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Professional Home Appraisals

Editor’s Note: Appraiser Mike Brunson explains how serving clients best often means giving them what they need, not always what they want.

Growing Business: Giving Clients What They Need
By Mike Brunson

In this period of economic and social change, clients are looking for professional appraisers to answer questions that until now have not been asked. Price and timing are the hot-button issues. While many appraisers are raging against the downward pressure on fees and the increased pressure for faster turn times, I have instead begun to offer my clients an alternative service. Here’s how.

I have several clients who order valuations for internal asset management. The client typically holds paper on a non-performing loan and needs to determine the best course of action. While bidding a recent land assignment, the client noted that my bids were coming back much higher than they expected. The client wanted to know why this assignment warranted a fee that was so much higher than what they desired/expected to pay.

As we discussed the complexity of the assignment and some potential reductions in scope of work, they said, “We don’t really care how much this thing is worth specifically, we just need to know if it is worth more than $x.” It turned out that the client was in second position behind a sizeable first. They suspected that there was little or no equity in the asset but needed an appraisal in the file. The client was requesting bids for a “full appraisal” because that is what they were accustomed to ordering. However, they had no need for the detailed analysis of a traditional “complete” appraisal that provides a specific value reported in summary format.

Here was an opportunity to serve a good client by giving them what they need instead of what they asked for. At the same time, it provided an opportunity to expand my options with this client regarding the services that I can provide as a professional appraiser. I explained that by definition, an appraisal can be expressed as a “specific amount, as a range of numbers, or as a relationship (e.g., not more than, not less than) to a previous value opinion or numerical benchmark (e.g., assessed value, collateral value).” In this case, the amount of the first trust deed would serve as the benchmark. We also discussed the question they were asking: “Is the property worth more or less than $x?” The client agreed that the majority of a traditional appraisal was extraneous to the question. I also explained that despite the negative connotation of the term “restricted,” in this case, a restricted-use appraisal report is acceptable for the intended use and intended user of this assignment. Honestly, my client was hesitant because, like most clients and many appraisers, they are not familiar with the concept of a limited scope, restricted-use assignment.

I spent some additional time and eventually went in to their office to discuss this and future assignments with a similar intended use. Ultimately the client agreed that a restricted-use appraisal report with a limited scope of work is appropriate for their needs. The next day, I delivered a two-page narrative appraisal (plus a certification page and a few client specific documents) using the amount of the first trust deed as a benchmark for the valuation. After completing my research and analysis, I concluded that the subject market value was less than the defined benchmark. I wrote the narrative report from scratch in less than 30 minutes. Not including the time I spent visiting the client (which I consider marketing) I completed the assignment in about 2.5 hours. The $250 fee for this appraisal is well within the client’s expected range.

Re-printed from online – serving real estate professionals for over 10 years.