Appraiser Income

An Internet-based home appraisal business launched a little over a year ago in Grand Rapids has expanded into 23 states over the past six months.

Founder Scott Packer and co-founder/partner Jason DeVries of AppraisalSave help real estate agents and homeowners get non-loan appraisals costing $175, which Packer and DeVries say is about half the cost of appraisals required by banks and appraisal management companies as part of the home loan process.

AppraisalSave is an online network of independent licensed appraisers, but it is not an appraisal management company, which are subject

to federal regulation.

The AppraisalSave appraisals cannot be used to obtain a mortgage but are designed for homeowners who need to know the value of a house for a divorce property settlement, estate settlement, or in preparation for potential sale of the home. Some appraisals are done for homeowners who want to end the private mortgage insurance requirement on their mortgage; if the appraisal shows they have a minimum amount of equity in the home, the insurance can be dropped. Still others may have a tax assessment dispute going on and need some ammunition to take with them to the tax appeal hearing.

The AppraisalSave appraisal costs less because it does not entail the extensive legal requirements of a mortgage appraisal.

In September 2013, the Start Garden seed fund for startups in West Michigan invested $5,000 in the company, which was then known as Appraisal150 because the appraisals then cost $150. Just a couple of months later, further review of the company by Start Garden resulted in an additional investment of $20,000.

Packer, 48, and DeVries, 39, are both natives of Caledonia and each has worked almost 20 years as a home appraiser. They are the principal owners of AppraisalSave. Start Garden owns a small percentage as part of its financing deal.

Packer said the Start Garden investment was used to build a high-tech website that automates the ordering and scheduling process for non-loan appraisals in 23 states.

“Websites are very expensive,” said Packer.

Clients go on the AppraisalSave website and choose from appraisers in their region. The appraisers list their experience, the geographic region in which they work and the average time the appraisal will take. Before listing appraisers, AppraisalSave confirms they are licensed in that state and in good standing. The appraiser may not do an appraisal more than 60 miles away from where they live.

Packer said he saw a need for low-cost appraisals by people in difficult situations.

“Some of our clients are going through a divorce or bankruptcy, so why should they have to pay for an overpriced appraisal” arranged by an appraisal management company, he said.

He said he got the idea for a low-cost appraisal service about 10 years ago, when many homeowners were repeatedly re-financing as mortgage rates went down and home values went up. The homeowners were required to pay for a regular loan-mortgage appraisal — which often would indicate they did not have enough equity in the house and thus would be turned down for the re-financing.

Others considering refinancing “couldn’t afford a $350 appraisal, so they weren’t getting them,” he said. “So we came up with a number that would work, and appraisers would do them, and here we are,” said Packer.

The AppraisalSave appraisal won’t work for refinancing; the bank will still order a formal appraisal. But Packer said they like to look at their service as “appraisal insurance.”

The website notes: “No matter how much your home was appraised for 1, 2, or 5 years ago, it is extremely likely that your home’s value has changed, sometimes positively and many times negatively. With our report it allows you to know if your home’s value is sufficient to warrant continuing the loan refinance process. The average cost of a bank refinance appraisal today is $450, which usually is required to be paid up front. If the value isn’t there, then AppraisalSave has just saved you $275.”

About 135 licensed appraisers in 23 states have signed on as independent contractors to AppraisalSave. DeVries said they make less money doing non-lending appraisals but “it’s just an easier process” that takes them less time because it’s streamlined with the help of the website.

He said he had assumed the new web-based service would attract new, young appraisers, but the average AppraisalSave appraiser has more than 11 years of experience and some have much more than that.

One thing they like is the fact that they are paid $150 by the client when they arrive at the home; no waiting for weeks for payment from an appraisal management company or bank. The client also pays AppraisalSave $25 for the service, which is part of the firm’s revenue flow. There are also up-charges for an appraisal that has to be rushed or for homes of more than 4,000 square feet.

Loan appraisals also take more time because the banks often require repeated additional contact with the appraiser to resolve details as the loan is being prepared, according to Packer.

If an appraiser is required to appear in court as an expert witness regarding a home value reflected by an AppraisalSave appraisal, the firm charges separate fees for that. Both Packer and DeVries appear regularly in court as expert witnesses.

About 30 percent of appraisals by AppraisalSave involve a divorce and about 40 percent involve a bankruptcy, according to DeVries.

Not counting the time it takes the AppraisalSave appraiser to walk through the house and the drive time to get there, the review of property values and recent real estate transactions in the neighborhood takes the appraiser about three or four hours on a computer studying the public records. Packer said they use comparable sales to come up with an idea of the worth of the house.

Many clients want an appraisal prior to listing their home for sale, or if they are planning to build a home in a given neighborhood.

“Usually it gives a pretty good idea of how much your home is going to sell for,” said Packer.

Packer said there is a cyclical aspect to the business: “Come January and February, we get a lot of tax appeals (work).”

repost from:

http://www.grbj.com/articles/80888-local-low-cost-home-appraisal-company-now-in-23-states