One of the requirements of your job as an appraiser is getting to the property to appraise it. Unless you are appraising a property within a few blocks of your own house or office, chances are that you will be driving there. Today, the costs of driving -- higher gas prices, higher insurance premiums and higher maintenance costs -- have gone through the roof.
This got me thinking: the cost of almost everything that we, as appraisers, need to do to successfully perform our job has increased substantially. Higher insurance premiums, higher costs for the tools required by USPAP guidelines, higher vehicle costs, and higher costs associated with working for an AMC means we forfeit a large portion of our fee. What we’re left with does not give us much purchasing power.
Let’s rewind 20 years
Two decades ago, gas cost about a dollar per gallon. Let’s face it – almost everything (milk, eggs, etc.) was cheaper, including obtaining and maintaining your appraisal license. But surprisingly, one thing that has pretty much stayed the same is the amount you charge for an appraisal.
In 1994, the average appraisal fee for a residential property was $320. Today, the average appraisal fee is $350. This is a 9% increase over 20 years, far below the rate of inflation. In inflationary terms, this means we are currently being paid less than we were 20 years ago.
Let’s compare the average appraisal fee to the cost of gas during the last 20 years. The graph below shows the percentage gas costs have increased compared to the percentage an appraisal fee has increased.
Gas has increased 239% over 20 years while the amount appraisers collect on average over the last 20 years has increased only 9.375%.
This is a pretty scary picture for appraisers. After factoring in the AMC percentage (25-50%) and our overall higher operating costs, it’s amazing that any of us can survive in this business.
It’s time for a change
Admittedly, demanding a universal fair appraisal fee is not a workable solution. But for too long we have allowed the lender, and now the AMC, to set the rate for a given job. If we all refused to work at these unacceptably low prices and instead agreed to charge an average minimum fee -- perhaps $500 – we could return to the days of getting paid fairly and living as comfortably as we did 20 years ago.
Now it’s your turn
Do you feel like you are struggling to stay afloat in managing your appraisal business? Is it time to come together and demand an average appraisal fee of $500? Let us know your thoughts by leaving a comment below.