Appraising Is More Than Filling Out Forms... It's A Business

In speeches, articles, and memos over the years, I've frequently pointed out one of my pet peeves: Appraisers tend to think only about filling out forms, and not about running a real business. It's like the business is a passive activity.

A couple of years ago, to help our customers take those blinders off, we developed what we call "the wheel", shown here. It's a circular diagram showing the various segments in an appraiser's daily workflow. The blue sections are business-oriented, the green sections are report-oriented, and the two transitional sections are a little of both. Some of it may look odd. That's because much of it gets overlooked when appraisers think about what they do every day. In reality, all of it gets done - but often it just gets done poorly.

Most appraisers are purely "green" and report-oriented, but now more and more are looking at the "blue" business side and realizing it collected a little too much dust during the boom years. Not surprisingly, we've seen our XSites and XSellerate skyrocket in popularity as appraisers take a new look at "Deliver", "Account", "Manage", and especially "Market" and "Order".

The Appraisal Wheel

We’ve posted an interactive version of the wheel on our website at, and I encourage you to visit it there and click on each section. You’ll see what I point out here but in greater detail, and it may get you thinking about things you might want to do differently.

I want to briefly step through the sections of the wheel so you get a glimpse of what they're about. Hopefully it will whet your appetite to learn more, on our website, at Please go check it out, and apply the concepts to your business in the ways that make you most profitable.

Gathering data

We all know that it's only after gathering data that you can even consider any approaches to value. (Has the whole assignment ever changed due to data that you collected? You bet.) Gathering includes everything from verifying the address, legal description, assessor's data, taxes, census tracts, and so on, to checking comps, doing the onsite inspection, drawing the sketch, taking subject and comp photos, getting street and flood maps, and more. Your workfile is infinitely more complex than the delivered report for a good reason - it's full of the results of "gathering".
Many appraisers approach gathering haphazardly and inefficiently, however, full of pieces of paper scattered on a desk (MLS printouts, retyping penciled in field notes, and so on). For most, gathering is a process dominated by manual procedures. Look around you and consider onsite data gathering tools, PDFs instead of printouts, and more of a digital workfile mindset.

Developing and reporting value

Once you've got data, you can develop the approaches to value, and finally communicate them in the report. During the analysis, which sometimes spawns further gathering of data, you're doing the highest-value intellectual work. The "boundary zone" spanning the data gathering and the analysis itself is essentially where you earn your fee. It's why you're charging for a service, not a paper product. Only after that do you become a typist. Typing is where you earn the least, which is exactly why it needs to be as efficient and automated as possible and produce the highest-quality final report in the shortest possible time. For most appraisers, this is handled well using forms software.

Complying with rules and regulations isn't optional

Fannie and Freddie guidelines, USPAP regs, Gramm-Leach-Bliley ("GLB"), digital signature laws, state seal requirements, HVCC rules, and more all affect every appraiser. "Compliance" has clearly become a watchword. But it also affects the typed data in your report in a very tangible way. Have you ever had a report rejected because something in it violated a client's "rules"? And of course you've got your own internal "checklist", from aesthetics in reports, to logic, error, and spell checking. And it's a two way street - others have to comply with your standards, your security requirements, and copyright protection of your intellectual property. How are you handling the broader view of compliance?

Delivering by paper, PDF, or other

Whether you print the report on paper and deliver it with a box of donuts, or automatically create a PDF and deliver it via a secure client section of your website, or any combination of methods between those extremes - it's all "delivery". Sometimes you deliver via third party web portals, sometimes via client or AMC websites, or via your own website, all with different rules. And even if you just e-mail it, there are the "we didn't get it" or "we need another copy" issues. There are many ways to streamline delivery, not just emailing a PDF. Look at the process you follow and ask yourself what steps are still too manual and inefficient, and fix them.

Accounting and the financial side of it all

You don't appraise because it's a hobby. You do it to get paid. There are numerous appraisal-specific issues in the simple act of billing a client - management companies may demand that the invoice be outside the report itself, there are often multiple invoices for one assignment, fee splits, and so on. Look at how you're handling accounting as being more than just printing an invoice. Do you kick out automated collection notices? Do you offer credit cards instead of CODs? Do you have your accounting files backed up offsite?

Managing: It's not going to run itself

First and foremost, an appraisal practice is a service business. Managing turn times, creating efficient workflow, and providing constant status feedback to demanding clients is tough, even in a one-man shop. It's nearly impossible to meet today's nitpicky responsiveness and service standards without solid tools.

At the bare minimum, tracking and managing your appraisal files themselves is the core. (Windows folders don't cut it.) You need to know at a glance what's coming and going, and what your client exposure is. And you must, must, must have offsite backups and offsite workfile storage - because a single storm, fire, or robbery can leave you with no data and no way to get back up and running. If you lose your appraisal business due to a disaster, it's not the disaster's fault - it's yours. You failed to manage risk.

Making the cash register ring with marketing

The appraisal business is feast or famine. You have to engage in true long term marketing - not just short term advertising like online directory and yellow page listings, or handing out donuts - to fill in the lender-driven gaps. That includes marketing your diversity of skills and competencies throughout the year. Clients (and all parties) must proactively be kept informed on a daily basis. That's marketing, since it sets the tone of your business to your client.

Managing the ordering process

Appraising has moved from faxes, phone calls, and the occasional "real live person", to automated ordering processes. Many of you check multiple websites each day, log in differently for each, then review, acknowledge, and download orders. Sometimes the web sites are run by the client, sometimes by a management company, and sometimes by yet another entity in between. Consolidating and automating those confusing steps and systems is essential. Clients demand the type of status updates they get from automated systems, so your desktop has to integrate with your own automated status system. The days of "easy orders" are long gone, if you do it manually.

Where we come in

We also use the wheel internally. It focuses us on your real needs and keeps us from falling into a "Forms R Us" view of the world. Think for a moment on what would happen if we didn't offer such a holistic product line. The result would be that you end up either paying too little attention to the missing areas, or finding piecemeal solutions that you have to waste your own time attempting to plug together.

So while it may come across that there are a lot of products we offer, and at times it can get confusing, we do it for an extremely important reason. We do it because we know each segment of this wheel carries its own weight in the overall success of your business, and as a technology solution provider, it's important that we provide tools so that your focus can be where it should be - comprehensively managing your business, not just printing your reports.

Go do it

You'll notice that the title of each segment is a verb; that's not an accident. These are things that require active, sometimes ugly, participation every single day. I say all the time to my kids and friends that "business is a contact sport". It's not for armchair quarterbacks or wimps. And as the Nike slogan implores, you have to "just do it". So study the wheel concepts, apply them to your business, and go put some bruises on somebody.