I’ve recently been looking into real estate as an investor, and I found a rental property relatively close to my home that looked pretty promising. It was advertised as a 4-plex, with 2 duplexes on the same property. The price was fairly steep, but not unreasonable considering the income the property was generating. I was amazed that after several months on the market, it hadn’t sold (this is very unusual for my local market). I decided to dig a little deeper before making the plunge.
I started by calling my local city zoning office, and asked them to look up the property and tell me about it. At first, everything checked out – the property had 4 addresses, and its history was consistent with its advertised 4-plex status. But when I asked them to dig a little deeper, it was discovered that, due to local laws, this property could not be used as a 4-plex. One structure was just fine. However, due to ceiling heights and door widths and other restrictions, the other building did not meet the legal definitions necessary to be part of a 4-plex.
Imagine for a minute that you were asked to appraise this property. Are we as appraisers giving due diligence to our work? Are we digging deep to find these kinds of issues? Suppose an investor were to purchase this property, only to find out that they can’t use it in the way it was advertised. Who’s at fault here? While the appraiser may not be liable in such a situation, I hope it gives us reason to pause and think about our work, and whether we’re giving it due diligence.
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Are we as appraisers giving due diligence to our work? Considering I have been telling everyone on your site for 6 years to seek the truth, I truly hope a select few have taken my advice. How much research is the typical appraiser doing before they put in that AMC bid of $295? Are you looking at current and past MLS listings (looking for differing / conflicting info)? Are you calling and or emailing those agents? Are you comparing that info to public record files? Are you searching building records for past and or current info that may not be reflected in public files yet? Are appraisers doing say a Zillow search which might have interior photos from other sources (say an old rental) that may not be in the MLS? Then, after coming up with a set of physical characterizes for the subject, are you doing research in the neighborhood to see how the subject compares?
If the goal is to churn and burn 4 to 9 appraisals a day, then most appraisers will ignore the truth of the subject either before, during or after the inspection and put profits before principles. In other words, call it a 4 unit property and hope in the near future they refinance so you won’t be liable for the original loan.
Seek the truth.
I have been a lot of reviews lately and the quality of work I am seeing from appraisers is alarming. Inconsistent, incorrect, and supported are the best ways to describe the reports. The overwhelming majority have information in the report the contridicts the report itself. I review appraisals from early this year when the market was increasing the appraiser has stable market with time adjustments and then a report from December when market conditions stabilized and increasing is marked. Of all the appraisals I have reviewed in the last 12 months I have not seen 1 report where the appraiser knew how to correctly apply time adjustments based on the contract date or calculate the dollar amount (If your time adjustments are always $5,000,$10,000, $20,000 that is a problem and a red flag for any reviewer. We are certified professionals and it is very rare to run across an appraiser than can explain how they determined the adjustment amount and if your adjustment for every line are always rounded to the thousandth or ten thousandth they is a red flag they that were pooya. This is the reason we are becoming dinosaurs and the way we are doing business now will soon be extinct. The report I reviewed last night was partially written in upper case and partially lower upper case and the review probably took me longer than the appraisal spent doing the report. The incompetent report writing and value opinion development is so widespread that it is the major obstacle facing our industry today. I have been working with Dustin through private coaching and improving my business practices and it has allowed to complete 5+ appraisals a day with high quality. Yes Bill it can be done you can do high quaility and high volume you just have to have a system that works for you. Dustins business model combined with an appraisal institute education is working great for me and I am have had a great start to this while many appraisers are struggling. I do not do bid work period unless it is from one my top clients that sends non bid work regularly as I have found it is most always complex or rural appraisals that other appraisers have turned down.
Congratulations on doing 5+ quality appraisals by yourself per day Jamie D. You shall be carried on the shoulders of your fellow all stars to the top of the mountain.
Let us all support Jamie D and his 5+ completed reports a day and wish him luck in achieving Dustin’s high mark of 9 per day.
Seek the truth.
Bill thank you for the support; however, the only gradification I need is the money going into my bank account. I was doing 9-10 a day in 2021 and most of 2022, but I had a really bad last quarter of ’22 and it was actually my worst quarter of a 26 year career. So I started working with Dustin Jan. 1 and joined the dream, private coaching, and went through all the workshops and my appraisal business is booming again thanks to his help. I did almost $10,000 in fees last week with 1 admistrative assistant. Granted I have been doing this for a long time (this is my 26th year) and I was already a know expert in my market, but I was not being as efficent as possible and that is what it takes today. I am working towards the 10+ appraisals day and hopefully with Dustin’s guidance I will be there in a couple of months and at my current pace of growth it is a realistic possiblity. I was just thinking about this today and the crazy thing is I only work part time about 20 hours a week in appraising. I am also a successful real estate investor and my wife owns a real estate brokerage so you could say I eat, sleep, and breathe real estate. The only gradification I need is from my wife and 3 kids that live a great life thanks to the real estate industry. I have seen your posts over the years and am deeply confused on what your problem is. If you do not want to be part of or like what Dustin is doing just turn it off and do not do it. Spend the negative energy you use complaining and use that same energy to do productive things and you to may be able to do 10,20 appraisals a day. It can be done and appraisers are doing it today and producing high volume, high quality, credible opinions of value. Dustin is a stand up guy and he is only trying to help and I truely beleive if you contacted him today he would try to help you also. I know you are a successful expert and do not need any help, but there are other appraisers out there without your superior intellectual capacity that want and need the help and guidance. I can tell you are knowledgeable from all your posts but you are putting your energy in the wrong direction. Take it all and put it towards having a successful business and happy life and I think it will serve you well. God bless you!
Wow Jamie D, congratulations on doing 9-10 appraisals a day in 2021 and most of 2022 with only one administrative assistant. With a 48 minute average per report (10 appraisals / 8 hours), it would seem if you knock that down to 30 minutes, you could complete 16 appraisals per day. With such outstanding service, I’m sure positive comments are to follow. Of note, I wonder how many True Footage hybrid appraisals you could complete in a day? Perhaps 20 to 25 is possible?
Seek the truth.
I also had a trainee helping me in 2021 and most of 2022 but he is now trained and moved on. It takes me about 30 minutes to do a complete quality competent appraisal I know that sounds crazy but I use what most successful appraisers are using and that is a team method. I was going to give you all the secrets, but I decided not to because it is just the basic principles of any sucessful business really. The most modern technology possible and a assembly line method and you can produce higher quality reports, faster, with fewer revisions and have a whole bunch of really happy clients that send repeat business everyday and you never have to worry about bids again. The dream team is less than the cost of 1 appraisal a month and Dustin is a open book and he will tell all the secrets to success. Which is basically just proven business principles used for over 100 years, modern technology, and then you have to add your own hard work he cannot do that for you and it will eventually led to less work and more money. The first month is free you should at least give a try and I did and I am now hooked on the results.
Wow again Jamie D, “It takes you about 30 minutes to do a complete quality competent appraisal”. Considering your pulling your on comps, determining market adjustments, driving to the subject, inspecting the property, doing the sketch, driving comps, and reconciling the report, 30 minutes seems a little long. With some more coaching, I would hope you could get that down to 20 minutes. Perhaps 20 appraisals a day is possible.
Again, I would love to here from Dustin and or his followers regarding your success.
Seek the truth.
I guess it comes down to delegating many tasks to others. The number one issue that can rise though is one of the people messing things up.
I think if the second duplex is not legal, an appraiser could be held liable for not determining this within the typical scope of work for a lending appraisal, particularly if the lender had to repurchase the loan. If the investor is upset at the bank appraiser, that doesn’t matter because the investor should do their own due diligence.
I got blackballed from a lender about 15 years ago for pointing out that they may need to check one unit to ensure it met code for ceiling. They wanted to know how I knew that: I’m 5′ tall and could touch the ceiling.
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