This just in: It’s tough being an appraiser in 2010. We all know why. The question is: How do you adapt? First, take a look at your business model.
Be honest. what’s your business model?
Simply put, your business model is how you position yourself in your market. What’s your pricing? Who are your target clients? How is your business structured? Why are you different than your competition?
It’s hard, but it’s important that you be honest with yourself. Will your current business model work out long-term? Who is your target client? Is it still lenders? Or AMCs? Or lawyers? They’re all legitimate target client types. Maybe you have more than one target client type. The point is to actually have a target that your business model is built around. What’s yours?
Next, think about whether or not that target is one you think is profitable long term. Is there enough work coming from those target client types? Is the volume of work increasing or decreasing? Are your fees climbing, dropping or staying the same? Can you differentiate yourself from your competition effectively enough?
Now it’s decision time. Is your business model today going to work 365 days from now? Or 1,000 days from now? If so, keep trucking. If not, don’t freak out. You only have one decision to make. Will you adapt? Yes or No?
Evaluating a new business model
One way to get your mind around modifying your business model is to answer the classsic questions: Who?, Why?, When?, Where? and How?
Who is your new target client type? For example, is it going to be AMCs, or attorneys, or both? How about agents? Or homeowners? Or credit unions? Or CPAs?
What are you going to offer them? Are you going to stick to mortgage-related appraisals? Are you going to diversify and offer pre-listing appraisals or floor plan drawings to agents? What makes you different in the eyes of your target client type? What would make them choose you? And what makes this a good choice as a client type?
When do these target client types need your services? When do you plan to start targeting these types of clients?
Where are you going to find these clients? Where do you project your business will be in a year by going in this new direction?
How are you going to present yourself to them? How are you going to differentiate yourself?
Go where the work is
Everything we’ve discussed so far has been great in theory, but how do you get started? Let’s go through it from the standpoint of the typical appraiser, using the clients I mentioned above.
Let’s assume that the average appraiser today has an annual income of $52,500 (150 appraisals per year at a fee of $350). Most appraisers spend roughly 10% per year in operating expenses for things like software, MLS dues, data subscriptions, CE, etc. Orders, in general, are declining, and fees, in general, are declining too. This is not a “woe is me” moment. Things always change, and you’ve decided to roll with it.
Now, remember 2005? Orders just appeared like magic. Yes, you worked hard to deliver them, and you worked long hours. But you hung around because the work was plentiful, the money was good, and the job was fulfilling. Things changed. You’ve got to change, too.
Let’s do a simple experiment. Do a Google search for “Divorce attorneys in [your town].” How many pages of results did you get (all of which include addresses, phone numbers and websites)? It’s sad, but the United States has the highest divorce rate in the world, and it’s estimated that there were over 2.5 million divorces in 2009. Houses need appraising. Estates need dividing. Attorneys need expert witnesses.
Okay, now try this. Search your MLS to see how many sold homes there were in your coverage area in 2009, 2008, 2007, 2006 and 2005. The National Association of REALTORS® has said that in the U.S., 5.2 million existing homes and 342,000 new homes were sold in 2009. The media proclaims “the end is nigh” and “it hasn’t been this bad since The Great Depression.” Do you think a percentage of people want to know the current value of their single largest investment in the worst economy in 80 years? Canvas neighborhoods with door hangers. Contact residents of properties you’ve appraised since 2005, urging them to call you for a new appraisal. If you get two orders per month at $350, there’s a tidy $8,400 to throw on your pile, and it probably will cost you less than $200 in time and materials to get those orders. You already admitted traditional orders are down, so you’ve got the time.
What about agents? Deals die daily because sellers don’t have proper expectations of what their home is worth. Agents are increasingly trying to convince their clients to get pre-listing appraisals. Remember that 5.2 million homes were sold in 2009. How many agents are in your area? You probably know most of them. Every time you see them, remind them you do pre-listing appraisals and floor plan drawings.
Use the technology at your disposal
So, you’ve decided the fish aren’t biting like they were down in the mortgage lake. There are 70,000 other fisherman jockeying for position there anyway, and you want to look for fish elsewhere. Technology makes it much, much easier to go after multiple client types, affordably and effectively.
The business model in 2005 was “sit back and let the fax machine ring.” That was passive. Your business model has to be proactive, and tech-savvy. Non-lenders expect it, and you can’t afford to look like a Luddite. Here are three ways to use it.
First, get a real website that looks professional and that YOU can control. You’re on a tight budget and changing your business model. You can’t afford to build a custom site with a programmer charging you $90 an hour to add a button. And you can’t afford to have an amateur site with a brown background and yellow blinking text. (Trust me, don’t do it.) You’re trying to impress complete strangers. Yes, Appraiser XSites are a great choice; that’s why we made them. But the point is to have a place to greet, impress and sell your visitors on your expertise and service.
Also, you must write content for this website so that these new types of clients can find you. Update this content regularly, even if it’s just changing key words and rewriting sentences because search engines want fresh content. A blog is also a great way to easily add new content. “Real estate appraiser in...” was searched millions of times last year. Those aren’t lenders. True story.
Second, you’ve got to proactively reach out. Call these attorneys and agents and tell them who you are, what you do, and why they should choose you. Or hire a salesperson to do it for you. When you do an inspection, put a door hanger on every house on the block, urging them to get an updated appraisal. (more details on door hangers) Get lists off the Internet. Use e-mail and print marketing. And make sure to check out our XSellerate appraiser marketing system. We built it to help you find clients and make money. If you own an Enterprise XSite, you already own XSellerate, so why not put it to use?
Last, and you might laugh, but understand that Google, quite literally, is knowledge. If you don’t know where to find door hanger paper, Google it. If you want to find a salesperson to make cold calls because it’s not something you’re comfortable with, Google it. If you want a list of FSBO listings in your area, Google it. People forget that answers are right at their fingertips.
Honestly evaluating your business model is the key. Then be courageous enough to do something with what you find. Also, use us as a resource. Sure, we want to sell you software, but you can’t buy if you’re not profitable. That’s why we spend our time making products that will help you either save time, or make money or both. And that’s why we offer free, live training to help coach you on how to use our tools effectively. We want you to succeed, and you can.