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The Challenge of Getting Paid for your Appraisal Assignments

by Guest on Jun 9, 2012 General Appraisal 1321 Views

Many appraisers manage their own small businesses and have to deal with getting paid for the work that they complete on a daily basis.  Since for most appraisers fee assignments are their sole source of income, getting paid for the hours that they put in is a high priority.  

For the appraiser who works for banks / AMCs billing is a simple process, you finish the work assigned, submit the bill and wait to get paid.  As long as the customer is strong the only thing you have to deal with is the long delays that they impose on you.  Why do they play a billing game, it's simple, because they can.

For the non-traditional appraisal firms dealing with private parties, including; lawyers, accountants and individual property owners (many who are out of state) it's more of a challenge.  You have to either accept that some people are not going to pay you and you won't be able to chase the out of state customers or implement a policy that guarantees that you will be paid.

I will always remember visiting an appraisal office here in Las Vegas several years ago and being taken to a back room where the appraisal business kept all of the appraisal reports that were ordered but not paid for.  There were many boxes full of narrative appraisal reports in that room and I was stunned by the amount of time and effort that was wasted to create them.  I promised myself that I was not going to have boxes of unpaid for reports sitting in a back room or on my shelf.

Each appraiser makes his or her own decisions about how they will operate their appraisal business.  I personally have chosen to create a business policy that requires 50% payment in advance for most appraisal assignments with the balance to be paid for the appraisal report upon delivery.  I do make exceptions for repeat customers, banks and government agencies who have little or no flexibility with their payables.

When you think about the gas, vehicle wear and tear, research time and other costs associated with completing an appraisal assignment that are lost if the assignment is cancelled without a retainer most appraisers simply won't take the assignments that you don't feel that you have a good chance of being paid for.  For a small one or two appraiser office losses from hard costs and lost time can be devastating.  You simply can't eat those reports that start filling your bookcase.

I always try to have an engagement letter for each appraisal assignment that spell out what is being appraised, what type of report is being completed, the turnaround time expected, the date of value and the payment terms.  If there are missing pieces of information or limited access to a property I always include that information in the engagement letter and of course disclose that information in the report itself.  Its better to have a record of what you agreed to that you can reference than relying on notes or your memory.

After several years I have found that I have lost only a few potential customers because they didn't want to pay me 1/2 of the fee in advance, in my opinion it is a reasonable request, and I have suffered only a few assignment fee loses due to non-payment after the first 1/2 was collected.  Customers who make a commitment generally want the report and don't walk away from it.  If you are having difficult trying to collect a retain chances are you are going to have an even bigger problem trying to collect the entire fee when you finish.

For more appraisal information contact Glenn Rigdon, MA,MRICS, ASA a Las Vegas / Henderson Nevada appraiser via email or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/3277-The-Challenge-of-Getting-Paid-for-your-Appraisal-Assignments.html

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