The market size of the real estate industry in the US in 2019 was 175 BILLION dollars.
That’s approximately 2.7 million brand new BMWs.
If you want to take a piece of that cake, we don’t blame you.
As a matter of fact, we’re here to help.
In this article, we’ll go over:
- how to start a real estate appraisal business
- how to run a real estate appraisal business
- how to actually be successful in both
- how to install a self destruct option in your office if someone decides to steal confidential records (maybe, if we have time)
So, let’s get into it.
How To Build An Appraisal Business
1. Become An Appraiser
- You might be thinking, “Is this guy for real?”
- Trust me, I’ve had people come up to me and want to start a business they have no knowledge of whatsoever.
- That’s why this is the first thing we’d like to point out.
- You need to pass the real estate appraisal exam if you want to become an appraiser.
- The criteria are different depending on the state you are in, so make sure to do the research and see what steps you need to take.
- We have several articles on the topic of being an appraiser right here on our site radarlogic.com, but since we value your time so much, I’ll provide you with the one I think you should read: Certified General Appraiser: Everything you need to know.
- It goes in-depth about this career choice, and every newcomer should most definitely read it.
- Now that that’s out of the way let’s go into more detail.
2 .It’s Official
- As an appraiser, you’ll carry a certain amount of responsibility.
- If things go sideways, you’ll want to protect yourself from lawsuits.
- One of the steps you need to take is forming a legal business entity – an LLC( limited liability company).
- Of course, this doesn’t mean you can set someone’s house on fire and walk away; it means you’ll separate your private assets from your business assets.
- Hence, if push comes to shove and someone sues you, your private assets are protected depending on the circumstances.
- There’s also a few other options besides LLC, but since this is a real estate appraisal article and not a college business class, we’ll leave the rest to you.
- Make sure you acquaint yourself with a good lawyer as well.
- Having someone that can give you legal advice can never hurt.
- Before you get discouraged and think there’ll be lawsuits, you probably won’t be in a situation where your assets are in danger and where you need a lawyer.
- As long as you’re doing your job diligently, everything should be fine.
- However, it’s always better to be safe than sorry.
3. Pay The Piper
- After you’ve established a business entity, you need to register for taxes.
- Registering for taxes can even provide you with tax benefits, depending on the state.
- Failing to this and getting caught can provide you with around 17 months in prison.
- I’d go with the tax advantage option, might be healthier in the long run.
4. Pot Of Gold
- Open a bank account, a business one.
- No, you can’t use your personal account.
- Mixing your personal finances with business ones is a great way to complicate things for yourself.
- If you’re good at accounting, you can actually save a few bucks at the beginning.
- You probably won’t start making a lot of money right away, so hiring an accountant won’t be entirely necessary.
- This is tied to the previous point as well.
- Do your taxes regularly, and don’t put yourself in a situation where the IRS is breathing down your neck asking all kinds of unpleasant questions.
- If you’re not good with numbers, shell out the cash for a professional accountant and don’t lose any sleep over it.
5. Right This Way, Please
- Office space. This one is a little bit tricky.
- If you’re just starting and don’t have employees, office space might be a waste of money.
- This is especially the case for those who live in a big city where renting an office space costs the same as a month in the Bahamas.
- Having a designated room for work in your own house could be more than enough.
- Make sure it looks professional, and it’s isolated from any background noise that can disturb a meeting with clients.
- Sure, your kids are great, but not everyone has to hear their piano practice.
- If you have employees, an office might be unavoidable.
- How big your company is will dictate the size of the workspace you need.
- You might get tempted to rent a 1000 square foot building because you have a big vision for the future, but you really shouldn’t.
- One of the benefits of this business is that you can start small and work your way up.
6.It’s Not Your Fault
- This ties into the second point we’ve made.
- You’ll want to get insured, completely.
- The first type of insurance you’ll need is General Liability insurance.
- This covers most of the clumsy mistakes you can make.
- Falling down a ladder and hurting yourself, for example, or even causing damage to the property you’ve appraised.
- The second type of insurance is Errors and Omissions insurance.
- If you miss something that you definitely shouldn’t have or made a wrong judgment, this can save you from getting dragged in court.
- Insurance is just the type of thing that you should have but, hopefully, don’t need.
- If you don’t have it and you do need it, you can get in a lot of trouble.
How To Successfully Run A Real Estate Appraisal Business
1. New Kid On The Block
- Every business needs clients.
- Go out and start meeting people, both clients, and potential business associates.
- The more connected in the real estate industry they are, the better.
- We’re not saying go be a selfish prick who talks to people who can only give him something in return, no.
- We are saying to be friendly and pleasant. To always convey the type of service you’re providing and make a good first impression.
- Networking is not optional here.
- Being a business owner or an entrepreneur, or whatever the word is the cool kids are using nowadays, requires contacts.
- If you’re a loner and prefer spending time with the good old “me, myself and I.,” private business might not be your cup of tea.
2. A Master Of None.
- This sort of ties into the last point.
- You should pick a type of clientele or a kind of property you want to be involved in.
- You like families, go appraise suburban houses.
- You like big buildings, appraise those.
- You like dinosaurs, become an archeologist, and steer clear from real estate.
- Whatever you decide, you’ll need contacts.
- It’s great that you want to work with lawyers because you heard there’s money in it, but if you’re not knocking on their door being the most charming appraiser they’ve ever seen, that wish won’t come true.
- Find out what works best for you and stick with it.
- People always prefer an expert over someone who takes any type of job just to make some money.
3. A Walking Billboard
- People need to know you exist.
- Start working on your marketing strategy.
- As a matter of fact, if you don’t feel comfortable, find someone to help you with this.
- The online presence of any business nowadays is a crucial part of your marketing strategy.
- If you don’t have enough money to both pay for the ads and have someone come up with them, start educating yourself.
- There’s not a thing on the internet that you can’t learn.
- Most of it is free as well.
- If my grandpa can learn how to use an iPad, you can learn how to post an ad on Facebook.
4. Hard Working Or Working Hard
- This is probably the most important point to make.
- Do your job diligently.
- Don’t half-ass anything.
- Your clients might not always be thrilled with your estimate but if it was objective and carefully thought through, they won’t have anything to hold against you.
- Having your own business is great, but cutting corners to make a few extra bucks will eventually come back to haunt you.
How To Start A Real Estate Appraisal Business – Putting It All Together
Let’s go over the main points one more time real quick:
- Become a licensed appraiser
- Form an LLC (or whatever business entity works for you)
- Register for taxes
- open a business bank account (don’t use your private one)
- Get an office space that you need
- Get insurance
If you want to be successful at it:
- start meeting people
- decide what your cup of tea is
- start advertising your company
- Do your job diligently
Just like any business, you’ll need to be willing to make sacrifices.
It will take time and energy before you start seeing some real results.
But if you push through the initial resistance and make a few correct decisions, you’ll be your own boss, and that’s something money can’t buy.
So be patient, be friendly, and be responsible. Success is waiting for you on the other side.