Editor’s Note: While coping with too much business is not a problem for many appraisers at this point in the business cycle, these valuable tips will help you work harder and smarter.
$300,000 a Year Appraising Revisited (again)
Joe Paris, IFA, GRI
I read the Readers Response to the $300,000 a year appraiser in the last issue of WRE and feel 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, seven days a week pumping out appraisals.
The doubting appraiser brought up valid issues of proofreading, equipment problems, homeowners not home, weather, and 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 (USPAP Certified) 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 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. USPAP Standards for Residential Appraisals (1 & 2), Personal Property Appraisals (7 & 8) and Business Appraisals (9 & 10) state the minimum requirements; this is where the bar is. We also are judged by our peers in the appraisal profession. Be careful with this. For example, if you think appraisers in your area don’t adjust for seller concessions, you still have to adjust for seller concessions.
How it’s Done- Going Mobile
The other respondent stated that the appraiser doing 1,000 appraisals per year is obviously efficient and he thought the volume is 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 the volume possible while keeping quality up. Every appraiser develops his or her own style, what I do won’t appeal to everyone. Since 1994 I have been using mobile offices. I’m on my fourth now and it has 210,000 miles on it.
My mobile office has two computers linked to the Internet, GPS navigation, printers, scanners, a cooler and anything else 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 five feet. I cover a large part of Southeast Michigan, which has a pretty good road system. As we are driving 75 miles per hour on I-75, either I’m driving or a trainee is 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 multitask.
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 that I have the right comparables and are 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 one of us fills out the URAR. The best case scenario is that by the time we get to the next appointment that report is emailed.
A Good Day
A good day has one appointment at 9:30 a.m. within five miles of my office (set from 9:00-10:00 a.m.). A second appointment is 30 miles away from the office at 11:30 a.m. (11:00 a.m.-1:00 p.m.). A third appointment is 30 miles from the second property at 2:30 p.m. (2:00– 4:00 p.m.).
When I complete the inspection of the third property I’m 60 miles from the office. The three properties are standard 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. A full-time assistant at the office sets up the work file with public records, purchase information, survey, etc., and 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 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 who do a high volume may be very experienced 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 databases, take additional classes, etc. Be careful here too, you 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 whether you can devote that much time and do 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.
Advantages of Working Hard
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 like 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 the times when you took a week or two off and how it felt getting back into 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.
About the Author
Joe Paris, IFA, GRI is an AQB Certified USPAP Instructor, owner of Real Estate Training Academy and a NAIFA National Instructor.