Professionals Work on Billable Hours

I find that most times when appraisers complain about fees (myself included), we are often not willing to correct our own notion that “it’s all about how much we can fetch in fees.” Isn’t it time we retrain our thinking as appraisers, because it’s not just about the set fees. It’s more about how we value our own time as professionals.

I wrote an article not too long ago called “I Should Have Been a Lawyer.” It was about how we as an industry, need to start looking at ourselves as professionals. The article explains how I used the services of a lawyer recently to help me work up an employment contract. I did not go into that attorney’s office and say “hey, I need to hire you.  So, how much are you?” Wouldn’t that have been a silly question? We we all know that if you go in looking for an exact fee upfront from a lawyer you’d be laughed at. Why? Because attorneys are professionals and their time is valuable.

For a hypothetical, let’s say you did approach them this way.  Naturally, the attorney would ask follow up questions like “what exactly do you need me to do,” or “how much time are we going to spend together working on this?” The attorney is not even considering a set fee for you. They, as professionals, operate on a ‘per hour’ basis and highly value their time and the time of their office staff. Most of the time, you don’t pay them for a generic service. You pay them for the custom work you need from a professional and the amount of time it will take them to complete it. This is what separates those who have a job from those who are running a business and want to represent themselves as professionals. The article I spoke of was not about how much I spent on attorney fees.  It was about how we as business owners should be valuing our time as other professionals do and structuring our compensation around that notion.

 

I want you to imagine that you are working in your office, typing away, and a trainee walks in and says, “Can you just believe I spent $7 on coffee?” Now, that’s a lot of money to spend on coffee, right? But do you have all the information you need to assess the value of the coffee at a reasonable rate? My next question would be, “well what exactly did you order?” If he responds with… “I got an extra large, triple mocha cappuccino, white chocolate latte with an extra shot,” Well, the $7 charge makes more sense.  On the other hand, if his response was “I got a drip 20 ounce,” that would seem like a rip-off to me. I think you would agree. In other words, context matters.

 

There is more information that’s needed before determining the compensation you should require. I want you to start looking at yourself as a professional who charges by the hour. I get it – orders come across with fees attached, but my question is… are you really taking the time to figure out how much each of those orders are going to cost you per hour – how much time is involved (including the time of your staff)? When an order comes into my office, we assess it at a “per hour” rate. If it looks like a pretty standard appraisal we might bid it one way.  If it looks like it’s going to be more complicated however, we’re going to take our time to look through it before bidding. It comes down to the scope of work, what is required, what time is involved.

 

Appraisers, we need to stop looking at things in terms of set fees. As long as we keep treating ourselves as technicians, the rest of the world will keep doing it as well. Let’s change the rhetoric, change the way we look at things, change the way we represent ourselves, change the way we value our time and change the way we structure our compensation when billing and biding.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 300 It’s not about the Fetching Fees

One Comment on “Professionals Work on Billable Hours”

  1. An interesting article and are we a business or a job or a profession? When there is perceived value one can bill hourly and the results are important. I bill at $450 per hour for litigation work, where results are important, as there can be millions of dollars in a judgment. Some banks and lenders tend to be more interested in completing a file and need low cost and quick work, thus the price is the only consideration. When the market changes, and the portfolio is non-performing, then good valuations are demanded and appraisers get blamed. Another huge problem are the big appraisal firms monetizing the appraisal process and using India and other means to create volume and fees. Users of reports have been convinced that the big firm low cost valuations represent quality, thus marketing has superseded the reality. I agree that we should be billing hourly and have outstanding work product, but the market wants cheap and fast, except in litigation or estate work, where the immediate outcomes can be significant. Even billing at $450 per hour, I am the low cost expert. The attorney bills are 15 to 30 times my billing, and many cases hinge on my testimony and valuation. One last thought is that I find many appraisers do not even think they are worth more than $25 per hour, and have low skill levels and poor self esteem. Yes many appraisers see the work as a business, and it is all about generating fees and volume, and few invest in becoming stronger appraisers and investing in the future. Education is forced upon appraisers to meet certification and licensing requirements and not as a tool to further skills. The real power for an appraiser is to just say no to low fees and work to find alternatives. This is my observation after being in the business since 1983 and I hear from many at AI national conventions and conferences..

Leave a Reply

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