How I built a thriving appraisal business while other established firms were failing
Fall 2008 was probably the dumbest time ever to try starting a real estate appraisal business.
The entire industry was in a state of collapse from the global financial crisis (which started in the real estate industry, if you recall). Lehman Brothers, the fourth-largest investment bank in the world, had just filed for bankruptcy. The world’s economies were teetering on the brink of collapse.
Unsurprisingly, mortgage financing came to a screeching halt after the subprime mortgage scandal that tipped everything over in the first place.
Since most appraisal firms live or die on the work they get appraising real estate for mortgage finance, long-standing firms were dropping like flies.
That is the year I started this firm.
And I did well.
It wasn’t my connections. It wasn’t uncanny business skills. It wasn’t even that I was a better appraiser than anyone else (although I am pretty good).
It was simply that I stuck to my principles.
These principles weren’t complicated by any means. There are just three of them, really:
- Focus on small, private clients. I knew that the same thing that caused a lot of firms to go under was also what made their quality of service suffer: relying on bulk, fast-turnaround jobs for huge lenders. To keep my service and quality standards high, I stayed independent, avoiding the institutional clients in favor of the “little guys.”
- Always do the job I was paid to do. Just about every appraisal firm, to this day, uses inexperienced trainees to do the bulk of the appraisal work—then have the “big boys” rubberstamp it with a cursory glance. I just never did this; I always do the job myself.
- Guarantee my work. I knew that it was as important to my clients that their appraisals were accurate, but equally important that they would not be challenged. So I guaranteed every report to meet the reporting requirements of the authority it was submitted to. I still do.
By sticking to these principles, I was able to succeed where others failed. And while these principles might seem simple or even obvious, the sad reality is that they’re contrary to how most large appraisal firms operate.
These are the principles I started with, and they are the principles I continue to work by every day.