Appraisers coping with higher fuel prices with fee increases, better itinerary planning

Last week, we asked you to share with your fellow appraisers how you’re dealing with historically high gas prices.  Twice as many of you wrote to say that you’re increasing fees and/or adding long trip surcharges, than said you’re not modifying your fee.

But many of you are instead (or in some cases, also) paying extra attention to your field itineraries.

Included among the people who took the time to write were appraisers who are not driving to inspections unless there are at least two scheduled in the immediate area; restricting long trips to certain days of the week; or otherwise “grouping” jobs.  You warned, though, that this is increasing your turn times, and may be leading to certain rural and outlying areas being underserved.

“I no longer accept assignments in adjacent counties,” one appraiser wrote us. “Since other appraisers are taking the same step, some rural areas are now underserved.  Lenders are reluctant to approve surcharges and thus in many cases we simply decline the assignment.”

How the idea of a fee increase would be received was of course an issue on a lot of your minds. “Management companies are balking at this, but appraisers need to tough it out,” one e-mailer said. “They are already taking too big a bite out of the fee.” Echoing that sentiment, another appraiser wrote, “Don’t feel bad for raising fees.  Remember, we make less than everyone else in the industry and have more qualifications to perform our job.”

Some of you pinned the blame for keeping fees from going up on the competition. “Here in southern California most cannot raise prices because appraisers are still undercutting each other,” one reader wrote. “While [rising fuel prices] would have been an opportunity to get those fees up after a 10 year vacation from fee increases, appraisers start the undercutting as soon as volume slows down.” Another writer, in Texas, had similar thoughts. “It’s hard to raise fees when there is so much competition in the area.”

Among those who did charge extra to compensate for fuel prices, across the board fee increases seemed to be as popular as trip surcharges.  But some of you had some original ideas.

• One of you said he offers a discount for assignments within five miles of his office.
• One reader also incentivizes clients to send along more assignments close by, but soft sells it. “[I] tell the lenders that I have trouble absorbing the extra costs for increased gas prices, since I am a one person shop.  Then I ask if they could possibly direct more assignments my way that are closer to my home/office.  That way, my costs for fuel do not escalate as much, and they feel like I’m looking out for their best interests, too.”
• One reader wrote to tell us she pays more attention to route planning and “clustering” inspections, but complements that with surcharges for “yesterday” requests – the ones that need to be done ASAP.

A few of you have parked the gas guzzler and are driving the more fuel efficient vehicle to inspections (Civics and Jettas were, unofficially, the most popular).

How do you broach the subject of raising fees with clients?  Let them know it’s temporary (if it is), only applies to long trips, or only to “rush” assignments.  That lets them know that either it’s only a “defensive” measure until fuel costs go down, or it’s something somewhat within their control.  They can give you assignments closer to the office, or plan ahead better, and avoid the extra charge.

One appraiser suggested expressing the additional fee as a standalone figure.  That is: “[Don’t] say the fee is now $X00.00 but rather the increase is only $X.00. Smaller numbers are easier to sell and be accepted.”

Overwhelmingly, those who have raised fees encourage you to be firm. “Some large lenders will not pay [the additional fee], so I don’t work for them,” one appraiser told us. “I have found that people who want quality work and who have been referred to me, or any other appraiser or professional for that matter, are generally willing to pay a premium for the service.  Stand firm on your fee.”

Our favorite response to higher gas prices is this one, from La Grange, TX: “I am an insurance adjuster and certified residential real estate appraiser.  I have started asking my insureds and borrowers to bring their home to me.  My neighbors don’t like these big houses pulling up in front of mine, but it is saving me a lot of gas!”

Thanks to all who wrote!