Developing niche expertise can be a great way to stand out from other appraisers, bring in new business, and earn more income. Luxury appraisal is one niche specialty worth considering. If you’re interested in appraising luxury real estate, you probably want to know: What are the benefits and challenges of specializing in luxury home appraisal?
We sat down with Jo A. Traut, appraisal curriculum and content specialist at McKissock Learning, to find out.
Q: What are the benefits of appraising luxury real estate?
A: First and foremost, appraising luxury residences is exciting and enjoyable. According to realtor.com, the most viewed homes on their website are those listings that feature opulent and unique customization. In general, people are inherently curious about non-traditional homes (and luxury properties fall into this category). Luxury home appraisal is a specialized niche that is easy to become passionate about—what better way to appraise?
Additionally, by specializing in this area of expertise and gaining a steady flow of clients who seek appraisers with this knowledge, you can let go of overly demanding clients on appraising traditional properties—those who request impractical requirements, expect unrealistic turn times, and cut corners on appraisal fees.
As a specialized luxury home appraiser, you can charge properly for the research and services required to credibly value these complex properties. Depending on the market and type of luxury property, you may only have to focus on 5-8 appraisal assignments a month instead of juggling 15-25 assignments to achieve the same monthly income. It is not unrealistic for a luxury home appraisal to require 3 to 5 times the amount of time required to complete an appraisal on a more traditional residential property.
Interested in luxury appraisals? Differentiate yourself by becoming a Certified Luxury Home Appraiser™ (CLHA).
Q: What are some of the challenges of luxury home appraisal?
A: Many high-end properties aren’t listed on MLS or search engines. In order to protect their privacy, many sellers avoid putting information and photos of the property on the internet. Therefore, you must work closely with top custom luxury home builders, designers, and luxury real estate brokers—those who typically sell, design, and build the top 5-10% of the market’s upper-tier homes.
Depending on your market and the type of luxury home, comparable sales may need to be located through companies that specialize in selling or auctioning luxury homes. When it comes to appraising custom high-end and luxury homes, many appraisers accept these assignments without grasping the additional research, development, and analysis required to successfully complete these complex valuation assignments.
Q: Is it more difficult to appraise luxury homes vs. traditional homes?
A: Luxury home appraisal is complex and involved, requiring a level of skill, knowledge, and competency beyond that required for appraising standard residential properties. Sometimes, appraisers accept these assignments without really understanding the time involved, the necessity of writing detailed narrative and explaining an involved analysis in the appraisal report, and that the research process may require locating and relying on data that is not available in the Multiple Listing Service (MLS).
Jo A. Traut is an appraisal curriculum and content specialist at McKissock Learning. She is a real estate appraisal and valuation compliance professional with over 20 years experience in residential appraising, operations management, risk analysis, quality assurance, and appraisal regulations.