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How Much Are You Worth?
by Dustin Harris, The Appraiser Coach
It’s a simple question: how much per hour are you worth?
If you asked a room full of attorneys what they are worth per hour, do you think they would be able to give you an answer? How accurate do you think their answers would be? If you asked your financial planner how much he or she makes per hour, do you think you would get an accurate answer? Of course you would. It does not matter if you are talking to attorneys, doctors, or plumbers… they know what to charge per hour, because they know what they are worth.
If you were to ask ten random appraisers how much they make per hour, how many of them would be able to tell you accurately? Let me answer for you; less than one. How do I know? I have asked this very question to well over 1,000 appraisers at this point. Less than a dozen have been able to answer with any degree of confidence.
I often hear my appraiser peers complain that they are not treated like the professionals that they are. Some even get upset at me when I use the word “industry” to describe the career we have chosen to be a part of. Yet when it comes down to it, do we run our businesses like professionals or technicians? I can tell you that the answer is more often the latter.
Why is it so important to know what we make or at least what we are worth per hour? The answer can and should affect nearly every other decision we make in our business. Yet, most of the decisions we make have foundations in fees rather than value (an interesting paradox for sure given what we do for a living). How does this thinking play out? We quote fees for our services based mostly on what our peers are charging rather than what we are worth. When we get a call from a client with a potential order in our area, we quote what we think will be competitive with other appraisers vying for the same job rather than what we believe the job is actually worth.
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Don’t misunderstand me; I am not saying this mentality can be completely avoided in the world in which we live. On a micro level, we live and work in a capitalistic (and also highly regulated) world and undercutting our competition is a matter of daily life. Yet, our macro thinking can and must be different for our long-term survival.
Every appraisal business owner should find quiet time on a regular basis to evaluate their business and how things are going. What is your overhead? What are you really paying in taxes? How much do you spend on the little things in your business? Do you have employees? Are they being paid enough? Are they being paid too much? In general, are you charging enough for your services? If not, make a change. It may require that you change completely the type of clients you work for. Unfortunately, many appraisers keep themselves so busy in the day-to-day grind that this “quiet time” never occurs. Consequently, they continue to live paycheck to paycheck and wonder why they are not getting ahead (even in a busy appraisal period).
Now, I am not naive. I realize that this article is more simplistic than reality. The world we live in is the world we live in. We must be realistic. You cannot begin tomorrow by deciding to start charging $1,000 for a 1004UAD and expect to stay in business. However, ignorance of what you are worth per hour is not a path to prosperity.
Successful business owners know their numbers. They know what is coming in the front door, what is being used up, and what is going out the back. They are able to make wise business decisions because they are keenly aware of what they are worth. Are you?
August Webinar: Efficiencies & Increasing Your Business Bottom Line
Presented By: Dustin Harris, The Appraiser Coach
Part 1: August 11th, 10:00 – 11:30 a.m. PST
Part 2: August 18th, 10:00 – 11:30 a.m. PST
“The seminar was very helpful and encouraging in time-saving mobile applications! Thank you for making it available!” – James W.
Are you still hung up on old ways of doing business? Have you adopted the latest technology to help you be more efficient and get more done? Today’s appraisal industry is rapidly changing. With increasing demand on appraisers’ time and attention, it’s more important than ever for appraisers to have the tools, systems, and knowledge they need to leverage technology and run an effective, efficient appraisal office. Whether you’re new to appraising with mobile tools, or you’re looking to sharpen your skills, this webinar gives you actionable steps that you can take today to be more efficient and effective with mobile tools and run your business like a pro. Sign Up Now!
On-Demand Webinars
Did you miss the acclaimed How to Support and Prove Your Adjustments webinar by Richard Hagar, SRA? Expand your knowledge and learn quick and simple methods for proving adjustments that improve the quality of your reports and help you avoid problems, blacklisting and legal actions. Sign Up Now!
Save with a Season Ticket!
Increase your value as an appraiser with all six webinars from our Summer Series, including How to Support and Prove Your Adjustments. Enjoy these on demand webinars at your leisure!.
Regular Price: $237 Season Ticket: $149 (six webinars)
About the Author
Dustin Harris is a successful, 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 also owns and operates The Appraiser Coach where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth. His free podcast can be listened to on iTunes and Stitcher. He and his wife reside in Idaho with their four children. Dustin is also a regular presenter for Working RE/OREP’s webinar series (see below). He is helplessly addicted to Swedish Fish.
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by anon
Trust in technology will be our downfall, not our saving grace. If you can’t perform all the tasks involved with residential appraisal with a pen and paper, you’re just pretending to be an appraiser. Getting tired of the notion that I have to buy foreign made products, and throw out tried and true manual methods, in order to stay competitive. The specialty of an appraiser is the ability to sort out difficult valuation questions, without having to rely on automation. I’m worth as much as I can get, despite the constant conflicts of interest with assignment companies. Mobile appraising is for the birds.
-by Jim Faulkner
We the appraisal industry keep trying to convince ourselves that we are providing expertise to our client, when in reality we are simply providing a service. Expertise is something that a client is willing to pay for when it is available. If an attorney or CPA that you want to use is not readily available, being out of town for example, then you wait for their return. With appraisers the client, typically banks, simply call another appraiser if you cannot meet their demand and fee structure.
-It is what it is and it will not change.
by David Loomis
This is a simple requirement to understanding how a professional practice or ANY commercial enterprise functions. Something I learned in the B School and from my Father, a principal in a large law firm. But knowing it – albeit a depressing insight and doing something is quite another matter. Scope Creep, endless revisions and banks shopping AMCs (I get orders and calls for complex properties as soon as a few minutes after one turns down my bid by another AMC) or as one AMC told me, “if we can’t make money, we just tell the client we can’t cover it rather than take a loss.” I am no fan of Big Government or Big Business, but it seems the only real hope is a Big Union or Appraisal Guild, modeled after the movie industry. If you think about it the similarities are close. Until there is equal strength (in numbers) there can be no widespread solution. Banks have consolidated power and they are fewer in number, that gives them market share and price leadership. Conversely, we have what J K Galbraith called “a geographic dispersion of economic activity” and there is no power in that. Only consolidating into a single or few large voices can that take place. By the time the delays and board stacking took place, “reasonable and customary fees” were gutted on increased exposure. If you use the Consumer Price Index from 1990 and a basis of two appraisals per day @ $250 each, now on reduced productivity, we should be earning $686 per appraisal just to keep pace with income adjusted for inflation and reduced production. And that does not include money which was earned on sending trainees out by themselves, which we can no longer do. As for me, I took my MBA work in real estate and time as a licensed contractor during my college years, paired down my client list (mostly by raising fees to reach my hourly-rate-goal) and started building rental properties and a few spec sales. Earning just enough on long hours to live on in the early years until the rental income exceeded the opportunity cost lost of appraisal work. And if we think appraiser attrition (Avg. age 62ish?) will save us; might want to rethink that. Banks will think of something. They have already proven themselves smarter, more draconian, ruthless and better connected politically than we appraisers. It’s sad for the many of us who really love the actual appraisal process and have survived long enough to acquire “experience and judgment.”
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