Do you want to start a real estate business? Do you want to be self employed? Do you want to learn how to become a real estate appraiser or valuer? Then i advice you read on because this article is for you.
The road to becoming a real estate appraiser is more like that of becoming a real estate agent. Now before we dive into the details of how to become a real estate appraiser, I think it’s wise we first define what a real estate appraiser does. Real estate appraising is the process of determining the value of a property.
So therefore, the function of a real estate appraiser is to determine what a particular piece of property is worth. Running a real estate appraising company is quite a lucrative venture, and you will get to deal with a lot of clients; both in the public and private sector.
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Becoming a Real Estate Appraiser: Who are your target clients?
Before you think of starting a real estate appraising service or business, it will be in your best interest to have an idea of your target market or clients you will be dealing with. Now who are your clients?
Each time the government condemns a property or reassesses taxes, they will need to know the value of the property.
In fact, attorneys are probably going to be your top clients. The reason is because they handle cases such as distribution of an estate. They also represent clients in a business partnership break-up or marriages, where couples or partners must split real estate.
- Home buyers and sellers
Before listing or buying a home, individuals would need to ascertain the value of the property.
- Insurance carriers
In the process of pursuing property damage settlements, insurance carriers and companies need to ascertain the current market value of the property they are insuring.
Banks will never give out loans without first knowing the value of the property you tendered as collateral. Property valuation is also needed before a home is foreclosed.
Now as a real estate appraiser, you can either choose to focus on one of the clients above or just handle residential or commercial properties; but many large estate companies cover all the areas. Note that every real estate sector has its high and low times but if you can deal with a cross-section of the market, you can be sure of steady revenue all year round.
How Real Estate Appraisal Companies Make Money
Few appraisers bill strictly by the hour. The type of appraisal demanded differs significantly from client to client. For example, a bank may provide much of the back-up information needed and provide you with a form to fill in, thus reducing drastically; the amount of time needed to make the assessment and analysis. On the other hand, a home owner may need a written report which demands more extensive research and a lot more time. Also, it’s a well established fact that appraising commercial real estate take much longer than residential properties. So when planning your fee schedule, you need to bear in mind all the factors listed above.
Starting a Real Estate Business or Being a Self Employed Appraiser
Most successful appraisal firms fall under two categories:
- Solo appraisers
- Large firms with 15 to 30 employees.
How to Start Small as a Real Estate Appraiser and Grow
If you want to start as a solo operator, then you can easily operate from a spare room in your home. This will mean that your overhead expenses will be minimal. All you need to kick start is a telephone, tape measure and camera. You can use your own car to go from property to property. You will also need to buy a computer and most importantly, you should be prepared to advertise your services; preferably in professional banking or law journals or in the Yellow Pages.
How to Grow your Company
You can grow or expand your business by bringing in a partner, renting an office space and employing full-time secretary. You should bear in mind that getting an office space and employing full time staff will add to your overhead.
- Market your Business and Services
Marketing will become more essential as you grow because you will need to keep fees or revenue growing as your overhead increases. And while growing, you must strive to grow big because the bigger you are; the more scale you will achieve. Being a medium-sized firm is not cost effective because three appraisers need as much data as 100 appraisers.
- Network and Form Strategic Alliance
To succeed in the real estate industry and become a big player, you have to network with other industry players and clients as well. Once you have built a strong relationship in the industry, you may be able to access information easily. You should also endeavor to join real estate organizations, which provide updated sales prices and descriptions of properties.
In conclusion, if you can succeed in your field as a real estate appraiser, nothing stops you from venturing into real estate brokering and development. But concentration on one field will be highly recommended.
- Startup Investment Capital to Start a Real Estate Appraisal Company
Low – $3000: If you intend to start as a sole proprietor (for word processor and camera, using the family car)
High – $10,000 (includes an office, car lease, and some advertising)
Break-even time – Two months to One Year
- Estimate of Annual Revenue and Profit
Revenue: $70,000 – $3 million (one person at low end; supervision a staff of appraisers at high end)
Profit (Pre-tax) – $60,000 – $500,000