The 10 Biggest Mistakes Most Appraisers Make in Running Their Businesses:

How to Increase Your Profits by Avoiding These Costly Blunders

By Dustin Harris

Introduction In 2002, I worked an average of 65 hours per week and made just over $75,000 per year.

In 2009 (when many appraisers were going out of business), I was working an average of

35 hours per week and grossing more than half a million! No, I did not change careers. I

was a residential real estate appraiser then. I am a residential real estate appraiser now.

No, I did not start a multi-level marketing business on the side. I was doing the exact

same work in the exact same areas, but with different results. The truth is, you can make

more money while working less. Yes, I said „More Money, Less Work!‟ How do I know? I am living proof, and I want to show you how to do the same thing.

Now, I know what you are thinking: Why

would this guy want to show me

how to make a ton of money if he is

already doing that well as an appraiser?

Good question. I‟ve asked it many times

myself when I see gurus trying to sell

their books at Barnes and Nobel®. I will

be completely authentic and candid with

you. The fact is, I love to teach. Oh, I

enjoy appraising as well. It is great work

and very rewarding, but it is not what I was born to do. I was born to teach. I love to

teach using various mediums including writing, lecturing, and one-on-one

coaching/mentoring. I have been blessed to find some true principles that have

revolutionized the way I do business (by that, I mean they have made me a lot of money).

Yes, it is also true that I have been able to increase my gross receipts by 7x‟s while

actually managing to cut my work hours by nearly half! The funny thing is that the methods

I used to get there are not rocket science... but they work. Not only did they work for me,

they will also work for anyone else who is willing to try them. There are many reasons appraisers go into business for themselves. Most have a desire to

be their own boss, hoping to make a lot of money in the process. Unfortunately, most

appraisers are not capitalizing on either one. Think about it; are you making the kind of

money you dreamed you would make when you started this career? Furthermore, are

you working the hours you planned to work when you decided that you wanted the freedom

of being the business owner? Come on, let‟s be honest now.

The fact is, it is easy to slip into the same rut that most every other appraiser (and for

that matter, every other self-employed individual) is in. We work our tails off and most of

what we make goes to Uncle Sam. It just ain‟t fair! Allow me to let you in on a secret; it

doesn‟t have to be that way! I know this is starting to sound like a 2 A.M. infomercial, but

this is not about flipping houses, selling soap, or Sham-Wows®. I have been a real estate appraiser and small business owner for nearly two decades now.

But, it has only been in the past 10 years that I have been able to make the kind of money

that puts me in the top 2% of all income earners in the world! The brutal truth is, I spent

over 10 years making every mistake in the book. What you see outlined below are tried and

true methods of what.... NOT... to do. I am an expert on every one

of these blunders. I made them all. It is my goal that you will not have to.

Wanna avoid the decade of failure I endured? … Keep reading.

Mistake #1: Trying to Do Everything on Your Own I always cringe just a little when I hear the phrase „Self-Made Millionaire.‟ Oh, I know

what they are trying to say, but it is never an accurate assessment of a successful person.

They could not have done it on their own. It is impossible. To be a self-made individual

would mean there were no customers, clients, supportive staff, supportive spouse(s),

mentors, trainers, educators, etc., etc., etc. The list goes on and on. The truth is, every

success story is filled with chapters written by individuals other than the auto-

biographer. Much of what we are can be attributed to who we

choose to surround ourselves with.

Self-employed appraisers are no different. In order

to run a successful appraisal shop, you must be

creating value for those around you on a regular basis.

When value is not created (and I am not talking

Market Value here), the paychecks stop.

Furthermore, in my years of working with appraisers,

I have NEVER seen one who could create as much

value for her clients all by her lonesome as she could

with a team surrounding and supporting her. Those

who try to do it alone are making a grave mistake. There is a reason I list this one first.

Indeed, it is the most common mistake appraisers make, and a costly one.

I spent the first decade of my career making this mistake. Frankly, I was selfish. To hire

help meant to pay that help. To pay help meant less money in my wallet because more

money was in theirs. This is scarcity mentality at its worse. It just is not

true. There is not one pie that either goes to the business owner or to the business

owner‟s employees. It is not a zero-sum game. In fact, the Laws of the Universe will show

us that giving more of the pie will not create less pie. Indeed, it only makes the pie itself

bigger! Let me illustrate it another way. My wife and I recently moved into a home where

the master-bath shower is a L-O-N-G way from the water heaters. Consequently, the

builder had installed a hot water recirculating pump. The purpose of such a system is to

keep hot water in the pipes constantly so you will not have to wait so long for the hot

water to get from the heaters to the shower head. There is nothing more annoying than

standing outside the shower in your birthday suit while you wait for the water to warm up.

However, I am no dummy. It cannot be cheap to keep that hot water circulating

throughout the home whether it is being used or not. Therefore, when I moved in, I

decided not to have the pump hooked up. It became apparent very quickly that this was a

mistake. I will not bore you with the details, but because the system was set up to run on

such a pump, the hot water in the shower was never hot... ever. As I began researching

these systems, I learned an important lesson. Keeping the hot water recirculating so it is

instantly hot when you turn on the faucet at the opposite end of the house is less costly

than wasting the water while you wait for it to warm up each time. Turns out, these

systems are actually more efficient! The same is true when it comes to payroll. When I first breached the subject of hiring a receptionist/clerk, I went to my appraiser-

mentor for advice. He trained me, so he ought to know. Let‟s just say, he was not too keen

on the idea. Okay, he hated it if the truth were known. I still remember the conversation

well. For over an hour on his back deck, he tried to talk me out of hiring staff. “They are

needy. They never show up on time. They cost too much. They need to be trained. They are

this, and they are that.” Now, I love my mentor to death (after all, he is my Dad) but on

this one, he was just wrong. I decided to ignore his advice and was immediately glad I did. Within just a few short weeks of hiring my first official staff member, she was

freeing up my time, and I was making more money than I could generate on

my own. Imagine this (for some of you, it will not take much as it will describe your life): I

am driving down the Interstate and going much too fast because I must get to that

appointment so I can take pictures of the exterior before the sun goes down. I am driving

with my knee because I have the county assessor‟s office on the cell phone in one hand,

and I am writing down the vital statistics she is giving me with the other. Not fun and not

safe (I ended up rolling my pickup one day playing this little game). The day I hired a

secretary to call the assessor‟s office and take care of the administration doldrums was

the day my life improved... dramatically... and may have even been saved... literally.

In one sense, my father was correct. Hiring staff can be a huge headache (to the Old

Man‟s credit, he had endured some real lemons). It does not have to be that way, however.

If you are careful in how you hire, how you train, and how you manage, they can - and will - be a real asset. This is not just about your W-2 employees, however. The mistake of „going it alone‟ can also

apply to those you associate with (or do not associate with, as the case may be). When I

first began my business in the mid-90‟s, I was fortunate enough to have more

than one mentor. Oh, my dad taught me, sacrificed for me, and was everything a

mentor should be… but he was not the only one. I also had other appraisers, real estate

agents, and even mortgage brokers in my area who were willing to take me under their wing

and help to mold and teach me. How grateful I am for those good people. I literally could

not have done it without them. When I moved to a new area, I found that the situation was not duplicated. In fact, the

feeling (especially between appraiser peers) in this new environment was as cold as a

frozen quarter-pound patty in Ronald McDonald‟s walk-in freezer. Not being easily swayed,

I decided I was going to do something about this. I booked a restaurant, sent out

invitations to the 50 or so appraisers in the area, and invited them all to lunch. It was a

raving success. Let‟s just say the typical 18% gratuity was not added to the check that

day. Three people showed up and two-thirds of them were me and my dad! Things have improved strikingly since that first „non‟-meeting. I now have several

appraiser-peers that, though we are technically „in competition‟ with one another, I can

turn to for help in answering questions, taking the temperature of the market, or just

feeling supported in our similar circumstances. I have been on both sides

of the fence on this one, and trust me, it is better to surround yourself with other

professionals… and communicate often. Which reminds me, you must be willing to share

with them and not just be a gleaner. This goes both ways. Do not make the mistake of

thinking that by rubbing shoulders with your rivals in the phone book you might

accidentally spill the company secrets and empower them to beat you at your own game. In

the end, you are you and they are they. Sharing and communicating can only

improve both of your lives. So, what are you waiting for? Grab your cell phone, find the nearest phone book, turn to

the section on real estate appraisers, grit your teeth, and start dialing.

Mistake # 2: ‘Saving Money’ Through the Smart Use of Technology

One of the complaints I hear most frequently from appraisers is, “We have not

had a raise in 25 years! We are being paid the same amount per appraisal

now as we were when I first started in this business.” This is said as if appraisers have no

ability to control their own prices. Oh, I understand their point, but I think it is a bit

simple-minded. The fact is, when I first started in this business, things were much

different than they are now. No, I am not old enough to have used a typewriter to

construct my reports, but I did not miss those days by much. When I began, computers

were slow and crashed a lot. The Internet

was almost unheard of (much less used for

any research or appraisal work). Digital

cameras were a future luxury and so were

cell phones! I began appraising in rural areas. A typical

day was spent driving 90 minutes (one-way)

to my appointment. I would inspect with a

measuring wheel (or sometimes a 100 foot

tape), a clipboard, and a film-camera (some

of you don‟t think that is funny because you

still are). After the inspection, I would

visit all (there were usually only one or two)

the real estate offices in town. It was

there I would have to continually beg for

sold information like a street urchin. If I could catch someone in the office, and they

happen to be in a good mood, I might get a little information from them. Usually, the

information was sketchy at best. “Oh, I don‟t know, Son. I think that one sold for around

$200,000, but there was some haggling over the snow blower, so I am not sure what the

final price was. It sold last month sometime, but I could not tell you the day. Square

footage? Hell, I don‟t know. It was big, though.” Though technically we may be getting „paid‟ the same (or roughly the same) fees we were

when we first began, I certainly have had a raise. In fact, I have

had several of them over the years. In the beginning, I think it took me an average of two

days (16 business hours) to complete a full appraisal. By the time I received the order, set

up the appointment, drove to the subject, inspected, dug up comp information (several

hours on just that one alone), took pictures, dropped them off at the one-hour photo

store, typed the report, copied a map from the phone book and splashed stickers from

Forms and Worms® on it (can you believe they are still in business?), picked up the

pictures from the one-hour photo store, glued them on the report (no, I am not kidding),

made two copies and overnighted them to the client (at my expense), it was a full two days.

Today, I complete 3-8 full appraisals per day (without compromising quality). I was never

good at math, but I would say that my fees have increased about 600%. And all of

this due to technology.

So where are appraisers continuing to make mistakes as it relates to technology? I

suppose there are some out there still using a typewriter and a Kodak Disc ® camera, but

not many. No, I am speaking of the mistake of not being able to „afford‟ the very latest

and greatest the world has to offer. I purchased one piece of equipment several years ago

that „cost‟ me over $600. At the time, it was a stretch to be able to pay that much for a

„gadget‟ (as my wife called it). Within the first 2 months, the investment had paid for

itself in time savings.

The fact is, you cannot afford NOT to invest in your work by making

sure you are in possession of the best the current industry has to offer. If you have not

increased the RAM on your computer in the past 24 months, for example, you are behind

the times. There are so many wonderful tools out there for our use that it is inexcusable

not to. Heck, buy some „toys‟ to play with while on the job. You have an excuse to. “Honey,

it‟s for work. I have to have it.”

Mistake # 3: Believing that Customer Service is only for ‘Other’ Kinds of Industries

In our industry, it is easy to forget that “everyone is our customer.” We

tend to think in terms of who is cutting our paycheck rather than trying to bring value to

all we come in contact with. Borrowers are picky, real estate agents are pushy and

underwriters are just pains in the A%*&! The fact is, though none of these people are

technically our client, they are all in need of some tender-loving-care (I

cannot believe I just said that phrase in reference to underwriters). Let me paint for you a picture: Just today, I completed an inspection where the home

owner was not present. She had left the door open for me and allowed me to do my thing (I

prefer this type of situation to the alternative of tiptoeing around the borrowers, but it is

usually the exception rather than the rule). As I was leaving her driveway, she called me. I

do not normally give out my cell number to borrowers, but I had to call her on my way to

get more specific directions. “This is Anne,” she began, “I am calling to ask you if you took

off your shoes when you went in my house.” You‟re calling for WHAT?!?!?!? Now, normally I

make it a rule to take off my shoes when I do inspections - it is just common courtesy.

This time however, the home did not warrant the extra effort (make your own conclusions

here). I had to be honest with her and tell her that I had not. “Well, if I find my floors

tracked up (how she would be able to tell from the

scuff marks and clutter that was already there I will

never know) I am going to be VERY angry,” she fumed.

At this point in the conversation I am thinking

silently, “She is not my customer. She is being very

rude. I think I will tell her how I feel about her ugly

house.” Notice, I said I was thinking this SILENTLY.

I did not express it. One must remember in these

situations that borrowers talk to their loan

officers (especially when the value comes in lower

than they expect it to - which lately is always), loan

officers talk to AMCs, and AMCs do not like getting

complaints that their appraisers told some borrower

that her house might do better with a little mud on

the floors to help the other trash blend better.

As a business person, you are always on

stage. Just because you do not have a waiting area or an order counter does

not mean you are immune from customer service. The community is constantly looking at

you and passing judgment on how you act. Borrowers complain to lenders. Lenders can

choose their AMC. Real estate agents talk to other agents. Love them or hate them, the

Better Business Bureau has their place. Trust me; there will already be enough complaints

about your company even if you try to be at your best. Do not give them even more

ammunition by not even trying. You are never going to please everyone, but you can (and

should) try to please the majority. That does not mean you bend rules or ethics in order to

do so. You can, however, be nice and honest. It is possible, and if you want to stay in

business, it is essential.

Mistake # 4: Allowing the Business to Control You Rather than You Controlling the

Business

I hear it all the time; Appraisers who once loved their job are burned out after 20 years. Why is that? It can be downright discouraging to a new trainee. They come

into the industry for a variety of reasons, but I am pretty sure that looking forward to

getting burned out is not one of them. How exciting would it be to come to work every day

for your first three years in the career you hope to spend your life in only to hear your

trainer moan and gripe about how sick of it all he is? It does not

have to be that way.

Believe it or not, there are a great many appraisers who have been in the business for over

two decades who still wake up excited for the day (at least most days).

What makes the difference between these two dichotomies? The answer may be found in

who has control. Ask yourself a serious question: Are you the puppeteer or the

marionette? When you answer, look in the mirror to see if your nose grows.

Most owners, if they are honest, are more at the mercy of the office than they are in

control of it. They do not start out this way... it just sort of… happens. It happens by

never letting a phone call go to voicemail. It happens by immediately responding every time

the “You‟ve got mail” chime sound on the computer. It happens by bending and twisting to

every whim of the underwriters like politicians do for lobbyists. It happens by going in

early and staying late till we might as well sleep on the office couch (don‟t laugh if you

already do). Frankly, it happens because money talks and we spend our

lives listening.

I no longer work exclusively from home. Oh, I still have a home office and

technology allows me to 'shack-up' with the downtown office when I see the need, but

most of my work time is spent in the field and at the office-office anymore. When I first

got into this business, however, the luxury of an office-office was not in the cards. I set

up my first „professional‟ office in the spare bedroom of our basement apartment. My wife

was not too thrilled with this prospect, but the idea of actually having a job outweighed

her dismay. That being said, it was a tap-dance none-the-less. In order to make a home

office work, there must be certain rules in place (unless your desire for work outweighs

your desire for a kiss from your spouse once in a while... which mine didn‟t). Like me, you

have probably noticed a great many marriages on the rocks over the old home office

problem. “He is never home! The office is where he spends all of his time! In order for him

to even see the children at all, I have to sneak in at night and change his screen-saver to

one of their pictures.” You could probably add a few of your own here. May I suggest, if

you have not already, implementing a rule that will do you and your family a BIG favor? If

you have a home office, pick a time (best to include your spouse in this decision) that you

can say is „close of business‟ time. At that time, no matter what is on your desk, shut down

the computer, stand up, walk out of the office, and „commute‟ home to your family. Now,

this rule does not need to be chiseled in stone, and there are exceptions, but for the most

part, you need to leave the office at the office and the family life at home (even if they

are only physically separated by 2x4‟s, a little sheet rock, and some hideous wall-paper). At

5:00 PM, GO HOME! You will thank me for this. No… your spouse will kiss me for it. I once heard an old sage give this advice (or at least a similar version of it), “You are going

to spend most of your life doing ‘work,’ so you might as well make it fun.” The fact is,

you have chosen this path. No one forced it upon you. For whatever reason, you made a

conscious choice to dedicate 30+ years of your life to spending half the day driving around

looking at real estate and the other half plopped down in front of a computer screen.

Therefore, it is my advice that you try to integrate some fun and recreation into that

known schedule. Put a set of golf clubs or a fishing pole in your work vehicle. Turn up the

radio at the office. Dance. Yes, I said, “Dance!”

Mistake # 5: Not Investing in Yourself How many hours of continuing education (CE) does your state require you to take each

year? Now, juxtapose that number with the answer to this question: How many hours of

education did you take last year? If the two numbers match, you are robbing yourself. Most appraisers do the bare minimum required education hours, but no more unless they

just can‟t fit the last class into the hours left in their requirements. “Damn, I need 6 more

hours to satisfy my CE hours, and the only class I can find is 7!” This is a sad commentary on who we are as a people - always looking for the shortest way

through - but it is a main reason most

appraisal businesses are doing only an

average number of appraisals. The fact that you

are reading this article in the first

place indicates that you are

different. You want something

more, and if you want to be

successful, you must do what

successful people do and go where

successful people go. One of the

main characteristics separating

„them‟ from the rest is that „they‟

invest in themselves. I know a man who runs a very

successful financial planning firm.

You would think that to be the

success he is with his business, he would need to spend a lot of time at the office. Frankly,

he is hard to catch there. Though he also does his fair share of recreating, his absence is

mostly due to his attendance at classes, seminars and continuing education conferences.

These are not education hours that are required by the state - for the most part.

Furthermore, the man is up at 4 or 5 AM every day studying finance and business. Is it any

wonder why he is successful? People come to him because he knows a lot about everything

related to finance.

A major key to your own success is going to be your

willingness and follow-through with your own self-education. I am not

saying that your alarm should be set for 4 AM from now on, but I am suggesting that you

find a time that works best for you to invest in yourself. Benjamin Franklin is attributed

with saying, “Empty your purse to fill your mind, and your mind will fill your purse.” Franklin

was not just a talker; he proved it by his own success.

Covering 12 counties in 2 states puts me in the car for many hours per week. Books on tape

are some of my most intimate friends. Every year, you can find me at conferences, classes

and webinars that are not required by license renewal. These educational opportunities

(that word is used purposefully) have allowed me to become an „expert‟ in many

fields that CE credits could not do alone. Though I hold a Master‟s Degree in Adult Education - and there is a place for formal

degrees - the majority of my knowledge has come from self-education. Whether or not you

have a certificate hanging on your wall from some higher school of learning, your thirst for

knowledge should never end. Self-directed education is, by far, the most difficult learning

you will ever do. There is no one there to follow up. The rubric is yours to define. In the

end, there is no robe, no cap, no stage, no Pomp and Circumstance, and no kiss from your

Mother. Yet, it is also the most rewarding. You are the one making all of the „class‟

decisions. You choose the conferences, seminars, books, or DVDs. Whatever you are

interested in, that shall ye study. In the end, you can (and should) be an expert in many

fields. Diversification is a key to survival, and diversification does not

come from CE credits alone.

Mistake # 6: Not Investing in Your Business

Let‟s face it, owning/running a business is not all it is cracked up to be.

Sure, there are perks, but it comes with its fair share of trials, fears, and failures. A

funny thing happened to me during my first 10 years of business. Maybe you have/are

experiencing the same. When a check would arrive in the mailbox for a job I had done, my

heart would leap a little. Watching my bank account grow was fun and exciting. The

problem was in learning the difference between „gross income‟ and „net income.‟ Oh, I was

paying my bills, but I had no idea how to escrow for the „down-the-road‟ bills. The largest

DTR bill, of course, always showed up on the same day each year... April 15. This date

never came as a surprise, but it always seemed to catch me by surprise when it would show

up. Because I did not plan for my tax bill, I never had the money to pay it. This, of course,

would result in late penalties and interest while I scrambled the rest of the year to try to

pay it back. Naturally, I was using up this year‟s income to pay last year‟s taxes which left

nothing to pay this year‟s taxes next year? Make sense? Yeah, it didn‟t to me either. Funny

thing was, I kept this pattern going year after year after year. What is the definition of

insanity again?

One of the best practices I finally started implementing was an escrow account.

Simply, it was this: I opened up a separate savings account and called it the “Tax/Pay Self”

account (more on the „pay self‟ part of that later). Now, whenever I receive a check in the

mail, I will automatically take 30% of the total and put it in the escrow account to be

allocated ONLY for taxes. Furthermore, the account is not your standard bank savings

account. Rather, it is a longer term, higher interest baring account, so I am actually

growing my money while I wait for April 15 (or my quarterly filings). But, what if my tax

bill does not add up to 30% of the gross? First of all, it is a rare occasion when it is not (if

you include both Federal and State), but it does happen. When it does, I call it a „tax

refund’ like the rest of the world. The difference is, I have been making money on my

own money (in the form of interest) all year rather than Uncle Sam doing the same thing.

Now, the difference between me and the

rest of the world is that I do not go out and

buy a new washer/dryer set or big screen

HD TV with that „refund.‟ Rather, I choose

to reinvest it in the machine that made the

money in the first place... my business!

Frankly, if it weren‟t for my desire to

grow my business and my willingness

to put my money where my desires lie, I fear

what it would look like today. Investing in my

business means buying more technology, tools, machines, payroll hours, etc., etc., etc. But, that is not all. In addition to the 30% put away to pay the bureaucrats, I also „tithe‟

my gross by paying myself 10% out of every paycheck. I picked up this little habit

after reading a little, wonderful book by George S Clason titled, The Richest Man in Babylon.” I highly recommend it. The principle is simply; you pay yourself before you pay anyone else. I have been utilizing this truth for over a decade now, and it has frankly kept

me out of bankruptcy on more than one occasion. Sit back and meditate on this question for a few minutes, “What does your appraisal

business mean to you?” If it is more important than a 5 on a 1-10 scale, INVEST in it and cause it to grow. If it is less than a 5… it is time to change careers. No garden can

stay stagnant. Either you weed, plant, fertilize, water, etc., or it gets overgrown and

unmanageable. Similarly, your business needs attention, and it needs to be fed. Do not

scrimp when it comes to building your infrastructure and efficiency. Investing in your

office will almost never be wasteful. It will pay you back... and then some.

Mistake # 7: Trying to Skirt by Doing the Bare Minimum

I used to be this guy: Get the order. Set it up. Call the county and gather

what information I could. Build the report. Do the inspection (as quickly as the home owner

would allow). Start the type-up. Zoning? I am sure it is residential. Highest and Best Use

analysis? I am sure it is present use. What else would it be? Etc. Etc. Etc.

That works for a while. The problem is, it will not work forever. Eventually, skirting

by important issues will catch up to you. It may

come in the way of an angry customer. It may

come in a more dramatic way, such as a State

Appraisal Board action or lawsuit, but it will

come.

I will be honest... I made a lot of

money doing the bare

minimum. I had a skeleton office crew (or

no office crew), I worked for dozens of AMC‟s,

and I did a lot of work (with little overhead).

Thankfully, I woke up long before I had to

be woken up. Before the Piper came to collect

his due, I realized what I was doing. I was cheating the customer, the system, and myself.

I know what you are thinking; “You cannot complete appraisals in a

professional and honest manner AND make money doing it. One or the

other has to go.” Well, that is just simply not true. I still make a lot of money in appraisal,

but I do not cut corners anymore. I still work for dozens of AMC‟s, cover 12 counties

(including 2 states), and make well over a quarter of a million dollars a year (net) doing it.

How? The answers are found scattered throughout this article.

As with nearly any principle, there are extremes on both sides. There is also such a

thing as trying to do too much.

I am married to a perfectionist. This is a girl who once refolded the bath towels (after I

had spent an hour folding them) because the crease was going the wrong way. Don‟t get me

wrong, I love her for her attention to detail. It is one of the main reasons I married her.

She is the yin to my yang (and, believe me, I have a horrible yang). But, there is a time to

let it go. At a certain time in life, or in appraisal work, there comes a point when enough is

good enough. I have worked with appraisers who had the following problem: They were too attentive to

details. Now, details are a positive in this industry, but there comes a time when the

microscope has to be left to the scientists. We are not scientists. Frankly, I can think of

very few absolutes in our field. Save the black and white for religion. Appraisal is

full of varying shades of grey.

I watched an appraiser struggle for over 15 minutes once because making an adjustment of

$2,000 for a fireplace would cause his subject to not be bracketed. “What would happen if

you made a $1,500 adjustment for the fireplace instead,” I asked. His reply was predictable. “It would work then, but we always adjust $2,000 for

fireplaces.” AHHHHHHHH. Now, maybe the rest of you have paired-sales analysis showing

that fireplaces are always worth $XXX and no more and no less, but I personally think

there is some wiggle room there. We do ourselves a HUGE disfavor trying to make our reports infallible. I will let you in

on a little secret; I have NEVER turned in a perfect appraisal report. Never. Two decades,

tens of thousands of reports, and none of them have been without blemish. There is a

point where you just have to hold your breath and turn it in. You can still do so with quality

and integrity. No really, you can. Just put the towels in the cupboard already!

Mistake # 8: Acting as if You are God’s Gift to the Appraisal World

I have heard rumors about other appraisers (though I have never seen it in

person, which makes me circumspect) who flat out refuse to change their appraisal reports

once it has been turned into the client. I guess the thought process goes something like

this: “I did my due diligence before I turned it in. If I change it now, it will look like I do

not know what I am doing.” I got news for you, pal; if that is the way you serve your paying

patrons, you really don’t know what you are doing.

Let‟s face it; we are prideful people... us appraisers. Most of us own our own businesses.

That alone often means that we are self-motivated, Type-A personalities who like to be

right. The fact is, most of us do put in the time and effort required to do a good job... and

then some. It is a little hard on the old ego when a “correction” comes in. Most of what the

underwriters call „corrections‟ are not. They should instead be called, “some other things

that are not really necessary or even possible, but we need to earn our paycheck, too, so

you will comply” requests. Well, maybe „requests‟ is too kind of a word. You‟ve seen them all. Anything from “You forgot to provide comment as to whether or not

the subject meets HUD guidelines” to “Please provide two additional comparables which

are more comparable than the 12 you already provided.” Okay, they don‟t say „please.‟ I

once heard about an appraiser getting a notice that she would need to retake the rear

photo due to “possible racial overtones.” When she inquired further, she was informed

that the pet dog in the photo could give away the race of the family as “that kind of dog is

popular with certain ethnicities.” That one still makes me laugh out loud, but it cannot keep

you from complying with the stupid underwriter‟s requests. Yes, underwriters are

only people (though I am sure some of you would vehemently disagree with that), but

they are people who often have power to influence

those who decide who stays on their panel and who gets

the blacklist.

Hate to break it to you, Sister, but it is

better to do their bidding (most of

the time) than to argue with them. I once went back and forth with an underwriter for 7

email exchanges on whether or not the subject sat in a planned unit development (PUD). In

her opinion, if it has HOA fees, it is a PUD. The verbatim definition from The Real Estate Dictionary (kindly provided by me) could not persuade her otherwise. What did I do in the

end? I marked the PUD box with a comment in the scope of work explaining the situation

and why the box was checked. Now, some of you are screaming at the computer screen

right now, “SEE, THAT IS WHY UNDERWRITERS THINK THEY CAN GET AWAY WITH

THINGS. WE APPRAISERS JUST ROLL OVER!!! Just calm down, Donahue! In the overall

scheme of things, is marking or not marking the PUD box really going to affect my credible

results? On the other hand, is fighting with this lovely specimen of a paper pusher going to

make my future business relationship any better? Think about it. Sometimes we just got to

eat our pride and make things work... even when we think we are right.

The opposite of this mistake is also true. You cannot let another individual (albeit an

underwriter, loan officer, reviewer, or telemarketer) tell you what to do and how to

appraise. You are the professional, and sometimes it really does matter. There is a point

when your pride (not to mention your license and reputation) need to be protected. I just

caution that you do it as kindly as possible. In my first 2 years of business, I picked up a client who sent me a lot of work.

Unfortunately, they also sent me a lot of work. Let me explain. I received upwards of 4-5

appraisals per week from this particular mortgage office. They paid me what everyone else

was paying at the time. The problem is, they required 4 to 5x‟s the work as anyone else!

The loan officers at this particular shop were young and a bit timid when it came to the

underwriters. If an underwriter wanted the appraiser to change something, regardless of

how ridiculous it was, they simply passed it on. In this case, I had no access directly to the

underwriter. It was always through the third person (the loan officer or processor). When

I say I was doing 4 to 5x‟s the work for this paying customer, I am not exaggerating. How

do I know? I timed it. The day I ‘fired’ them as a customer was a happy day. Yes,

as the business owner, you are allowed to „fire‟ your clients if you wish. It is a fine line, and it is a line each appraiser must deal with. To comply or not to comply

with the underwriter‟s requests... that is the question. Just do not let your little feelbads

keep you from doing the wise thing.

Mistake # 9: Forgetting that You are a Salesperson

Many go into the appraisal field to avoid sales jobs. Anyone who has

been in the world of commission sales knows, it can be a difficult place to spend eight

hours a day, 5-6 days a week. No one wants to be the guy screaming on the TV to “Come on

down to Hungry Harry‟s Hamburgers for a sale that will knock your socks off... literally” as

he holds up a pair of dingy tube-socks that you can

almost smell through the screen. However, believing that

being in the appraisal industry means you are not in the

sales industry is a common misconception. We are

all in sales.

First of all, you should be constantly seeking

out new business (more on that in the next section). Secondly, you should be taking

tender-loving care of your current business (also more of that in the next

section). Thirdly, as mentioned in a section above, you should remember that you are

always on stage. As you interact with borrowers, customer service reps., real estate

agents, businesses throughout town, bank tellers, or even milkmen, you are being watched.

Always act in a professional manner, and never pass up an opportunity to give out your

business card. I cannot count the number of dollars that have flowed to me over the years

as a result of giving out a business card to an individual who had no foreseen appraisal work

to give at the time.

Furthermore, be a friend to those who are currently patronizing your business. It is

okay to be human with these people. Being human does not make you any less

professional. Rather, it allows a personal connection to be made that will endear them to

you for time to come. For example, be willing to negotiate on fees. It is okay to say, “You

know, we normally charge $XXX.XX for this service, but you are a loyal customer. We want

to keep you happy. We would be willing to drop our fees to $YYY.YY for you.”

You must never forget this truth; you are a salesman. You should never let your

guard down. Look for opportunities to sell yourself, your company, your services, and

your employees. Just do it without the greasy hair and colorful sports-coat.

Mistake # 10: Not Actively Seeking New Business and Not Taking Care of Your

Current Clients

I‟ve saved this one till last for a reason. It is, by far, the BIGGEST

mistake appraisal companies make that costs them literally

10‟s of thousands of dollars each year in lost revenue! On a scale of 1-8.5, it is an 8.6 in

importance. There is an old tale of a man traveling the dry heat of the desert. Naturally, he is lacking

water and famished from the sun‟s rays. He comes to a deep well filled with water. Now,

the story varies depending on who is telling it, but it is clear that the well has a pump and a

bottle of water next to it. The man picks up the bottle and finds it to be clear and begging

to be poured down his parched throat. But alas, there are instructions on the bottle: “Dear

traveler,” they begin, “this well is deep and full of cool, clear water. There is no limit to

the amount that may be harvested. However, the pump must be primed before it will work.

This bottle‟s purpose is for that priming. Pour the entire bottle down this tube and the

pump will work.” Now, the man must make a decision; instant gratification by drinking the

water that is readily available in the bottle, or follow the instructions for the possibility

of getting a greater reward. Unfortunately, when faced with a similar dilemma, we

appraisers often choose to pop the top and drink the bottle. Who is your best client today? Would you have given the same answer three years ago?

What about three months ago? The fact is, for most of us, our best clients are constantly

rotating depending upon market conditions, our performance, and other factors. So, the

next question is, what are you

doing to retain your

current patrons? What are you

doing to proselyte additional, paying

customers? It is a fact that a large majority of

appraiser/business owners do very little to nothing about those questions outlined above.

It is all too easy to get into the work-a-day mindset of taking care of

what is on your desk before your eyes and forget about customer „touches‟ or seeking out

new clients. However, over the years, this has been the main issue that has kept me above

my peers over the years (no rhyme intended). Building strong relationships with those who

are currently paying for the food on your table and actively seeking to find and obtain

additional business is, indeed, the number one secret to running a successful appraisal

business. How is this to be done? In addition to simply being nice to your customers, you must make

and follow a „touches‟ plan. This is obviously much easier to do with your local, brick-and-

mortar style clients than your AMC-style ones. Send an email. Make a phone call. Stop in

with chocolates. Do something! I once ordered pizza for an entire office just because.

Let‟s just say, they remembered that for a long time (and it only cost me about $60).

Research shows that simply being in your client‟s peripheral view all of the time (not in an

annoying way, but in a „Hi, it‟s me again‟ fashion) will do more for retention, and thus

your revenue stream, than any form of marketing to new perspectives ever can.

While you are at it, why not follow up on a few of those clients from the past? Call them

up. Ask to speak to the person who controls the work volume for your area. It may not feel

comfortable, but I have found that there is no shame in asking the question, “Why have I

not seen any work from you guys in a while?” You may be surprised to find out the answer.

Most of the time it has nothing to do with your quality, turn-time or even fees. The large

majority of the time, you are losing work over a paperwork issue. How much money

have you lost from a good client because they do not have a copy of your

newest appraisal license? The other part of this is looking for and getting on the approval lists of new companies

that you have not worked for in the past. Do you have slow days? We all do. Those are the

days that working the Internet and phone lines is a must if you want to continue to grow.

It can be time consuming and, frankly, a pain in the neck to fill out all of those applications,

but it is worth it. Don‟t have time? Good. That means business is going well. You still cannot

ignore this important aspect. Business will not be good forever. If you have to, hire

someone at minimum wage to look for AMCs, fill out their paperwork, and follow up. Trust

me, the $7-8 per hour you pay them will be rewarded in the long-run. So, open the bottle, and pour that cool, clear water right down the old... primer. Conclusion

Well, there you have it; The 10 Biggest Mistakes Most Appraisers Make.

Chances are, you are probably not making ALL of these mistakes (if you are, it is a darn

good thing you read this report). However, it is likely that you are making at least 2-3 of

them. Okay, it is more likely that you are making at least 5-6 of them… but who‟s counting?

The question is; what do you do now that you are armed with this information?

Obviously, my goal in this report is not to just point out what most appraisers are doing

wrong. It is my hope that you will make a serious evaluation of your current situation and

see where you might be able to use some improvement. Furthermore, it is my greater hope

that you ACTUALLY MAKE THE CHANGES that will improve your business,

bottom-line, time management, and overall life! We live in a world of abundance. It is my wish for you that you find more of it in your life!

Now, go create some value! Dustin Harris is a multi-business owner, but he made his fortune as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., Your Appraisal Office, LLC.(www.yourappraisaloffice.com), and is a popular author, speaker and mentor. He also owns and operates The Appraiser Coach (www.theappraisercoach.com) where he personally consults and coaches other appraisers helping them to also run successful appraisal companies and increase their personal net worth. He and his wife reside in Idaho with their four children.