Here’s Your Cash Flow Business Tip of the Week

How are note appraisals priced? You are in uncharted waters when it comes to pricing, because you are practically a pioneer in the field. Almost certainly, nobody else in your area is appraising notes, which is why you want to. Remember- the main reason for appraising notes is to have an advantage over your competition. Appraisals gives you access to financial professionals– and financial professionals are the best source of repeat referral business. And repeat referral business is the secret to making a substantial income. This is not to say that the fees you make from the physical appraisals are not important – they certainly are. The best guideline for fees is to determine what a real estate appraiser would charge for a like kind appraisal. If you were valuing a note on a single-family house, find out what a real estate appraiser would charge and use that as a guideline. Pricing will change from area to area. This is important to keep in mind when you are doing an appraisal out of your area.

There are two major decision areas when pricing and charging for a note appraisal referred by a financial professional.

(1) It is my opinion (learned from experience) that it is wise to conservatively price the appraisal you do for the client of a referring professional. It is natural to want to earn a “nice and fair” fee for the work you do and you should. Keep your fee reasonable. In my opinion, you should charge less than you would an individual note seller who is going to be a one-time client. There is not much competition in the note appraisal business– but what you do not want to happen, ever, is for your referring professional to find that your fee is substantially above another appraiser they may have found. Remember you are in this for the long haul, and want many repeat referrals as well as referrals to other financial professionals. I have been asked about doing free appraisals as a way of establishing a relationship with a financial professional. This is something you need to think long and hard about. Under certain conditions, it might be ok to do a complementary appraisal to help establish a relationship.

Next tip, I will discuss how to handle the situation when an appraisal client turns into a brokerage client.

P.S. If you want to get on the fast track to marketing yourself and gaining certification as a note appraiser, go to the following page to learn more:

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