Blog posting - March 25, 2008
This is an article I wrote for the magazine WE. This magazine covers topics for appraisers and home inspectors. The article is in response to comments made regarding a previous article written by an appraiser who wrote about making $300,000 per year. One person thought that it was impossible to do quality work and do as many appraisals as the author stated. The other appraiser that responded thought that it was possible if the appraiser was very efficient.
I have done the number of appraisals the author claimed he did and I'm sure many others have also, so I wrote to tell them how I did it. I'm sure there are a lot of ways this can be done depending on the type of assignments and the appraiser. I used my mobile office and support people when there was that much appraisal work coming in.
The doubting appraiser was a general licensed or commercial appraiser. I think he was influenced by his experience appraising commercial properties that take much more time to research than residential properties that are relatively simple form reports.
Working RE (article written March of 2008)
I read the Readers Response to the $300,000 a year appraiser in the last issue and felt compelled to respond. Two appraisers responded to that article, one was skeptical and the other wasn't. I understand the appraiser who doubted that 1,000 appraisals in one year is possible. I averaged 75 appraisals per month from 2001 to 2005 and a few of those years I was over 1,000. Although it is possible to do that many appraisals I also know most appraisers won't spend 10 - 18 hours a day, 7 days a week pumping out appraisals.
The doubting appraiser brought up valid issues of proof reading, equipment problems, home owners not home, weather, answering questions from lenders. These issues are not insurmountable especially if you do quality work and have good equipment and back-up systems. We can't anticipate every question an underwriter can come up with but usually they don't question that many things and often it is a simple matter. The appraiser also mentioned you could never do error-free appraisals at that volume. I have done over 10,000 residential appraisals, I teach appraisal classes at my school, and I consider myself a competent and ethical appraiser. I must add; I have never done a perfect appraisal or maybe even an error-free appraisal, which may be the same thing.
When I took USPAP Instructor Training the concept of perfect appraisals was discussed and it was made clear to me that perfection is not the goal. To produce a perfect appraisal you need perfect data, analysis and conclusions, so thankfully the bar is not that high. The USPAP Standards for, Residential Appraisals (1 & 2), Personal Property Appraisals (7 & 8) and Business Appraisals (9 & 10) state the minimum requirements; that is where the bar is. We are also judged by our peers in the appraisal profession. Be careful with that one. For example, if you think appraisers in your area don't adjust for seller concessions you still have to adjust for seller concessions.
The other respondent stated that the appraiser doing 1,000 appraisals per year is obviously efficient and he thought the volume was possible. I agree with this appraiser. I think that reaching that volume is a function of efficiency, experience, personal motivation and the type of appraisal assignments, so let me tell you how I do appraisals when there is that much work available.
I have a system that makes this volume possible while keeping the quality up. Every appraiser develops their own style, what I do wouldn't appeal to everyone. Since 1994 I have been using mobile offices. I'm on my 4'th now and it has 210,000 miles on it.
My mobile office has 2 computers linked to the internet, GPS navigation, printers, scanners, a cooler and anything else I think I need on the road. I can do more in my mobile office than I can in my regular office. The phones aren't ringing, nobody comes to visit, and everything I need is within 5 feet. I cover a large part of Southeast Michigan, which has a pretty good road system. As we are going 75 on I-75 either I'm driving or a Trainee is driving and the other is working on the report. This is a good way to train someone and it is safer than driving and trying to multi task.
When we get to the property I inspect it (walk-through) and take the photos while the trainee measures. The Trainee then inspects the interior (walks-through) and takes the notes. By the time the Trainee walks out to the van the subject pictures are printed and I'm checking to make sure I have the right comparables and mapping them. While the Trainee is doing the sketch I'm finishing up finding comparables and mapping how to get to them to take photos. As we drive to the comparables the trainee or I fills out the URAR. The best case scenario is that by the time we get to the next appointment that report is emailed.
Here is an ideal scenario:
1at appointment at 9:30 a.m., within 5 miles of my office (set from 9:00 - 10:00)
2nd appointment 30 miles away from the office at 11:30 a.m. (set from 11:00 - 1:00)
3rd appointment 30 miles from the 2nd property at 2:30 p.m. (set from (2:00 - 4:00)
When I complete the inspection of the 3rd property I'm 60 miles from the office.
The three properties are standards construction homes in stable neighborhoods with lots of similar sales and active listings; the MLS and public records are easily accessed and reliable in these areas. There is a full time assistant at the office that set up the work file with public records, purchase information, survey, etc., has entered the data in the report and set the appointments.
I look over the data in the reports and pull comparables before leaving. I identify all the sales and listings that look relevant. If I guessed right, the relevant comparables are already identified and mapped in the report before I get there. If I see that I misjudged the property based on the inspection I then search the MLS, public records and if necessary use the cell phone to call the Assessor Office or Local Real Estate Sales Agents to find the best comparables.
In this scenario by 5:00 p.m. we are back at the office and all three reports could have been sent to the clients before we pulled into the parking lot. They would be credible and reliable appraisals, or I wouldn't sign them.
The appraisers that do a high volume may be very experience, or willing to work beyond 9 - 5, or both. The number of appraisals is not as important as the quality of the appraisals and what the appraiser is comfortable doing. If you sacrifice quality for volume it is definitely not worth it. The high volume allows the appraiser to pay for staff, buy software and hardware, join more MLS's, take additional classes, etc. Be careful here too, the appraiser then may have to maintain the high volume to handle the costs.
Doing 1,000 appraisals per year is physically possible but is an ethical and a business decision. If you believe you can do that volume and the quality of your work won't suffer you are half way there. The next consideration is can you devote that much time, and would you want to. The final decision is whether you are incurring costs that you may be stuck with when the volume drops off, or you loose enthusiasm for working around the clock.
Here are some reasons why doing the high volume can be conducive to doing better reports. One reason is being able to afford the things mentioned above. Another is that some people focus better when they are busy. Another is that just as an athlete can get better as the season progresses due to repetition an appraiser can get better by doing a lot of appraisals. Think of times when you took a week or two off; how it felt getting back in the groove, you may have even felt a drop in confidence.
One of my favorite sayings is that you are as good as your last appraisal. I'm not advocating doing 1,000 appraisals a year or using a mobile office. I ‘m just sharing my thoughts on how it is possible to do a high volume from my personal experience.
Joe Paris, IFA, GRI
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