areas or for complex assignments where there are only a few appraisers, or are they sent to dozens or perhaps hundreds of appraisers in the suburbs looking for cheap and fast? Do these mass e-mail blast bid requests (fee/turn time) technically meet the mandate to hire the most competent appraiser? Are these blast e-mail techniques within the spirit of the law?
      As it relates to appearing on your podcast Dustin, in reviewing how many comments you typically get (0 – 2), I’m afraid perhaps only above ground pool Mike would be listening. Just like you Dustin, one must know his or her worth, and besides you have a history of “not handling the truth”.
      Seek the truth.

        1. As I’m sure my spreading of the truth and enlightening words would only be perceived as negative propaganda, I must disappoint my fans (hello Mike), and your listeners (your family?), and say no to the invitation. Please don’t feel bad, as almost on a daily basis I turn down invitations from AMCs wanting to counterbalance their lack of wisdom and professionalism on their panels.

          Remember, January through December is seek the truth months.

  20. Dustin, it is common practice for commercial banks to obtain bids for appraisal services. I fact I have bid several commercial assignments today. We see bids for residential properties in rural areas where there are a limited number of appraisers to do work. I have found bidding assignments in rural areas to be profitable as we are generally double or triple the fees than typical suburban areas. As an appraisal firm we know what our overhead costs are and have a pretty good idea of the time it will take to complete assignments and bid based what we think it take to do the assignment. Harder properties we build a buffer into the bid. It is frustrating to see appraisers provide cut rate fees to get assignments. However, we find we get jobs where we are not the low bid because the lender likes the work product and will pay a higher free to get appraisal work product they feel comfortable with. We bid a small retail building where the low bid was $1800 and the high bid was $3200. Typically we see these kinds of assignments for $2,500, but several of the commercial guys are slow and the cut fees to get the work. I guess that is how a free market works.

  21. Dustin, You are a champ if for only giving us a forum to share ideas and experience. Say, Federal VA asked me to do rural appraisals for $1,100.00 here in Marion County. Do you really do appraisals for less than $400? Bill Johnson will die an untimely death if he doesn’t settle down….I say that after 40 years in the business…. my best friends, all MAI’s passed away: C. Larsen, aged 46; G. Roberts, aged 53; G Hargraves, aged 56; L. Ofner 63; T. Holt, 54; L. Holt 66. This is not a healthy way to make a livin’. But I was a logger previous. Still glad to be alive. Buddy Crouch

  22. The bidding process encourages sub standard appraisals as the cheapest are frequently selected. The solicitation of many bids is unfair to ethical capable appraisers. If there was a charge for each bid to the management company they would limit the number solicitations and stop wasting appraisers time checking the properties. Experience has indicated that failure to check properties results in accepting complex appraisals at low fees. If a fee, such as $35 was imposed by all appraisers for each bid, the AM’s would be forced to cleanup their acts as well a reduce the number of bids solicited. Of course the bid fee would be deduced the accepted fee and the unsuccessful bidders would be compensated for their time. As long as appraisers are willing to provide free bids this system will continue.

    1. Agree Richard. To formally bid an appraisal job means many things in the appraisal process, but in short one needs to spend quality time to identify the 1st set of characteristics (the subject), so that in turn it can be compared to the characteristics of the neighborhood its in. Although many an AMC try to base complexity on a single set of data points (GLA, acreage, etc.) only with multiple data points in conjunction with knowing the client specific guidelines (2 comps in 90 days, 4 closed sales, 2 active or pending’s / due date, FHA like inspection, etc.), can a true case be made to support ones complexity fee/bid. In reality Richard, per TRID guidelines the appraisal fee has most likely already been predetermined, and presenting the client with the truth via one sentence or a hundred (support for their fee), will most often not increase the chances of getting the job as they are simply trying to crowbar the appraisal fee into what has already been promised via TRID. From an AMC point of view, who cares if 99 appraisers spend an hour of their time in the bid process, as long as one takes the predetermined fee working from their gunt.

      Seek the truth.

  23. I don’t go with my gut. I built a table of prices that includes factors like river frontage, square footage, site size, assignment type. These prices are carefully thought out and keep me from the impulsive gut that sometimes can bid too low.

Leave a Reply

Your email address will not be published. Required fields are marked *