The Tiered Appraisal Office

If you’ve not read “Good to Great” by Jim Collins yet, then I highly recommend that you do so. It’s been a few years now since I read it myself, but the lessons this book contains have really stuck with me.

In the book, Collins does multiple case studies of two, similar companies who work in the same field. One of them really progresses to a new level and the other stagnates by comparison. He then tries to identify what the companies did differently; in short, what made one company great and the other merely good?

Collins has a lot of analogies in the book and there’s a particularly excellent one he uses that relates to what I want to write about today: hiring and firing. He says that your company is like a bus and that you need to both think about getting the right people on the bus and the wrong people off it.

That second point is important and often overlooked. Sometimes, you need to realize when it’s time to cut bait. You need to see that you’ve hired the wrong person, that it’s not working out for either party and that you should let them go.

It’s the hiring process that I want to talk about today, though. Specifically, how should you structure your business in a way that helps you hire the right person for the right job?

Well, when it comes to business structure, I like to follow a simple but effective three tier approach. Tier I is entry-level; data entry, customer service, that kind of thing. Tier II is a step above; almost like a perfected Tier I. These are go-to people in your office who have experience, know exactly what they’re doing and can serve as trainers to those in Tier I. Tier III – in the context of our profession – relates to trainees and fully-fledged appraisers; analytical people, critical thinkers and decision-makers.

I spoke on the phone recently with a business coach. She’d been hired by an appraiser that knew my work and he’d asked her to get in touch. She was enquiring about my business model and – through sheer coincidence – happened to refer to the same tier-based model. She said her client was looking to move his own appraisal business to the next level and that he was essentially considering going all-in: hiring a couple of employees at Tier I, a couple more at Tier II and another at Tier III. She asked if I thought this was a good idea. My response? A pretty unequivocal, “Not really.”

Firstly, hiring a bunch of people and training them all at once is a headache you don’t need. Secondly and most importantly, we work in a pretty niche profession. There are a whole lot of terms and little details that are extremely important, but which can only be learned over time. That’s why I strongly prefer hiring Tier I individuals and continuing to train them and progress them up the ranks.

Finally, as regular readers will know, I am a huge fan of “off-shouldering”, or the law of delegation. You might ask, “Which of these Tiers can I delegate to?” and my joyful answer would be, “All of them!” You can off-shoulder tasks of different complexity levels to each of these Tiers.

I will say, however, that when it comes to the really important stuff – the stuff that can break your business if handled incorrectly – you need to be fully aware of both state laws and USPAP regulations. I don’t want to speak to your state laws – they’re something you need to research yourself – but USPAP basically says that it doesn’t matter which of your employees does the work… it’s going to be your name on the final document. Accordingly, you need to be pretty darn careful about your hire. It’s your reputation and your livelihood on the line at the end of the day, so you need to be 100% sure you’re getting in the right person for the job.

Hiring new staff is an integral part of growing your business, but you need to make sure you do it the right way. My advice is to follow this tried-and-true Tier-based system, progress your employees up the ranks and allow them to grow with experience. Do this, be smart about it, get reliable people you can delegate to, oversee and ensure the quality of their work, and you’ll be well on your way to taking your business to the next level.

 

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode 094 – The People on the Appraiser Bus.

13 Comments on “The Tiered Appraisal Office”

  1. Pingback: The Tiered Appraisal Office - Appraisal Buzz

  2. With the entire state of CA soon to be at $15 for minimum wage (double that of Idaho), good luck getting tier 1 individuals for less than $20. When on a national average appraisal fees are $500 from the borrower, and 80% of all residential transactions get filtered through AMCs (say $150 off), many an appraiser today are tier 1 owners/individuals after expenses. With refinance volume at 17 year lows, interest rates at 7 year highs, and government sponsored PIW eating up an additional 12%, good luck expanding your business, and keeping your doors open when locally the median price is over $800,000. Go make up a value.
    Seek the truth.

    1. I followed Dustin’s advice and I think I’m doing pretty good in CA. I average 80-100 appraisals a month. I have 3 employees and everyone gets paid well. The problem with the naysayers is their lack of good clients. The majority of my clients are banks and mortgage companies that order their appraisals through private panels. They pay high fees for the best service, quality and turn time. I have not done an appraisal for less than $450 in 5 years and that is not my average fee. If a management company does not pay my minimum fee, I counter or respectfully decline the order. Why? Because I can. I’ll let you do that math and leave it at that.

    2. Do they still have that moritorium on moving from the state in afffect, Bill? I forget you are stuck there with no other options available.

  3. The business if for the birds.why not repeal HVCC????????

    ………….NOW..Go make up SOME value

  4. Bill Johnson jumps first in line for the comments. Shocker. Dustin, have you done a podcast with this “person” yet? A great lead in question; how do you live a good life carrying around boundless negativity and trolling one of the most positive people in our industry? Next question; why don’t you create your own platform for you and your like minded friends? Something like appraiser bitching.com? You could have some bang up blog posts all to yourself and maybe even your real name… But, we have already figured that one out. In the meantime, keep on trolling, buddy. Your Ignorance and pessimissim on display is a hoot!

    1. I am beginning to wonder if “Bill Johnson” is a real person. He claims to be in California, yet I find no Bill Johnson on the state appraiser directory. There are a few Williams (or the like), but none in the San Diego area he often speaks of. I have asked Bill two times if he is an actual person, or if he is hiding behind a pseudonym. He seems have a lot to say about a few pet things, but when I ask that question, I hear *crickets.* Not saying he is not real, but I wonder. I am asking again, are you an actual appraiser, Bil Johnson? In all sincerity, is that your real name?

      Yes, he has been invited on the show multiple times. He has declined my invitation. I even offerred to allow him to approve of the final cut (these things are not done live, and I want to be fair to him in editing). Declined. Guess it is easier to say these things behind the anonymity of the keyboard. Okay. Whatever. I simply would like to debate his ideas in a format where we can find some common ground. Honestly, I am not out to destroy Bill. I want to have a conversation with him. Do not want to do it on air Bill? Okay. Let’s do it privately. I am of the old school belief that differences of opinion should and can be worked out in person. The invitation is again on the table. My phone number is 208-745-9330 Bill. Let’s talk man to man. I promise to be civil. I even promise to be open to learning a thing or two from you.

    2. Daniel, keep whistling your selfish tune (Daniels doing fine) while you ignore the reality for most in this industry (Me, I’m NOT most). If this profession is to be saved, it will NOT come from the Dustin’s of the world (top 1% of 1% ?), but will need to come from the bottom up. This is not about me charging four figures for multi-million dollar pre-listing appraisals in Rancho Sate Fe, or working a county where its not unusual to get 20 VA assignments month ($600), but is about the TYPICAL FEE ($500), being paid via the TYPICAL ASSIGMENT ($350 after AMC split / 80% of the time). Good luck being an individual in this team sport.
      Seek the truth.

  5. If this business is difficult, what about selling pizza, hamburgers, carpet cleaning services, retail, etc. My point, we have low expenses on a relative basis, and a pretty clean, professional service, where we’re usually dealing with a higher education level employee, IMHO (but what do I know).

    1. Obviously, a lot, Todd. I have friends in every industry out there. Do you know what my margins are? 28%. My good friend owns 20+ pizza franchises. His margins? 3%

    2. Assuming your a fellow appraiser Todd, what is wrong with applying some market value logic to this profession? If by volume some 80% of all residential loans get filtered through AMC’s, and the median appraisal fee is $500, with $150 knocked off for the AMC, focusing and fixing the typical issue (market value) should be the start, and not discounted by way of calling the messenger (me) a troll (Daniel). Many of these issues don’t specifically apply to me, but apparently most here want to ignore the model matches on the same street, and go a mile away to pick there comps. Big picture appraisal policy (effects all), is not being set according to the masters of there trade who drink the Kool-Aid here, but is being determined by the typical appraiser, at the typical fee, and at market value. Is this business difficult? Sure it is, but detailing to the masses here how back in the day I would represent entire condo conversion developments (thousands of units), in relationship to mass property tax appeals while making a pretty penny (saved them 10s of millions of dollars), means nothing today. Focus on the big picture, and not the individual success of a few, and perhaps this profession has a chance to survive.
      Seek the truth.

  6. I’m very interested in helping my Company adopt the off-shouldering or delegation system. Too much time is spent by appraisers doing $15 an hour work when we could be generating many multiples of that doing what we have real expertise in. I work for a large Company that as of now hasn’t seen the value in that approach, insisting that we don’t have the “resources” to make that happen. It seems like simple math to me and a failure to recognize the value of the Appraiser “resource”.

    For Bill J-I’d be interested to hear what your solution is to save the industry?

    Define the problem, Seek the Solution.

  7. Seek the truth lol. 10-years after HVCC and Bill the martyr is still trying to make life swell for a majority who refuse to change and take the time to better themselves. Check out Page 18 in WorkingRE, Summer 2018. “I Can’t, therefore…It’s unbelievable.” Don’t forget, most fee appraisers are accidental or unintentional business owners. The 1% exist because they hustle and use Dustin’s techniques of working on it, not just in it. Bill, the status quo you claim to support should change their mantra from seek the truth to “Get after it!” Rich Hagar even suggests it. Thank you Dustin for all that you do! Get after it!

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