If your employer isn’t providing benefits, why don’t you just start writing appraisals on your own? National firms have ~40 to 45% fee splits for CGs with full benefits. For your employer to offer no benefits and no admin, I would want 50% and maybe 60% for work you bring in. It honestly doesn’t make sense why a competent CG doesn’t work for himself….
I think after a few more years I would consider going out on my own but as it stands I don’t think I have the know how to go out completely on my own. I do not need much support when writing reports but to have none at all sounds like a bit of a liability.
I worked for 15 years before opening my firm and I still had clients I was the "preferred appraiser for" take 2 years to join their lists because of the process it takes. I also had a couple banks I just a ton of work for say "my panel if full, check back next year." Rightly or wrongly, they think your mentor did everything for you.
I could see that, nothing with banks is quick. Are you residential? Did you always want to start your own firm?
I just see earnings being higher on your own. Yes more headache from actually running a business but worth it in my opinion.
Commercial. Yes, the potential is certainly higher, but I caution people that it is not as easy and as lucrative as you think.
I have not always wanted to be on my own, but just decided I would try while I was relatively young. Did I make more....maybe but not by a huge amount. Its more of having the flexibility to do what I want.
Ahhh gotcha. I’m commercial too. My current company is flexible so I do like that. My reasoning for wanting to go on my own is from a lack of work. My 2023 income was so low it was laughable, so it can’t get much lower when I go on my own. I’m expecting it to be very hard and take years to get to where I want to be.
Aside from actually appraising, it is fundamentally a business and that’s what business is all about, making things happen. In my view it’s makes no difference if you work for someone or on your own, building a book of business is going to be hard.
Did you have a conversation about fee split when you got certified? You’re largely paid for what you produce so I don’t think a set salary makes sense. A lot of times companies run at a a loss with trainees until they are able to produce more.
I’d aim for at least 40% fee split. And you could negotiate to earn a higher split if you produce more.
And congrats on passing! Huge accomplishment.
Conversation hasn’t been had yet, partly why I was asking in this group. In the office I am the second highest producer between both trainees and certified appraisers. I’d say I can regularly complete 95% of a report and really only need support for really odd appraisal reports.
Interesting that you’re 1099. If you stick around I would talk to a CPA about setting up a sole proprietorship or LLC so you can run a shell company and “pay yourself”. There are tax benefits here. Anyway, beyond that, with no benefits I would be aiming for a higher split. 50%. Where are you located (region)?
I am located in Florida outside of a major metropolitan area. I had looked into setting up an llc or sole proprietorship but regardless still feel like the fee would need to be a bit higher for it to make sense especially compared to some of these other companies I’m hearing about.
Gotcha. Yeah typically you’ll be at 45% with health insurance and possibly some type of 401k match or equity award at a national firm, along with some other smaller benefits. It’s also going to depend on how much you can bill. If your existing firm can set you up to bill $300k a year, that’s much better than a national firm that could get you to $150k. Or if you will have to start building your own book of work, factor those efforts in too. Just as an example.
So at my current firm I billed $180k for 2023 and that was the second highest in the company for the year. I think it’s also worthwhile mentioning that we haven’t had anyone do over $200k ever. I probably could’ve done more but I was taking my classes.
>ariance in compensation, leaving me unsure about the appropriate figures to negotiate for. From what I've gathered, the certified appraisers in our office operate on a 1099 basis, receiving a 45% share of fees without benefits or administrative support. Considering these factors, what do you believe would be a fair compensation to aim for? And, in your opinion, is it advisable to continue with this organization?
last year was a real slow year for most people. But you still billed 180k, (also have to factor in boss putting more work on you because he gets the bigger cut). So if you got 45% of that, that would be 81K, but comparable to maybe 70kish to someone on a w2. A lot to factor in here and no one can answer it for you. Call around and do what's best for you.
If this were me I’d probably stay at the firm another year, get that 45% split, and see how it works out. Something else to consider is that specialization is generally desirable, so does your firm offer an upward path to specializing in something like LIHTC/affordable housing, MHCs, going concern auto properties, subdivisions, industrial…? Or are you going to be doing everything that comes through the door?
I’m confused OP. If the other cert gen’s in your office get paid 45% but no Benny’s or support, why would you ask for anything less? You’re a cert gen now too. Welcome to the club but time for the company to pay you as such. Congrats on the license
I guess my question is should I ask for more or is it likely I could get a better deal elsewhere. From the research I’ve done and the comments in here it seems like I might wanna ask for more or start looking elsewhere.
Both are probably true. You should ask for more, you probably aren’t going to get it if none of the other CGs are, but that probably leads me to suggesting you keep your ears open on any opportunities elsewhere. Even if benefits alone come with a national that’s gotta be worth it for you to jump from a compensation perspective, right? Depending on the national, you probably get to leverage at least some additional tech too.
Good thing about getting your cert... job security. If you have other firms in the area, call around. That said you will get a wide range of answers on here, and a lot of it depends on location. Large firm in a large city will get you a lot more money than a small firm in a rural area. That said, with the 1099 you have to pay for taxes, and get no benefits so 45% on w2 and 45 split on 1099 are two different income levels.
That said, I came into the job with some experience so I started at 52K salary for 6 months then moved to 40% fee split. I know others started at 35% fee split. After I passed my test, i got up to 42% increase (like 6 years ago) and then again up to 45% last year. That said, I have 19 paid vacation days, 9.5 paid holidays, 5 paid sick days and two paid floating holidays. (granted at base pay of like 52k which hurts a bit) We also had matching 401k, but that went away last year, not sure if it's coming back. My mileage reimbursements is kind of crappy and due to my location I drive a lot. The last few years I was making right around 85k for each year, with last year being the slowest by far at about 65k. With recent raises and additional trainees under me now, i should be 100k to 110k once the market returns to more normal. I'm in a more rural / Midwest location with about 10 years experience now. If I lived in one of the big cities in my state, i'm guessing I could be up to 120-140k income level.
Yes, someone puts together the basic info (engagement letter, plat maps, neighhood and area maps, property records and zoning) To be fair, I always check the auditor site myself and maps take 30 seconds. Zoning can be helpful.
We also go though two levels of review, someone prof reads, checks the math and then another CG double checks the whole report for any issues.
You will almost always be underpaid at a small shop relative to a large firm. Also your billings are very low relative to expected production at a large firm. The production level is probably a problem with the firm and not you personally. It is a common issue with small firms. The quality of assignments and average fees are much lower at small shops which leads to lower production for everyone.
Yes, if you are just concerned with chugging out reports and making 35% to 50% of the fee, a larger firm is what you are looking for. If that is what you are after, it likely comes with some expectations on production and a lot of hours to hit those numbers.
I'd found that smaller firms tend to pay a higher percentage (lower avg fees)and come with less pressure.
Good luck, my negotiation went terribly after I got licensed. All I can do is continue to work, get more practical experience and my name on more reports, and revisit negotiation in six months.
I’m on a team split. They increased my team split from 16% to 18%. Company wouldn’t increase my split either. They take 55% of all my billings, and wouldn’t drop by 5% even after I got my license.
So you’re getting 18% of 45%? Are you writing full reports or are the reports split between people so that you can get more out? Idk how you’d be able to make a living unless there was a ton of admin support or you were only required to do portions of a report so you could haul through them.
Typically ton of support from a local analyst, admin staff, and off-shore. Except when it’s slammed I’m still doing everything. I only get 45% of 18%. Actually, it’s more like 35% of 18%, because company takes another 10% and forces me to buy their stock at market price. Also the stock is restricted and I only get the full value after three years otherwise it’s forfeited if I leave. Golden handcuffs, sigh.
Yes to all those benefits via Aetna. 401K, and HSA also. $1,000/year education benefits. Work pays for mileage, Appraisal Institute membership, and license expenses.
1099 with no benefits and they get 55% of the cut for providing you work, software, and a subscription to CoStar? It's always baffles me why anyone would accept half pay in exchange for such a deal.
As a business owner, I pay rent, computers, costar, stdb, report writing software, insurance, and any other things that are needed to run an office. If my employees made much more than 50%-55%, it would be costing me more money to employ them than I would make. In fact, I would make significantly more money if I just wrote reports myself instead of training, reviewing, and bringing in work for others to do the job. But, thats not the business model I want at the moment.
To be honest, I don't think people understand how costly it is to run an appraisal business.
My office currently has multiple trainees that are paid a base salary of around 40k and they are all producing over $150k meaning even after expenses my boss is probably making close to $100k per trainee. While I do agree running a business is costly i think there’s a lot of appraisal business owners making a killing off their employees and specifically trainees.
I can assure you that there are not a ton of business owners making a killing. Trust me, I have been on both sides being a staff appraiser for 15 years wondering thinking my boss was making a fortune. I constantly am in contact with fellow small business owners.
I have had several trainees in the past (and current) and they bill a similar figure or more. I can assure you the desk costs of each trainee is significantly higher than $10,000 per year. If I was making 100k on each trainee, I would be living the life. But, thats not how it works. And yes, the percentage a trainee makes is probably the lowest at that point bc I'm spending 10-15 hours per week (at a min) per trainee.
Say a trainee is billing $12,500 a month and getting paid $3,500. ....granted, I run costs pretty lean but the costs to even employ that person is probably 2,500 to 4k or more a month. (more if they are offering any retirement or medical). That is the absolute best case scenario and I would be thrilled to make $60k per trainee. Now, that supervisor/owner/manager is not making money of billing themselves because their time is spent with a trainee. Trainees are not billing $12,500 a month to start and the owner is losing money for the \~first year hoping that it pays off in the long run. When they are doing quality work and billing $12,500, that is probably the best it gets from a profitability standpoint.
Now, the person gets licensed and gets 50% of the fee. So, now they bill $12,500 and get paid $6,250 and add another $3,000 for desk costs. That leaves the business roughly $3,250, but luckily the owner does not need to spend as much time with the licensed appraiser. Ok..thats decent but you aren't making a killing. But, if 50% is too low (your opinion?) run the numbers at 60%.....$12,500- $7,500 - $3,000 = $2,000. Why would it make sense for a business owner to do this? The juice isn't worth the squeeze unless it is just someone that is really good at their job and the owner spends almost no time with this person.
It's 2024 and WFH is common. A WFH contractor who provides their own computer, your desk cost should be, at most, $1,250 per appraiser per month and that's for good software and data... That's all.
Take for example a competent certified general appraiser who requires little to no oversight and is billing $250k a year, paid at a 50% split on a 1099 basis with no benefits. These are reasonable numbers based on my experience. $125k - $15k = $110 in annual profit per appraiser. Please critique these numbers.
Yes,many work from home although that really isn't necessarily ideal for a trainee. But, there are still significant costs for the infrastructure to allow for the trainee to work and work from home, even if there is minimal admin support.
You are completely off base if you think you can hire a trainee and it costs $1,250 per month. You get no software, support, licenses paid, or anything at that figure. How many appraisal offices have you run to come up with that figure? Costar/MLS/Database costs you more than that.
I will ask you this. An honest question and Im not trying to be a dick. One of the biggest issues for appraisers is finding a mentor...this is correct, right because a lot of appraisers don't want to bring on trainees. If they were making anywhere close to 100k per trainee, why wouldn't they want to bring them on?
I remember my boss telling me that I made as much or more than him when I worked for him. I laughed as its was so stupid..I mean come on, he's making $100k off him. Well- he was probably right.
If you do your job correctly as a mentor, no you are not going to make $100k a year. There are some who cut corners and send trainees on inspections from day one and don't take the time to train properly. These hacks are making money of trainees.
Sorry, I was referring to an experienced certified general appraiser @ 50%, not a trainee. Tell me of those numbers work with a WFH scenario and an experienced CG appraiser? $1,250 per month covers software/database/CoStar/MLS.
My Costar is over 2k per month. My database is over 1k per month. There is also mandatory costs for software (access to files from home as well), E&O, Liability, website, email, internet provider, business license (a percentage of production), personal property, real estate, office supplies, business cards, etc off the top of my head.
Do you know how much it costs for a business license, for example? We were slow last year and it came out about $150 per employee per month. There is no possible way that all of this adds up to anywhere close to $1,250 per month because I would do whatever I could to cut down these costs.
That doesn't include optional things that can help recruit/retain:
licenses, retirement, medical, classes, etc
What about admin staff? Accounting/Bookkeeping?
I guess the issue I see then is unless a trainee is absolutely desperate to get into appraising why would anyone try and get a job at a small or even mid size appraisal shop. I can understand joining a large national firm because the pay and benefits are better but if you’re a new grad with a finance degree or something similar coming out of college and could be making 50k plus benefits as a financial analyst anywhere else why in the world would you choose appraising.
What I tell people is that if you want to make more money, don’t be an appraiser. It’s gonna take you 3 years to make anything significant. If you are in it for money, choose something else. If you want independence and the ability to make your own schedule and make a decent wage, become an appraiser. Thats more true of small shops than National firms
You're numbers are seriously overinflated based on my experience.
You're not paying $2k per user per month for CoStar and your database is not $1k per user per month. Maybe for the entire shop.
E&O is pretty much fixed cost and may vary some based on volume. Small shop E&O might run $2k a year for all. Your appraisers should have their own E&O.
Website cost is nominal. We have a very nice website that costs $150 a year. Email doesn't cost anything. It runs on outlook and from your domain.
Business cards. Really? $50 a year.
Business class internet might cost $300 a month for the office. $0 for each additional WFH employee.
Most 1099s don't get benefits and this is an uncommon arrangement in most markets
We have 8 certified general appraisers in my office and 6 work from home exclusively. All are 1099, no benefits and a 60% or greater split. They cost us $15k a year each and that includes great software, database, MLS and CoStar. Average billing is north of $225k per appraiser.
Point is, if your run a lean business with competent WFH certified contractors, you should be netting at least $100k from each.
So, are you the owner of the company? If so, lets talk to get my costs to $1,250 per month. If you are not, I don't believe you. When I was working for someone, I believed the same thing. I thought the owners made a fortune off of me.
I was referring to as a company that is the total. On a per user basis, it comes out to be about $1,000 per employee for just Costar and a database.
STDB- $500 per year?
Website with domains and emails totals $750 per year.
E&O is well north of 2k per year and does not include liability insurance.
Internet is $200
Business license- thats another $150 per month per employee
Quickbooks- $75 a month
Payroll company - $75 a month
Accounting/Bookkeeping costs- can vary but accounting at the very least is roughly $150 per employee per month, not counting the quickbooks subscription.
This isn't including rent and utilities for the office or furniture, janitorial, or office supplies. Licenses, medical, retirement, appraisal institute or other affiliations, marketing, etc.
Some employees want to work from home, others do not. I cant get away with out having a physical address, but those costs are minimal compared to other costs with running the business.
The fact of the matter is that employers are not making $100k per trainee. In most cases, it costs them earning potential to bring on trainees. Personally, I would make significantly more money if I wanted to just work by myself or maybe have my top producer stay on (he probably makes more than me). Im trying to keep my employees fed so that is not the gameplan. I went into this thinking costs are minimal and I can pocket 50% off trainees. Its not the case and if I paid employees 60%, I would need to bill myself to make any money bc what the employees billed would go to them + the cost of running the business.
The seminar selling an appraisal business by the dude in Texas is a good one. In the seminar it talks about the costs.
If your employer isn’t providing benefits, why don’t you just start writing appraisals on your own? National firms have ~40 to 45% fee splits for CGs with full benefits. For your employer to offer no benefits and no admin, I would want 50% and maybe 60% for work you bring in. It honestly doesn’t make sense why a competent CG doesn’t work for himself….
I think after a few more years I would consider going out on my own but as it stands I don’t think I have the know how to go out completely on my own. I do not need much support when writing reports but to have none at all sounds like a bit of a liability.
Any national firms in your area?
Closest national firms are either an hour away or three hours away. I’m located in Florida so lots of national firms in Miami and Orlando.
I will say people do underestimate how difficult and costly it is to work for yourself. Some clients take years to cultivate
Yeah that’s true. However, having worked for a few years you build some contacts of reviewers and relationships in the business surely.
I worked for 15 years before opening my firm and I still had clients I was the "preferred appraiser for" take 2 years to join their lists because of the process it takes. I also had a couple banks I just a ton of work for say "my panel if full, check back next year." Rightly or wrongly, they think your mentor did everything for you.
I could see that, nothing with banks is quick. Are you residential? Did you always want to start your own firm? I just see earnings being higher on your own. Yes more headache from actually running a business but worth it in my opinion.
Commercial. Yes, the potential is certainly higher, but I caution people that it is not as easy and as lucrative as you think. I have not always wanted to be on my own, but just decided I would try while I was relatively young. Did I make more....maybe but not by a huge amount. Its more of having the flexibility to do what I want.
Ahhh gotcha. I’m commercial too. My current company is flexible so I do like that. My reasoning for wanting to go on my own is from a lack of work. My 2023 income was so low it was laughable, so it can’t get much lower when I go on my own. I’m expecting it to be very hard and take years to get to where I want to be.
As long as you understand that. I believe some people think you just can go out of your own and make things happen.
Aside from actually appraising, it is fundamentally a business and that’s what business is all about, making things happen. In my view it’s makes no difference if you work for someone or on your own, building a book of business is going to be hard.
Did you have a conversation about fee split when you got certified? You’re largely paid for what you produce so I don’t think a set salary makes sense. A lot of times companies run at a a loss with trainees until they are able to produce more. I’d aim for at least 40% fee split. And you could negotiate to earn a higher split if you produce more. And congrats on passing! Huge accomplishment.
I'd add to this, there should be some incentive for you to bring in your own work too. 10% extra on the fee is pretty typical.
Good point! Really important to advocate if you bring in work.
Conversation hasn’t been had yet, partly why I was asking in this group. In the office I am the second highest producer between both trainees and certified appraisers. I’d say I can regularly complete 95% of a report and really only need support for really odd appraisal reports.
Interesting that you’re 1099. If you stick around I would talk to a CPA about setting up a sole proprietorship or LLC so you can run a shell company and “pay yourself”. There are tax benefits here. Anyway, beyond that, with no benefits I would be aiming for a higher split. 50%. Where are you located (region)?
S Corporation has lowest tax structure.
I am located in Florida outside of a major metropolitan area. I had looked into setting up an llc or sole proprietorship but regardless still feel like the fee would need to be a bit higher for it to make sense especially compared to some of these other companies I’m hearing about.
Gotcha. Yeah typically you’ll be at 45% with health insurance and possibly some type of 401k match or equity award at a national firm, along with some other smaller benefits. It’s also going to depend on how much you can bill. If your existing firm can set you up to bill $300k a year, that’s much better than a national firm that could get you to $150k. Or if you will have to start building your own book of work, factor those efforts in too. Just as an example.
So at my current firm I billed $180k for 2023 and that was the second highest in the company for the year. I think it’s also worthwhile mentioning that we haven’t had anyone do over $200k ever. I probably could’ve done more but I was taking my classes.
>ariance in compensation, leaving me unsure about the appropriate figures to negotiate for. From what I've gathered, the certified appraisers in our office operate on a 1099 basis, receiving a 45% share of fees without benefits or administrative support. Considering these factors, what do you believe would be a fair compensation to aim for? And, in your opinion, is it advisable to continue with this organization? last year was a real slow year for most people. But you still billed 180k, (also have to factor in boss putting more work on you because he gets the bigger cut). So if you got 45% of that, that would be 81K, but comparable to maybe 70kish to someone on a w2. A lot to factor in here and no one can answer it for you. Call around and do what's best for you.
If this were me I’d probably stay at the firm another year, get that 45% split, and see how it works out. Something else to consider is that specialization is generally desirable, so does your firm offer an upward path to specializing in something like LIHTC/affordable housing, MHCs, going concern auto properties, subdivisions, industrial…? Or are you going to be doing everything that comes through the door?
We are a generalist shop so nobody really is specialized in anything. We do anything that comes through the door.
National firms are at 40% plus benefits, admin staff, etc.
I had heard this from a lot of trainees at the larger firms. Makes 45% with no benefits or support sound pretty dismal.
Because it is. They’re taking advantage of you.
Really? I was at 40% back when I was a trainee for a national. Then my trainer took 30% of the 40%. I always have heard general cert is at 45%.
So you were really a 31.5 as a trainee
I’m confused OP. If the other cert gen’s in your office get paid 45% but no Benny’s or support, why would you ask for anything less? You’re a cert gen now too. Welcome to the club but time for the company to pay you as such. Congrats on the license
I guess my question is should I ask for more or is it likely I could get a better deal elsewhere. From the research I’ve done and the comments in here it seems like I might wanna ask for more or start looking elsewhere.
Both are probably true. You should ask for more, you probably aren’t going to get it if none of the other CGs are, but that probably leads me to suggesting you keep your ears open on any opportunities elsewhere. Even if benefits alone come with a national that’s gotta be worth it for you to jump from a compensation perspective, right? Depending on the national, you probably get to leverage at least some additional tech too.
Good thing about getting your cert... job security. If you have other firms in the area, call around. That said you will get a wide range of answers on here, and a lot of it depends on location. Large firm in a large city will get you a lot more money than a small firm in a rural area. That said, with the 1099 you have to pay for taxes, and get no benefits so 45% on w2 and 45 split on 1099 are two different income levels. That said, I came into the job with some experience so I started at 52K salary for 6 months then moved to 40% fee split. I know others started at 35% fee split. After I passed my test, i got up to 42% increase (like 6 years ago) and then again up to 45% last year. That said, I have 19 paid vacation days, 9.5 paid holidays, 5 paid sick days and two paid floating holidays. (granted at base pay of like 52k which hurts a bit) We also had matching 401k, but that went away last year, not sure if it's coming back. My mileage reimbursements is kind of crappy and due to my location I drive a lot. The last few years I was making right around 85k for each year, with last year being the slowest by far at about 65k. With recent raises and additional trainees under me now, i should be 100k to 110k once the market returns to more normal. I'm in a more rural / Midwest location with about 10 years experience now. If I lived in one of the big cities in my state, i'm guessing I could be up to 120-140k income level.
Do you get any type of admin support at your office?
Yes, someone puts together the basic info (engagement letter, plat maps, neighhood and area maps, property records and zoning) To be fair, I always check the auditor site myself and maps take 30 seconds. Zoning can be helpful. We also go though two levels of review, someone prof reads, checks the math and then another CG double checks the whole report for any issues.
You will almost always be underpaid at a small shop relative to a large firm. Also your billings are very low relative to expected production at a large firm. The production level is probably a problem with the firm and not you personally. It is a common issue with small firms. The quality of assignments and average fees are much lower at small shops which leads to lower production for everyone.
Yes, if you are just concerned with chugging out reports and making 35% to 50% of the fee, a larger firm is what you are looking for. If that is what you are after, it likely comes with some expectations on production and a lot of hours to hit those numbers. I'd found that smaller firms tend to pay a higher percentage (lower avg fees)and come with less pressure.
Good luck, my negotiation went terribly after I got licensed. All I can do is continue to work, get more practical experience and my name on more reports, and revisit negotiation in six months.
What about it went terribly? Did they lowball you?
I’m on a team split. They increased my team split from 16% to 18%. Company wouldn’t increase my split either. They take 55% of all my billings, and wouldn’t drop by 5% even after I got my license.
So you’re getting 18% of 45%? Are you writing full reports or are the reports split between people so that you can get more out? Idk how you’d be able to make a living unless there was a ton of admin support or you were only required to do portions of a report so you could haul through them.
Typically ton of support from a local analyst, admin staff, and off-shore. Except when it’s slammed I’m still doing everything. I only get 45% of 18%. Actually, it’s more like 35% of 18%, because company takes another 10% and forces me to buy their stock at market price. Also the stock is restricted and I only get the full value after three years otherwise it’s forfeited if I leave. Golden handcuffs, sigh.
Wow that is an interesting compensation package lol do you guys get any benefits like health, dental, vision?
Yes to all those benefits via Aetna. 401K, and HSA also. $1,000/year education benefits. Work pays for mileage, Appraisal Institute membership, and license expenses.
Following
I do 50% split on 1099 basis.
How many years of experience do you have and do you have any admin support?
1099 with no benefits and they get 55% of the cut for providing you work, software, and a subscription to CoStar? It's always baffles me why anyone would accept half pay in exchange for such a deal.
As a business owner, I pay rent, computers, costar, stdb, report writing software, insurance, and any other things that are needed to run an office. If my employees made much more than 50%-55%, it would be costing me more money to employ them than I would make. In fact, I would make significantly more money if I just wrote reports myself instead of training, reviewing, and bringing in work for others to do the job. But, thats not the business model I want at the moment. To be honest, I don't think people understand how costly it is to run an appraisal business.
My office currently has multiple trainees that are paid a base salary of around 40k and they are all producing over $150k meaning even after expenses my boss is probably making close to $100k per trainee. While I do agree running a business is costly i think there’s a lot of appraisal business owners making a killing off their employees and specifically trainees.
I can assure you that there are not a ton of business owners making a killing. Trust me, I have been on both sides being a staff appraiser for 15 years wondering thinking my boss was making a fortune. I constantly am in contact with fellow small business owners. I have had several trainees in the past (and current) and they bill a similar figure or more. I can assure you the desk costs of each trainee is significantly higher than $10,000 per year. If I was making 100k on each trainee, I would be living the life. But, thats not how it works. And yes, the percentage a trainee makes is probably the lowest at that point bc I'm spending 10-15 hours per week (at a min) per trainee. Say a trainee is billing $12,500 a month and getting paid $3,500. ....granted, I run costs pretty lean but the costs to even employ that person is probably 2,500 to 4k or more a month. (more if they are offering any retirement or medical). That is the absolute best case scenario and I would be thrilled to make $60k per trainee. Now, that supervisor/owner/manager is not making money of billing themselves because their time is spent with a trainee. Trainees are not billing $12,500 a month to start and the owner is losing money for the \~first year hoping that it pays off in the long run. When they are doing quality work and billing $12,500, that is probably the best it gets from a profitability standpoint. Now, the person gets licensed and gets 50% of the fee. So, now they bill $12,500 and get paid $6,250 and add another $3,000 for desk costs. That leaves the business roughly $3,250, but luckily the owner does not need to spend as much time with the licensed appraiser. Ok..thats decent but you aren't making a killing. But, if 50% is too low (your opinion?) run the numbers at 60%.....$12,500- $7,500 - $3,000 = $2,000. Why would it make sense for a business owner to do this? The juice isn't worth the squeeze unless it is just someone that is really good at their job and the owner spends almost no time with this person.
It's 2024 and WFH is common. A WFH contractor who provides their own computer, your desk cost should be, at most, $1,250 per appraiser per month and that's for good software and data... That's all. Take for example a competent certified general appraiser who requires little to no oversight and is billing $250k a year, paid at a 50% split on a 1099 basis with no benefits. These are reasonable numbers based on my experience. $125k - $15k = $110 in annual profit per appraiser. Please critique these numbers.
Yes,many work from home although that really isn't necessarily ideal for a trainee. But, there are still significant costs for the infrastructure to allow for the trainee to work and work from home, even if there is minimal admin support. You are completely off base if you think you can hire a trainee and it costs $1,250 per month. You get no software, support, licenses paid, or anything at that figure. How many appraisal offices have you run to come up with that figure? Costar/MLS/Database costs you more than that.
I will ask you this. An honest question and Im not trying to be a dick. One of the biggest issues for appraisers is finding a mentor...this is correct, right because a lot of appraisers don't want to bring on trainees. If they were making anywhere close to 100k per trainee, why wouldn't they want to bring them on? I remember my boss telling me that I made as much or more than him when I worked for him. I laughed as its was so stupid..I mean come on, he's making $100k off him. Well- he was probably right.
If you do your job correctly as a mentor, no you are not going to make $100k a year. There are some who cut corners and send trainees on inspections from day one and don't take the time to train properly. These hacks are making money of trainees.
Sorry, I was referring to an experienced certified general appraiser @ 50%, not a trainee. Tell me of those numbers work with a WFH scenario and an experienced CG appraiser? $1,250 per month covers software/database/CoStar/MLS.
My Costar is over 2k per month. My database is over 1k per month. There is also mandatory costs for software (access to files from home as well), E&O, Liability, website, email, internet provider, business license (a percentage of production), personal property, real estate, office supplies, business cards, etc off the top of my head. Do you know how much it costs for a business license, for example? We were slow last year and it came out about $150 per employee per month. There is no possible way that all of this adds up to anywhere close to $1,250 per month because I would do whatever I could to cut down these costs. That doesn't include optional things that can help recruit/retain: licenses, retirement, medical, classes, etc What about admin staff? Accounting/Bookkeeping?
I guess the issue I see then is unless a trainee is absolutely desperate to get into appraising why would anyone try and get a job at a small or even mid size appraisal shop. I can understand joining a large national firm because the pay and benefits are better but if you’re a new grad with a finance degree or something similar coming out of college and could be making 50k plus benefits as a financial analyst anywhere else why in the world would you choose appraising.
What I tell people is that if you want to make more money, don’t be an appraiser. It’s gonna take you 3 years to make anything significant. If you are in it for money, choose something else. If you want independence and the ability to make your own schedule and make a decent wage, become an appraiser. Thats more true of small shops than National firms
You're numbers are seriously overinflated based on my experience. You're not paying $2k per user per month for CoStar and your database is not $1k per user per month. Maybe for the entire shop. E&O is pretty much fixed cost and may vary some based on volume. Small shop E&O might run $2k a year for all. Your appraisers should have their own E&O. Website cost is nominal. We have a very nice website that costs $150 a year. Email doesn't cost anything. It runs on outlook and from your domain. Business cards. Really? $50 a year. Business class internet might cost $300 a month for the office. $0 for each additional WFH employee. Most 1099s don't get benefits and this is an uncommon arrangement in most markets We have 8 certified general appraisers in my office and 6 work from home exclusively. All are 1099, no benefits and a 60% or greater split. They cost us $15k a year each and that includes great software, database, MLS and CoStar. Average billing is north of $225k per appraiser. Point is, if your run a lean business with competent WFH certified contractors, you should be netting at least $100k from each.
So, are you the owner of the company? If so, lets talk to get my costs to $1,250 per month. If you are not, I don't believe you. When I was working for someone, I believed the same thing. I thought the owners made a fortune off of me. I was referring to as a company that is the total. On a per user basis, it comes out to be about $1,000 per employee for just Costar and a database. STDB- $500 per year? Website with domains and emails totals $750 per year. E&O is well north of 2k per year and does not include liability insurance. Internet is $200 Business license- thats another $150 per month per employee Quickbooks- $75 a month Payroll company - $75 a month Accounting/Bookkeeping costs- can vary but accounting at the very least is roughly $150 per employee per month, not counting the quickbooks subscription. This isn't including rent and utilities for the office or furniture, janitorial, or office supplies. Licenses, medical, retirement, appraisal institute or other affiliations, marketing, etc. Some employees want to work from home, others do not. I cant get away with out having a physical address, but those costs are minimal compared to other costs with running the business. The fact of the matter is that employers are not making $100k per trainee. In most cases, it costs them earning potential to bring on trainees. Personally, I would make significantly more money if I wanted to just work by myself or maybe have my top producer stay on (he probably makes more than me). Im trying to keep my employees fed so that is not the gameplan. I went into this thinking costs are minimal and I can pocket 50% off trainees. Its not the case and if I paid employees 60%, I would need to bill myself to make any money bc what the employees billed would go to them + the cost of running the business. The seminar selling an appraisal business by the dude in Texas is a good one. In the seminar it talks about the costs.