Expanding your appraisal client base to include attorneys, homeowners, agents, and other high-fee non-lender clients can help you break free from the regulations and short turnaround times expected from lenders. Here are four specialty areas that can supplement (or replace) your mortgage lending appraisal business:
Going through a divorce is tough, but beyond all the hurt and anger is the financial aspect. Appraisers play a significant role in valuing the marital assets. Appraisal work is not only limited to the marital residence; many couples hold business or commercial properties as marital assets.
If you are good at this type of work, you can be the first person a divorce attorney or arbiter calls. These clients are usually more interested in appraisal quality than a low fee or a speedy turnaround time. In some cases, you may be required to go to court to provide expert witness testimony. This type of work can be quite lucrative, albeit stressful at times.
When a person dies, an appraiser may be called in to value their property. There are different types of estate appraisals. Some appraisals provide the basis for taxes that are levied by the IRS and states. In these situations, the appraiser provides a Fair Market Value to value the property for taxation purposes. In other assignments, an appraiser might value the properties of an estate so that the assets are divided equally among the heirs.
Ad Valorem Taxation Appraisals
Municipalities issue assessed values on real properties which are used to determine property taxes. Sometimes a property owner believes their assessment is unfair and they file an appeal or engage an attorney to handle the appeal on their behalf. In most of these cases, an appraisal of the property is needed and serves as evidence of property value at the appeal hearing or proceeding.
Eminent Domain Appraisals
When the federal, state or local government entity takes a property for the public good (e.g., construction of a new highway) that body will order an appraisal, which establishes compensation to the property owner. The owner then, working with an attorney, may hire an appraiser to conduct a separate appraisal to ensure that the offer is fair and to serve as an expert witness should the case go to court.
These non-lender appraisals are different from typical mortgage lending appraisals. For example, these appraisals are rarely ordered by AMCs, and these appraisals do not require compliance with GSE and FHA guidelines and requirements, so you may need to brush up on the differences.
Breaking into new appraisal markets
Focusing on non-lender business can be profitable, but breaking into new markets isn’t necessarily easy. With non-lender clients, you will need to market your services, network, and build your reputation as a trustworthy appraiser in a niche market. It takes time.
The work can be immensely satisfying because you are working with people, solving problems, and providing information that will help them make life decisions. At the same time, you can find yourself in highly charged emotional situations, for example, if you are inspecting a property for a divorce appraisal and the parties begin arguing, or if your appraisal client is a wife whose husband just passed away.
Beyond the emotional issues, you may need to follow different rules and regulations, so it’s critical that you take the time to learn the ins and out of the type of non-lending appraisal work you want to pursue.