The financial industry is changing, which means the support systems for that industry must also change. The local bank is starting to disappear, becoming part of a network of national banks instead. This has caused a need for an appraisal management company to be formed in many areas because banking institutions prefer working with one contractor instead of several.
As an appraisal management company, your core job responsibilities are rather simple. You’ll be working with a network of local appraisers that will subcontract the appraisal work that the banking industry has to offer. If you want to know how to start an appraisal management company, then your first task will be to begin forming this network of local appraisers so you can build bridges between them and the banks that require their services.
Here’s how you’re going to make this happen.
1. Research the Market
You’ll find that most local markets have not yet organized themselves into a network. The banks may have gone national, but the appraisers are still local and at best loosely affiliated. You can’t just assume that every market is this way, however, because some appraisers have created their own appraisal management company already. Research your market to find those appraisers who have yet to get linked up.
2. Start the Plan
Once you have an idea of who will be joining your appraiser network, you’re ready to start crafting your business plan. Include startup costs, recruitment costs, and incorporation costs as you begin to build relationships with lenders and appraisers within your area. It doesn’t usually take much capital to get started, but loans or partnerships can provide an infusion of cash when it is needed. If you need lending assistance, your business plan will need to be completed.
3. File the Paperwork
You’re going to need to work at the local, regional, state, and national level to become licensed as an appraisal management company. Local business licenses will be required and because you will be in the financial industry, there may be specific certifications, licenses, insurance, and fees that are required for you to become an official business. Fill out all the paperwork and meet the obligations to make your business official.
At the national level, you’re going to need to have a tax identification number if you plan to hire employees. Make sure you are fully covered for liability issues and if you need to collect local, county, or state taxes in addition to withholding taxes from worker salaries.
4. Hold a Seminar
The goal of your appraisal management company is help everyone make more money. The only problem is that your company may be seen locally as new competition instead. Bring all of the appraisers together in your area and show them your business plan. Let them see that by building convenient networks, they’ll give themselves a better chance at securing more work.
You’ll also want to conduct a full interview with all of the appraisers who are interested in your management company. Not every appraiser is going to buy into the vision you have for the local market, so be selective in who you choose to bring on board.
5. Market Yourself
If the financial institutions don’t know that your business exists, then you aren’t going to be making any money. After creating a network of local affiliates, you’ll want to start creating a network of financial institutions who will work with you when they have appraisal needs. Look at the lenders who regularly issue home loans first to see if they’d be interested in approaching the convenience of your network. You will want to examine every financial entity in your community at some point, but start with the bigger fish and then proceed to the smaller ones for the best chances of success.
6. Provide Consistency
For your appraisal management company to succeed, you’ll need to provide a level of consistency so that the financial institutions can expect certain results. That means making sure the appraisers are meeting certain timeframes, are conducting themselves professionally, and are accurate with their assessments. Your company will only be as successful as the appraisers who are representing you. Poor results will put you out of business fast.
If you want to know how to start an appraisal management company, then the main thing to know is that you need to build multiple networks on both sides of the bridge you’ll be building. If you can do that, then you will be able to have a successful business venture.
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