Question on fee/pay structure for commercial appraisers
Hi all - I am currently about 4 years into being a CG (writing full reports for about 7 years). I have been with the same small shop in the Midwest for the entirety of my career, but I am now wondering what else may be out there. Can anyone enlighten me on the fee structure for themselves or others in small and big shops alike? Currently, I receive 45%, the firm also covers 60% of health insurance, 3% match for 401k, CoStar for me, and my desk (though I'm mostly remote at this point). I am in charge of bidding, writing, gathering data, reviewing, and sending out the report, so I am touching nearly every aspect of the report. The firm's name in the local market does bring us some business, so that is a positive to them, but I am currently on my own trying to contact new banks/lawyers/trusts to get more business.

So, I wanted to know how that may compare to others in the field. I just recently reconciled my billing and found that I accounted for 40% of the commercial income, despite being only 25% of the commercial staff, and I'm honestly having a hard time seeing where my split is going (over $150K to them this year). Speaking with the partners, I found that I will not have any new bumps in commission until I reach partner then increasing to 60%; however, the partnership is predicated with receiving my MAI, and I'm unsure about the career honestly. So, I would need to do some soul searching before committing to that.

Thanks  


EDIT: I forgot to add. I am curious on bonuses as well. We did not get anything this year, but in past it has just been $100 to local grocery stores. 
[{"id": "j2268b2", "text": "I am in the Midwest and pay about the same split. However, I pay 75% of health insurance, and I pay the person who does all the bidding, sets the inspections, most of the writing, most of the research, and the sending out stuff.\n\nI don't do big bonuses either, a couple hundred bucks and some vacation time.", "replies": [{"id": "j24dceo", "text": "Gotcha. Seems like my shop is pulling from both ends it appears. Either the splits need to come up some, or insurance and additional help for admin need to come in. Thanks for the response.", "replies": [], "depth": 2}], "depth": 1}, {"id": "j226slf", "text": "I have worked for several different sized firms and have only slightly more experience than you. \n\nI got a higher split at the small firm, but I didn't get much paid for. It was 50% up to 60% for clients i brought in. As a trainee it was 40%. No insurance or 401k. I was 1099 so higher tax liability. No licensing or education stipend. \n\nI worked for a small office of one of the nationals. Got a 40% with a 10% extra for clients I brought it. Once I got my MAI it went to 60%.  I got $2000 a year for licensing and education. All subscriptions, equipment, software were paid for. Was W2 so that was nice.  I got a bonus at year end based on the company overall performance and my percentage of the production. \n\nI now work for one of the big corporate nationals. 50% split. No bonus. All expenses are reimbursed. Mileage, licenses, education, etc.  I have all the software and subscriptions I would need. Get 401k match of 3%. Great insurance that you would expect of a fortune 500 company. \n\nIf you have any specific questions I'd be happy to answer.", "replies": [{"id": "j22iruy", "text": "How much of the report do you complete for the national and what is your title? You can be vague if it would reveal too much. I do review work on some national work and I am always curious who does what. \n\nI am also curious what I'd make at a big firm.", "replies": [{"id": "j23nfc0", "text": "I\u2019m not the person you asked this question to but I work for a national and can give you some info here. I\u2019m not sure I want to give my title as I\u2019m not sure if that would give away my company but I have an MAI and have the equivalent title for my company for context on me. \n\nTo be honest I think most of the nationals are the same way as mine in this topic. The answer, and you\u2019re not going to like hearing this, is it goes appraiser to appraiser, not firm to firm. Some appraisers do the I\u2019m going to have 2-3 analysts, junior appraisers, whatever you want to call them working for me and they might write the front ends, maybe they write up comps, etc. and I do the walkthroughs and come in and make the call on values, while other appraisers will take the traditional approach of writing the report front to back. \n\nMe? I take the traditional approach. I have had between 1-3 junior appraisers working for me at a given time and I can tell you I want them to work on all parts of the report - obviously with my input my guidance, my review, my viewing of the property, etc. When I was a trainee my boss first had me do the traditional route first, then he got the \u201cgreat\u201d idea to do the hybrid scenario. The problem was I didn\u2019t learn much in the hybrid scenario - but he sure made out $$$ wise when I sat down and started breaking out time, money, etc. on this hybrid \u201c50/50\u201d as he branded it split. I don\u2019t want to do that to others so I can make more $$$ so I take the traditional path with my trainees now that I\u2019m the supervisor. \n\nI\u2019ve branded the traditional approach I use to clients when they ask this very question \u201cI know others do it differently but when you hire me, you\u2019re hiring ME to do the appraisal, front to back\u201d and it\u2019s been well received. \n\nI will tell you I\u2019ve never worked for them but I have heard, and from people I trust (including multiple employees of the firm I\u2019m referencing directly) there is one national firm who outsources the entire front ends of at least many of their reports to South America. The appraiser gives up a split of the fee and the front end is done for them. They will tell you they don\u2019t have to do it, they can write their own front end for clients who ask, but I think they are being at best misleading and at worst (my personal opinion) breaking uspap unless they have a statement of this person or persons involvement in their cert\u2019s real property appraisal assistance section\u2026", "replies": [{"id": "j23q5qm", "text": "I agree with what you said. It's different from appraiser to appraiser. I head a team right now, but we are a hybrid. We have one person set up front ends, while 3 other junior appraisers do a lot of the appraisal. I'll review everything and be there to answer questions. I go on most all inspections, as more and more clients are requiring a CG or MAI to do the inspection.\n\nI do my own appraisals  front to back about 50% of the time. I get to chose the assignments that I want. Focusing on the more interesting assignments and more complex appraisals. \n\nI know 2 nationals that offshore their front end to wither the Phillipines or south America. It does seem like a grey area and I'm not sure how much time it saves if you have to verify everything after they've done it.", "replies": [{"id": "j23strq", "text": "I\u2019m sure there are plenty of appraisers who do the hybrid model great. I\u2019m obviously jaded against it because of my own experiences but I don\u2019t discount that it can work and it can provide a good product to clients. It\u2019s interesting that there is a 2nd national offering the front end element too. I didn\u2019t know that. I agree that I don\u2019t know how much time it saves, but you and I are also considering the idea that someone like you or I would actually check the work haha.", "replies": [{"id": "j23v686", "text": "Having been with two firms that offer outsourcing the front end, it\u2019s a moderate time savings, since you have to double check everything anyway. Both firms have largely automated the process of the bones of regional/neighborhood/market analysis already, so it\u2019s just a different person spending the 15 minutes putting the bones of that together, but the real time savings are when you\u2019ve got multi-PIN properties. Having done a building that was condo\u2019ed and having 30 PINs, it was a huge savings being able to give them a list of PINs and having them pull the tax bills and input that info into the tax section of the report. \n\nIt\u2019s also great for the little annoying stuff that\u2019s absurdly easy to double check, like pulling flood maps and zoning maps. Those take 2 seconds to double check, since they\u2019re exhibits in the report and you can see \u201chey that\u2019s not the right map\u201d, but for some reason, after a decade+ of doing this, mapping is still my least favorite part of the job. \n\nThe market analysis and neighborhood are the two sections that are of very marginal utility. Yes, they pull the stats and the auto text writes up what the tables say, but you can\u2019t just take what they\u2019re giving you and turn it around to the client as you need to tailor each section to your property and specific neighborhood/market. \n\nFrom a production appraiser standpoint, the biggest thing is the cost associated with it. One firm charges a percentage of the fee for it, while the other charges a flat fee. The percentage of fee thing doesn\u2019t make a ton of sense to me, as it doesn\u2019t matter if you\u2019re doing a $2,000 assignment or $20,000 assignment, the front end you get from the offshore teams is generally going to be largely the same, so why am I paying 10x more for the higher fee one?\n\nI don\u2019t know that I\u2019d consider it anything more than data entry, since at the end of the day, you\u2019re the one doing the analysis of the data that they\u2019re providing. If you just send off what they\u2019re giving you without any analysis, it\u2019s one thing, but from my experience, the quality of work isn\u2019t there to be able to fully wash your hands of the front end by using offshore resources.", "replies": [{"id": "j247sml", "text": "Thanks for chiming in. I would be upset paying a percentage for that as I tend to do higher fee work, but the front end is still just the front end. \n\nI did forget that we have an offshore team, but all they do is create the assignments in the database and make exhibits and pull property cards. I kind of forgot about them and am not sure how it's profitable to have them do so little.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j23kqsw", "text": "I\u2019ve worked for one of the nationals my entire career in the Midwest (smaller MW market). We pay out somewhere in the 40%-45% range for a CG appraiser. The CG level is a bit different in we have multiple pay structures depending on your managers preference but they generally track in that range. You get an additional 5-10% if you bring it in yourself. I\u2019m not sure on healthcare but we have a high deductible plan with an HSA, 401K match. They pay for costar and if you do investment grade reports they likely will pay for AE (assuming might not be an issue for you at first). There is an education allowance (although I\u2019m personally questioning if they\u2019ll cut that in 2023, we\u2019ll see, that\u2019s no insider information just ky personal speculation). W2 employment status. \n\nHere is your bigger concern. I\u2019ve seen a fair amount of small shop folks come to my national in my office and neighboring ones. We\u2019ve had a few success stories but most of them really struggle with the tech. If you\u2019re going to jump to a national be prepared to go through a big tech jump (understanding macros in excel, understanding the models utilize v lookups and what they\u2019re doing,etc.). I will say I\u2019ve seen an uptick in success stories in the past 5 years compared to my first 10 years and assume that\u2019s partially an age element on the tech stuff but just want to prepare you for this stuff.", "replies": [{"id": "j23xddu", "text": "I feel like macros are kind of deprecated and v lookup was replaced by x lookup.\n\nWhat kind of models do you use where a lookup function is used?\n\nI ask because I've generally found the national firms have low compliance with tech, and I've increasingly started to simply shorten my reports.  I've found most tech generates tables and such that most don't really use.  I was using Valcre for a while there, but stopped as it was overboard for the few appraisal I write.\n\nI'd be interested in your perspective.", "replies": [{"id": "j245axa", "text": "Well the v lookup comment isn\u2019t me creating them and more an example of stuff that are built into the models and pull data. It was more than anything just an example than anything I\u2019m writing but we\u2019ve had a lot of people come from small shops that get terrified as soon as they see the national models because they\u2019re used the local shop models.", "replies": [{"id": "j24iyj6", "text": "I would suggest you learn how to make your own models.  I worked at a national, and the one-size-fits-all approach really doesn't work.  I wish I had learned how to program for Microsoft Office 10 years ago.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j23wrc0", "text": "National firms have a general maximum net compensation of 45%.  Your fee split could be higher, but the fee split is applied to a lower figure that has had fees and such deducted from it.  Smaller firms may be higher as the fees are just too low to make it work otherwise.\n\nAt 7 years, you're right at the age where you can do other things like brokerage or investment asset management.  It is VERY easy to get stuck in the repetition of appraisal and make decent money while never really knowing the market.  After 10 years in the business, it will be hard to leave it.\n\nI have the MAI designation, but it means very little if you aren't going to market.  Get it for that extra compensation,  but it is not by any means a golden ticket.", "replies": [], "depth": 1}]