I was recently in Texas at yet another appraisal conference. The man who was speaking asked everyone to stand up. There were approximately 140 appraisers in the room. He then asked for those under 30 years of age to sit down. About five people did. He asked those under 40 to sit down. About 10 more did. Under 50. About 25% of the room was now sitting. Finally, he asked for those under 60 to sit down. I am not kidding when I tell you that about 60 appraisers (of the original 140) were still standing!!! In other words, 75% of the appraisers at that conference were over 50, and 60% were over 60!!!!
Now, that may not be a scientific look at the industry as a whole. I would dare say that older appraisers are more likely, in general, to attend such conferences, but it is not that far from reality. Now for the kicker; he then asked for hands to go up of those who were currently training new appraisers. Including myself, 5 hands were raised. Out of a room full of 140 active real estate appraisers, only 3% were training new blood to replace those balding heads and crow-feet eyes leaving the industry in mass quantity. See the problem? I have heard that we have lost as much as 30% of our population in the past 3.5 years!
For some, this may not seem like a problem at all. Simple Econ 101 teaches a little something called ‘supply and demand.’ If there are less appraisers, our fees go up, right? Well, maybe, but there are more issues at play here than just appraisal fees. Needless to say, it is not a good thing for our industry (or our clients) to see the number of qualified expert appraisers heading for the hills (or the golf course as the case may be).
So, what can we do to reverse this ominous trend? I will suggest three ways.
1. Reconsider Retirement
Sounds simple, but there are reasons to look at sticking around. As I travel the country and meet with appraisers, there is a common theme among the ‘more seasoned’ professionals. “I used to be able to make a pretty good living as an appraiser,” they will opine. “Not anymore. All this crap they are asking for is just ridiculous. I am not getting paid anywhere near what I am worth. I am done with this and am throwing in the towel!” I understand the frustration, but maybe there are other considerations to look at.
You are well aware that things are not what they used to be. The cheese has moved. Many of us ‘rats’ are in the pantry running around in circles wondering where it went and praying it will soon be returned. A few of us, however, have left the building and found the rich formaggio Italiano somewhere else.
I have seen a handful of disgruntled appraisers lately make this shift. Those who were once determined to find another job are realizing that, with a little creative thinking, there is a better way to make a living. Yes… even as an appraiser.
2. Hire a Trainee this Month
Okay, that is admittedly a bit naive. I am not saying you should go out and hire a trainee for purely altruistic reasons. I believe in charity, but an appraisal business is not a charitable organization. There must be an economic benefit to hire an employee, so let me go a little deeper.
What I AM saying is that there are very viable (profitable) reasons to still hire trainees. Begin by asking yourself a few questions. Are you currently turning down appraisal requests? Are there areas that you are geographically competent in that you are not currently covering but would like to? Are you putting out an inferior product because you do not have enough (or any) extra sets of eyes checking over your work? If you answered “yes” to any of these questions, you may be a candidate for….. (okay, now I am sounding like a sleazy lawyer commercial). But, you may want to consider utilizing a trainee.
I know. I know. “Why would I want to train my competition.” I hear it all the time, and my answer is always the same. “Don’t! Do not train your competition. Make their package to stay with you so sweet that they will have no reason to hang out their own shingle.” Open up your books, and show them how much you really net (most employees do not understand the difference between gross and net fees). Offer to pay them a percentage that is higher, but remind them that they will not have to run the business. How can you pay them a percentage that is higher than your net? Easy. Overhead consolidation and volume pricing.
3. Clients Need to Stop Disqualifying Trainee Use
This one is obviously on the backs of the client and not the appraiser, but maybe this article will get into their hands. Also, I am not going to spend a huge amount of time on this one because I have already written an entire article on this very topic. Needless to say, our clients (AMCs or Lenders) are shooting themselves in the foot by making it nearly impossible for appraisers to use a trainee for INSPECTIONS and/or other significant parts of the appraisal process. I stress inspections because most new appraisers can be trained in a fairly short period of time to do very competent inspections which becomes a huge financial incentive to the business owner to hire. Remember, hiring new appraisers is the goal here. Now, there are still ways to use trainees and comply with most client’s requirements, but that is also another article for another day.
Now, there are other ways to look at this issue, but hopefully you have been given enough to warrant a consideration of this important topic again. There are many cynical appraisers out there who see no reason to even broach the topic of trainees. “I’m not paid enough to do my own work,” they cry. “Why would I want to hire someone else and pay them some of my already meager fee?” I get it, but with all due respect to your point of view, you are looking at this through the wrong paradigm. If you are doing too much and not being paid enough, you are a PERFECT candidate to hire and train a new appraiser.
Now, go create some value!
Dustin Harris is a multi-business owner, but he has found most of his success as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and consultant. He owns and operates The Appraiser Coach (www.theappraisercoach.com) where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth.