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[Sounding Bored] Negotiating Appraisal Fees, Staring In The Headlights

Sounding Bored is my semi-regular column on the state of the appraisal profession. I was particularly annoyed about getting pressure to drop my fee this week, so I turned on my headlights.

I was highly recommended by several sources to perform an appraisal in a sticky legal matter. We delivered an engagement letter. After a few days the client left a message saying the proposal looked good “but see what you can do about the fee” in a slightly sarcastic tone.

I winced when I heard the message because this was a complex matter involving litigation and court testimony and I quoted what I thought was a fair fee. Of course I may not have been in sync with expectations or this individual simply expected to negotiate.

There is nothing wrong with negotiating a fee up or down if the ultimate assignment, once defined, is not what was originally expected. However, I am particularly sensitive to the commoditizing of appraisal services (ie AMCs) that has occurred over the past decade.

…that we are just a bunch of form-fillers.

I tend to see our industry as a deer in headlights when negotiating fees and turn times.

In other words, as an industry we are way too happy to accommodate (I guess that correlates well with the credit crunch) the client whether it is fair or not.

Of course I am being very idealistic here but why not?

I don’t to be in the game of quoting a very high fee building in the expectation of negotiating downward. I quote what I am willing to work for. That seems to be more a professional approach to me. Avoiding being:

It sounds pretty basic but I am often amazed at how many of us (I ahve had my moments) have acted that way to a client.

We don’t need any more apologists for our worth as experts. Of course it ultimately is what the market will bear but why automatically negotiate?

Suggest that the client looks elsewhere if they are uncomfortable with the fee.

It has been my experience that the client doesn’t always go elsewhere if they were handled professionally in the past.

Incidentally, that particular client ended up calling back and hiring us for the assignment and expanded the engagement for a higher fee.

You get what you pay for.