Its mid-December in 2022 and everyone listening to this episode pretty much knows the deal. The interest rates have pretty much doubled, the lending market has been crushed, which means that the appraisal, title, inspection, real estate sales, and several other industries have been greatly affected. If you’re an appraiser listening to this show, you’ve likely experienced something of a decline in orders over the last few months as most lenders and AMCs are reporting anywhere from a 50% decline to upwards of 80% or more, depending on their client base and business mix. Of course, if you’re an appraiser, depending on your business mix, your business might be following that same trend.

So, what is business mix and what does it matter? Business mix simply refers to the different types of clients a business works with, as well as the types of products or services they may offer. Most appraisers roaming the streets of the U.S. have a heavy lender biased business mix, meaning they only do primarily lending type appraisals for things like refinances, home equity loans, and purchases. If that’s you, you’re likely seeing some dips in your business. Shameless plug here, many of our coaching students are not seeing that same dip, depending on how long they’ve been with us and how much of my advice they take, because many of them have focused heavily on what we often refer to as ‘direct lender’ business, as well as a heavy emphasis on relationship building and becoming the recognized go-to authority in their market by doing things like office talks, CE classes, speaking events, webinars, private Facebook groups for realtors and lenders, and so on.

Not only do these types of activities lead to an increase in business of the non-lending type (divorce, estate, date of death, cash sales, pre-listing, etc.), but at the more advanced levels of this strategy, and depending on your message and skills, you’ll find yourself being promoted to more and better lending clients by your raving fans.

If you’ve been listening to this show for more than say, 3 episodes, you’ll know that I harp on the value-add part of life and business, ad nauseum. If you’re not adding value above and beyond the cost of your product or service, you’ll always be subject to the market forces that seek to commoditize everything. It’s the nature of free markets to always create pressure to do things better, faster, cheaper, and with a better user or buyer experience. The real estate, lending, and appraisal businesses are no different. The buyers of services want better, faster, cheaper, and a better experience. When the market doesn’t get all of those things, they settle simply for cheaper and faster, which is what a big portion of the appraisal business has gone to. Appraisers can complain all they want about pricing pressure, but without any meaningful differentiation, many appraisers can’t explain why they charge what they charge, beyond saying that it’s the going rate. Well, as soon as the ‘going rate’ changes, there goes your whole marketing and pricing strategy!

Friends, I have a long list of topics slated for this podcast through the end of the year and through the first quarter of next year. However, what I always try to do is take a pulse each week of where people and the markets are and customize the show to what I think people need to hear at that time. The markets have shifted and so has my topics list because I don’t think you need me to talk to you about digging into your P&Ls right now or funding your survival accounts. If you haven’t followed my advice over the last five years and funded your survival account with 6-18 months of business and personal expenses, you’re certainly not going to do it right now. We are in the times that a survival account is designed for. I see the forum comments about some of you who haven’t had orders in weeks, or that your order volume is down 80-90% and you’re thinking about getting a part-time job or starting a side hustle.

I won’t weigh in on whether I think those are good ideas or not because I don’t know everyone’s individual situations. I’m all for whatever someone needs to do to survive and fight again another day. What I am going to weigh in on in thus episode is what every single appraiser, agent, lender, and really every other business should be doing right now. I think businesses should be doing this in good times and dark times, and I teach and coach on that every day, but its times and markets like the current one that highlight just how important these things are. I will also say that I know very well an extremely small percentage of you will actually do any of these things, so, to a large extent, I’m speaking to the 5% or less that will actually step up and do something.

Being really good at the thing you’re selling is expected. Those of you using this time to dive into learning more, getting more knowledge and designations, and just getting better at what you do, congratulations! Decent use of your time, for sure. I’ll never tell you to not expand your knowledge and expertise in your field. But being really good at what you do is expected. If you think that taking some classes and getting some new letters after your name is going to open the floodgates of business, I hate to say this yet again, but it won’t. You know the saying; people don’t care how much you know until they know how much you care. Well, how will they know how much you care, and therefore how much you know, if you’re not the most well-known leader in your market?

The first thing I think you need to do is to get out in your market and look for opportunities to become known. Look for every opportunity to speak at real estate related events, on Facebook groups, Club House chats, wherever you can get your name, your voice, and your teachable point of view out to the world in such a way that gets you noticed in a good way. There are lots of appraisers out there who have gotten noticed, by the way, for being absolutely arrogant jerks to the very people who make the market move. It’s not unique to the appraisal industry, but it’s very prominent in it and it’s the attitude that appraisers are in some way superior to the agents and lenders that create the business appraisers have coming into their offices. It’s an industry who generally has disdain for the very people creating their livelihood. I’ve never really understood it, but maybe that’s because I was an agent, as well as a lender in my past.

Get out in your market, friends! Become the most well-known expert in your field and industry, not to mention the most helpful and friendly expert in your field. Don’t charge people for talks and classes, do it for free. Don’t make people jump through hoops to get some of your knowledge and experience. Share it freely and with joy and see what happens over time. This first suggestion will not get business pouring in this week to pay your electric bill, by the way, so if you’re just listening for tips and tricks to get business coming in today, you’ll be disappointed. Nothing I teach is for today business, it’s for tomorrow wealth and longevity. The vast majority of people in the three industries we coach in, appraisal, real estate, and lending, tend to go about things with a very short-term mentality. They want ‘now’ business and don’t have time for the long-term business building stuff. That is until they don’t have any of that easy come, easy go business.

The next suggestion for how to use your time during the current market slowdown is to sit down and develop some classes for your market. We have been in harvest mode for 10 years or more and very few have been in seed planting mode. When you never plant any seeds, you have no harvest in the fall. This is seed planting season, friends! This is the time to be creating content, getting out in your market and meeting agents and lenders and asking them how you can help their business. Call your state and find out what it takes to create a con-ed class. Ask your market what their most pressing challenges and issues are and then create a short course to help solve, or at least help with that challenge. Take some extra courses and get smarter, for sure! But then put your pants on, get in your car, drive to the nearest bank, credit union, or real estate office and start talking to people. Everything else is factory work!

I see so many discussions on forums of people upset because the fees are dropping, and the AMCs are not taking their bids. If you’re business is primarily made up of orders from AMC’s, you’re likely feeling the market slowdown the most. It’s not guaranteed, but the way that model is set up, it’s much more difficult to build relationships within the AMC and be guaranteed business when there is a slowdown, which is why we always recommend trying to build a business around direct relationships and constant networking. Which leads us to the next suggestion in this kind of market: constant networking.

What does constant networking mean? Networking is any activity that you do that builds your network. I think sometimes I say the word ‘networking’ and the appraiser brains and personalities in the crowd get all freaked out because most of you don’t consider yourselves natural networkers, and that’s okay. I fully understand that appraisers tend to skew to the introverted side of the personality profiles and, therefore, you tell yourself a story and reinforce how much you hate networking, going to events, and being around crowds. I’m not a fan of crowds and events either, but I’ve learned to change my views on network building once I realized just how valuable having a strong network is.

I too would be considered something of an extroverted introvert in that I am more comfortable around people I know really well, but I would prefer to be by myself in most other situations. By the way, introverted does not mean ‘doesn’t play well with others!’. Introverts are simply people for whom being switched on, dealing with people, being in crowds or at events is more emotionally draining than it is for extroverts. Extroverted people are energized by being around others, going to events and parties, and just generally being more outgoing. Just because you’ve always told yourself that you’re an introvert and hate being around groups of people, it does not mean that you can’t also be the kind of person who can turn it on for an hour or two and meet some people that end up being great clients for you long term. What can be assured is that, if you never get out there and meet people, you will always be at the mercy of whatever is available to you as a relatively faceless entity to your clients and potential clients.

When the market drops, there is no love lost for companies that stop sending you business when they only know you as a number on a rotation. If you’ve done nothing to make yourself known to your market, your clients and customers, and the universe of potential clients and customers, what could you possibly expect from them when they have less business to give to the market? Who are they giving that business to? They’re giving it to those they know, like, and trust the most and most likely have a relationship with. If you’re not building relationships with people, and then expanding the number of people you’re building relationships with, I feel only slightly bad in saying this, but you’re simply a vendor of services that can be jettisoned when it’s not beneficial or convenient to keep working with you.

The vast majority of appraisers in the market today have done nothing to separate themselves from the competitive market of other providers of the same services. They’re not known in their markets beyond maybe their name. Nobody knows what they look like, what they sound like, what their thoughts and opinions are, and who they are as human beings because they’ve made no offer to get out of the office or the basement and make themselves known.

An apt analogy for this point is the difference between vitamins and a prescription from a doctor. The vast majority of service providers in most markets are the equivalent of vitamins in that they’re convenient to have, they’re good when things are hectic and busy, but they are a luxury. They’re not required, nobody has prescribed them to you, they’re just there when you think about them. A prescription from a doctor is completely different in that there is some authority there, there is typically some urgency and importance around a prescription, not everyone can have it, you can’t get it over the counter, its exclusive, and it’s something people either can’t or don’t want to live without. Are you vitamins or a prescription? Are you needed by your clients and customers or are you just a nice convenience when they think about it?

The next suggestion I have for you in this market is to increase your confidence in the non-lending side of appraisal work. Everybody has hopefully heard or realized by now that lending work is not the only work available to appraisers. We develop opinions of value on real estate, and real estate is involved in lots of transactions that don’t involve lending. Most divorces where a home is jointly owned will need an appraisal. Retrospective appraisals for tax purposes, date of death, setting up and settling an estate, financial planning, tax appeals, pre-listing appraisals, cash sales where no loan is needed, for sale by owner, measurement services to agents and homeowners, and the list goes on. Within each of those specific needs are a host of different products available to you as a licensed appraiser. We do a crazy amount of desktop appraisals for non-lending work. This is where you send out a link from AlaMode Total or Anow to the client so that they can take all of the exterior and interior photos of their home and fill in some questions about updates, condition, quality, amenities, and so on. You never leave the office and there is an almost endless supply of needs in every market for these services.

If you aren’t researching these options for yourself, or maybe you’re just not interested in doing anything other than lender work, then okay, this is for those who are looking to diversify their business mix and not be so dependent on the lending and interest rate environment. For those already throwing up objections to doing some of the private work, all I can say is that it isn’t for everyone. One of the most appealing things about doing appraisals for lending work is that, in good, steady markets, the business is fairly steady with very little work. There is definitely more work involved with building up and maintaining a non-lending appraisal business, but there are also what I consider to be commensurate benefits.

The non-lender side of the business tends to not have strict deadlines. Yes, sometimes somebody needs an appraisal by a specific date, but you don’t have anybody hounding you every day for an update. We charge 25% – 100% more than our lending appraisal fees for non-lending work, depending on the need and the client. The work is paid up front, so cash flow is fantastic. There’s no waiting around for 10-20-30- or 60 days for a check. Granted, it’s not a steady flow of business from one client like it can be with lending work, but its steady in the sense that, when built correctly, it flows in all year long in every market and interest rate environment. We do see some variability between good times and not so good times, but it’s that in good times there is a steady flow of all kinds of non-lending work, and in bad times there is an outsized amount of divorce work since difficult times tend to influence the dissolution of marriages more than in the good times.

Of course, with non-lender work there can be a little more hand holding and explaining so that they understand the report, but there are no revision requests, no underwriting reports, no upset agents or loan officers, and even with a potentially upset client, you can talk with them and explain everything so that they fully understand what’s going on. The bigger percentage of my own appraisal company business is still lending work, but the non-lender side of our business most definitely smooths out the highs and lows of the lending side of things and is simply part of a wise diversification plan, in my opinion.

I already know some of the objections to doing non-lending appraisal work because I hear it all the time: “I don’t want to have to go to court, Blaine!”, “I don’t like dealing with angry couples going through a divorce!”, “I don’t want, I don’t like, It’s not easy, there’s not enough to go around!” Look, nobody is telling you to do something you don’t want to do. If you don’t want to do divorce appraisals for all of those reasons, don’t do them. There is still a long list of reasons people need appraisals outside of the lending needs that the vast majority of appraisers serve. My suggestion was to simply explore your options and increase your confidence in doing non-lender work if you want to diversify, avoid having to maybe get a part-time job during these times, or worse, close your business completely.

It definitely does take some time to build up the non-lender side of your appraisal business, and it takes effort as well. You have to be willing to do several things in order to get that business flowing in, and one of those things is becoming known in your market to some degree. In fact, I’d say there are about 5 things you need to do to start getting non-lender work for your appraisal business. From having a decent web presence and good SEO, getting good Google reviews, having a decent follow-up system for after the appraisal care, to having a good network of Realtors, Lenders, and past clients who can refer you for that kind of work is the minimum cost for entry into that market. If you’re not willing to do any of those things, you can’t expect to have anything show up on your doorstep in that regard. You’re stuck with what you have or don’t have on the lending side of the business.

On a side note, if you have any interest in developing the non-lender side of your appraisal business, we’ve built out a course and coaching program for that very thing. Not trying to sell you anything because that course and membership community is currently full, but if you want to get on the waiting list, just email me at [email protected] and let me know you’d like to be added to the waitlist for the next opening of that course and the community of people all doing the same thing, and we’ll notify you when we open it back up. We’re adding some new modules to it as well, so the next version will be even better than the last one and all past members always get any new updates to that course.

The bottom line is that nobody is coming to save you. You aren’t owed anything by anybody, especially not the market. The market, your clients and customers, even the really good ones don’t owe you anything and it’s always up to you and me to hustle each and every day to build moats around our business to ensure our own survival. I’m always looking for ways to create backup plans and diversification of my business, which includes multiple streams within the same business, as well as multiple streams of income from non-related businesses and industries. If it is to be, it is up to me is the mantra, friends. The harvest season is over and its now seed planting season. What are you going to do to plant seeds for the next harvest?

Until next week, I’m out…6

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