Appraisers' Free Forum

I got great feedback re: starting up in the appraisal business....so thanks to those who provided the great info!

Just a general question.....how are fees determined. Does it vary by state, or is there an industry standard. Lets say for residential.....is it sq footage and lot/tract/property or is it based on the price range of the house?

For example..1500 sq ft....small lot, 5000 sq ft on two city lots, 15,000 sq ft on 5 acres. (just examples of properties I've worked with in a different capacity). What would the fee scale be on these size homes?

Depends on how complex the assignment is, where it is located, and somewhat the number of appraisers within the area you work.
Supply and demand determine price in my opinion.
How busy are you, is it a good client, is it FHA, etc.etc.

It should be based on a percentage of the total fee, which depends on how experienced the trainee is.

Kat, Annemieke is, I believe, discussing the fee split arrangements. The appraisal fee, however, is to be set due to complexity, not value nor size.
Som areas, a 15,000 SF on five acres are going to be quite easy, due to that is typical for the neighborhood/market.
Other times, a 1200 SF ranch on a slab on five acres could take twice the work as the previously mentioned property.
Thus, the smaller house could be harder to appraise, and require a higher fee.

It depends on the intended use of the appraisal and the level of detail required in the report.

For what you mentioned, the fees could range from $300 to $3,000. In general, I base my fees on how many hours I think it will take to complete. Lending clients receive a break on hourly fees due to the volume of orders and the repetitive nature of the property type.

Under NO circumstances do you base your fees on value.

Goodpasture wrote:Under NO circumstances do you base your fees on value.

You know.....as soon as I posted that, it seemed to be a conflict of interest! Thanks for the confirmation.

Goodpasture wrote:Under NO circumstances do you base your fees on value.

Of course as a general rule of thumb, things get more complex as the value goes up. Of course that is not always true, try a FHA appraisal on a 1915 house in fair condition, 1 oil heater and 2 woodstoves, not a single closet in the house, on 10 acres in a county with 45 sales last year, 20 of those HUD code homes. Today's gem. There might be a few required repairs Sales price $35k.

Then base it on complexity or size or land size or distance from your favorite coffee shop.....hell, base it on whether or not you got laid last night.....just not on value.

I take it by your tone, that I needn't ask about last night. I guess subtlety isn't something that you notice. Go look in the mirror, its Halloween, fright night is upon us.

Goodpasture wrote:Then base it on complexity or size or land size or distance from your favorite coffee shop.....hell, base it on whether or not you got laid last night.....just not on value.

If I'm basing it on that criteria, ain't nobody can afford to get an appraisal!

I always do a comp check before I give them a fee.

Ben .... thanks for setting me straight. I mid-read the OP

Annemieke Roell wrote:Ben .... thanks for setting me straight. I mid-read the OP

Anytime. You've done the same for me. A lot more times!!!

Most of us probably set our fees by the seat of our pants. Unfortunately the customers have decided that they can pressure ofr fast and cheap appraisals and have been succesful in doing so and those have become the industry standards in mortgage work.

There are costs to doing business. Things like computers, internet access, transportation, filing, etc. You need to cover those. Keep in mind that there is not much client loyalty here either.

The only thing that makes much sense is to calculate your fee by the hour and figure out in advance how many hours it takes to produce an appraisal report. Even with that you are facing clients who will tell you what your fee is. There has been a lot of salivating at the feet of our clients and we are now facing starvation wages because of it. Keep your self respect and work for fees that you think reflect your value. Also, even thought you are not your brother's keeper, do remember that if you covet low fee work you will further weaken the profession you have joined.