Thinking about starting a real estate appraisal business? Once you’ve completed your stint as a trainee appraiser and become fully licensed or certified, you can begin working independently as an appraiser.
Many appraisers choose to start their own business because they love the freedom and flexibility of being their own boss. Before you dive in, make sure you understand the costs involved.
We’re breaking down the costs of starting an appraisal business so you can plan, budget, and avoid surprises along the way to meeting your career goals.
Essential costs when starting an appraisal business
An appraisal business is a relatively inexpensive business to start. Most business purchases you already have—computer, cell phone, car, comfortable pair of walking shoes, and a home office space. (Talk to your accountant about ways to depreciate and deduct these expenses on your income tax form.)
However, there are some non-negotiable expenses to consider before you can start taking clients. Essential costs include:
- Licensing fees
- Computer equipment
- Measuring tool
- Appraisal software
- Transportation
- Office supplies
- Business cards
Here’s a breakdown of the larger costs you can expect to accrue when starting an appraisal business.
Legal and licensing fees
Choosing the right business structure (like an LLC or S-Corp) can impact your taxes and personal liability. It’s smart to talk to a lawyer and accountant to understand the legal terms and pick the structure that best protects your assets and minimizes your taxes. Yes, this step costs money upfront, but it’s well worth the investment.
In addition to budgeting for any legal or accounting fees, you’ll also want to check with your state agency to budget for licensing fees.
Insurance premiums
You’ll need professional liability insurance (errors and omissions) to protect against work-related claims. You’ll also need regular business insurance to cover your office, equipment, and other assets.
Shop around and compare policies, but don’t make the mistake of skimping on coverage. One unfortunate incident could derail everything you’ve built, so be sure to set up your insurance safety net.
Investing in your tech toolkit
Investing in the right appraisal technology will help you streamline your workflow, making you more efficient and accurate. Here’s some guidance on setting up your tech toolkit.
Computer and internet
A powerful computer with fast, reliable internet access (and possibly multiple monitors) is crucial. This is how you research those tricky comps, write up watertight reports, sync up with your team, and stay in touch with clients. Consider this investment first and foremost.
Laser measuring device
Technically you can use a metal measuring tape to measure properties. However, most appraisers today prefer to use a laser measuring device. Popular brands include Leica DISTO and Bosch, and you can expect to spend around $200 or more.
Appraisal software
Using specialized software tools and appraisal apps can save you significant time both in the field and at the office. Industry leaders like Bradford Technologies Appraise-It Pro and TOTAL by a la mode offer powerful features and ease of use.
Look for features that make your life easier, like:
- Automatic form filling: Eliminate tedious data entry.
- Floor plan sketching: Generate floor plan drawings faster and easier.
- Data integration: Seamlessly pull information from public records and other sources.
- Report generation: Easily create polished and professional reports.
Prices can vary considerably depending on the features offered and whether you choose a subscription-based model or a one-time purchase.
Business laptop or tablet
A reliable laptop or tablet is your mobile office, so choose wisely. Consider a device with enough processing power to handle demanding appraisal software and data analysis.
Make sure it has a large amount of storage space, a screen size that’s comfortable to work within the field, and the ability to sync with your office computer.
Smartphone
Your smartphone is your constant companion, so make sure it’s equipped to handle the demands of your job. For example, a good camera is essential for capturing clear photos of properties you appraise.
There are also many productivity apps available to help you take notes, manage your schedule, and access important documents on the go.
Accounting software
Stay on top of your finances with accounting software like Quickbooks or Xero. These user-friendly programs streamline tasks like sending invoices to clients, tracking your business expenses, and creating budgets to keep your cash flow healthy.
Business tracking tools
Don’t let client information, appointments, and follow-ups fall through the cracks. Invest in customer relationship management (CRM) software to keep everything organized in one place.
Project management tools can also be helpful to ensure you stay on track and meet deadlines. The good news is that there’s a range of options available, from free basic versions to feature-rich subscription tiers. Explore what’s out there to find the perfect fit for your needs.
Optional costs to help launch and grow your business
Marketing your appraisal business both online and in person is super important for gaining clients. However, how much you spend on marketing can vary widely. To start, consider the costs of building a website and creating a brand for your business.
A professional website
Your website isn’t just a fancy online brochure—it’s a powerful tool to attract and convert clients. Treat it like your most polished salesperson, working around the clock to impress potential customers.
Think about what questions a potential client might have and make those answers front and center. Introduce yourself with a brief but impactful “About” section.
Don’t just list your credentials. Tell a short story about your experience and passion for the appraisal profession. Highlight what sets you apart—maybe you specialize in a unique property type or have expert knowledge of a particular neighborhood.
If you’re tech-savvy and on a tight budget, website builders like Squarespace and Wix offer user-friendly platforms and templates to get you started. Expect costs to start from around $40 and scale upward depending on features and complexity.
However, for a truly customized and professional look, partnering with a web designer specializing in appraiser websites is a worthwhile investment. This is a more costly option, but they’ll ensure your site not only looks amazing but also ranks well in local search results.
Branding that sticks
We live in a world saturated with logos and taglines, but yours should linger in people’s minds long after they see it. Business cards that are professionally designed and printed are an essential investment. Carry these with you so you can hand them out to current and prospective clients.
Additionally, small, branded items like mugs, pens, or even those classic fridge magnets are subtle yet effective reminders of your services. They become useful tools for past clients or realtors you work with, subtly reinforcing your name whenever they glance at their coffee mug or grab a pen to sign a contract. The best part? These don’t break the bank and offer a surprising amount of value.
The ongoing expenses of an appraisal business
Continuing education
Each state has requirements for ongoing education to renew your license. Thankfully, at McKissock, we offer an affordable Unlimited CE Membership to keep you on top of your game.
Taxes and accounting
Even if you’re a spreadsheet whiz, tax season gets complicated fast for a business owner. Budget for at least a yearly consultation with a good accountant who understands the unique tax situation of appraisers.
Marketing and advertising
Get your appraisal business noticed! Invest in your website as your primary marketing tool and optimize it to appear in local searches (SEO). Build a presence on social media platforms your clients use.
Network with realtors, lenders, and other professionals in your community. Consider targeted advertising in local publications or direct mail campaigns to reach specific audiences. Remember, consistency is vital. Show up regularly to build awareness and attract new clients.
What are the costs of starting an appraisal business?
The total costs will vary depending on your situation. Taking over an existing business might have high buy-in costs but minimal setup expenses. Starting from scratch in a rural area could be surprisingly affordable.
Here’s what we recommend when building a financial roadmap for your appraisal business:
- Price out the essentials: Licensing fees, computer equipment, software, measuring tool, office supplies, business cards, and at least a basic website to establish an online presence.
- Factor in recurring costs: Things like insurance, gas mileage, professional memberships, software subscriptions, and continuing education courses.
- Create a realistic start-up budget: How much do you need to get started and cover those first few months while your business gets rolling?
- Prepare for ups and downs: Bear in mind that real estate markets—both commercial and residential—are volatile. Expect brisk and slack periods, and save up enough money to get you through the latter.
Having a well-thought-out financial plan will seriously lower your stress levels as you make the leap into launching your appraisal business.
Reduce your CE costs with McKissock Membership
Looking to cut your continuing education costs? McKissock’s Unlimited CE membership makes staying on top of your requirements a breeze, saves you money, and comes with many perks, including partner discounts and access to a whole online community of appraisers. Get unlimited courses, webinars, and professional development tools for one flat price. Learn more.
