Cash Flow Business Tip of the Week: Note Appraisals (continued)

note-appraisal-docNote appraisals, if handled in a professional manner,  can increase your income and prestige in several ways: (1) Note Appraisal fees are substantial for the amount of time it takes to complete the required work; (2) Some appraisals will turn into brokerage situations either almost immediately or, more possibly, in the future; (3) Some financial professionals are in a position to refer numerous transactions (repeat referral business) per year; (4) Financial professions who are satisfied with your work will refer their colleagues to you– double repeat referral business. You must also be impartial and make an appraisal that indicates the highest and best value of the asset (cash flow) you are evaluating. There are important advantages to doing this. Once you earn the trust of the financial professional, they are in the position of referring many different clients and cash flows. They can make most of your problems go away.

The Note Owner’s Manual becomes a very important and powerful ingredient in your appraisal program. You want to get this powerful tool into the hands of “appropriate” financial professionals. The Note Owner’s Manual will do a much better job of explaining what you do than you can. The Owner’s Manual will accomplish three things: (1) educate the professional, (2) educate the professional’s clients and (3) create urgency to sell. I suggest you give Note Owner Manuals to “appropriate” professionals – those who you have done business with and those who show a real interest in learning what you do.

Pricing the note appraisal

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 give 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.

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