Why appraisers should stop complaining about bank work
$2,000 for an appraisal?
When I talk to commercial appraisers they often say, “I don’t like to do bank work.” Then WHY are you doing it EVERY day? I don’t think your bank clients would appreciate the attitude. They, after all, are giving you $$$. In what business universe would we complain about our clients?
Say thank you
Be grateful for your bank clients. You’re in a business relationship or you’re not. If you are, then wrap it with technology and great customer service. The product is “an appraisal” yes, but the creation and delivery of the product can be vastly improved.
Your interaction with their customer, the borrower, is uber important. You effectively are representing the bank. Dress nice. Be professional. Be communicative. Avoid launching into a 1,000 questions many of us appraisers are prone to. Be conversational and friendly. Have some EQ.
Low fees or few processes?
What’s the biggest challenge for commercial fee appraisers today? Many say it’s low appraisal fees. In reality, the problem is the lack of comp management, report writing and workflow processes.
It’s EXHAUSTING to plow through an old Word doc getting rid of old subject information, making sure it’s relevant to the current subject and having the confidence not to mess it up.
Yes, back in the day you would get $6,500 to appraise a 300 unit apartment complex. In 2021, it’s more like $2,000. Those days no longer exist. And there’s a reason for it.
So what changed?
Availability of data. If you utter the word “microfiche”, your younger appraisers will bust out laughing. But it’s true. Back in the day, we would actually go to a government building to confirm zoning. Can you imagine?
Build a profitable sandwich
Appraisals are like sandwiches. They can be broken down into ingredients. You need bread, maybe some prosciutto, salami, provolone and a bunch of veggies. Sprinkle in some spices, sauce or whatever suits your sandwich scope of work.
Most appraisers are stuck on monthly production goals when they should be looking at hourly. Let’s say you want to bill $150 per hour. Based on a $2,000 appraisal fee, the goal would be about 13.3 hours to achieve $150 per hour.
Below is typical timeline breakdown for a two approach appraisal report. The example assumes a typical property type: retail, office, industrial or multifamily. Whatever. Don’t over think it.
What may not be super obvious is the HUGE time savings in word processing by organizing an appraisal into components. Creating a library of neighborhoods, zoning and market overviews. The ability to merge in all your comps, adjustment grids, map, subject pictures and a complete addenda.
Without tools, most appraisers take almost 2x as long, or about $75 per hour.
Have good quality ingredients ready to make your sandwich. Avoid getting the data you need while you’re working on a current assignment. You should have it already in your library, updated and ready to go. If you need help, hire somebody to do it for you.
Don’t erase your profit with a bad attitude towards bank work. Make an awesome yummy sandwich that your client would love. Build the sandwich profitably. Don’t erase the bank relationship or your profit.