The earnings on this two-appraiser shop don't survive the AVM math

What does the trainee actually cost you if one of the owners leaves? Supervised experience hours have to be signed off by a supervisory appraiser who meets the state's requirements, and those requirements are set state by state. If the guy doing the supervising is the one retiring, that 700 hours is stranded unless the remaining owner qualifies and is willing. I'd ask which of the two is the supervisor of record.

Basic question because I only half follow this. The borrower pays 600 to 725 but the firm gets 512? Where does the rest go, and is that spread the AMC's fee for routing the order? I've been reading loan files for months and I've never understood which line that comes out of.

@vellum yes, the appraisal management company takes a piece for ordering, engaging the appraiser and handling the compliance side, and on the consumer's disclosure it often shows as one appraisal fee. On the management side I order maybe six appraisals a year for owners and most of what I use otherwise is a broker price opinion at a fraction of the cost, which tells you something about where the low end of this market has already gone.

The 15 percent estate and divorce work at 1,640 average is the only part I'd pay a multiple for, and it's the part least likely to transfer. Attorneys hire a name. Does the package say who the referral sources are, or is it just "legal work"?

3.1x on SDE where the earnings are two owners' own production is high. Five years running a service business taught me that the number people quote as SDE usually includes the labor you'll have to replace at market rate. If both owners walk, you're hiring two certified residential appraisers, and in most metros that's 85 to 110k each plus a vehicle before anyone produces a report. Run it that way and the 205k gets thin fast. I wouldn't be past 2 to 2.5 on a firm this shape, and I'd want the sellers carrying paper on part of it.

I do this work in the field, and 1,050 reports across two appraisers and a trainee is roughly 350 each a year. What's the inspection-to-report time? If they're driving 40 minutes each way in that metro, capacity is already maxed and there's no growth in the price without adding a body.

Has anyone here actually seen a UAD 3.6 quote from a form vendor? Everything I read says broad production started January 2026 with mandatory use by November 2, and the reports I've seen described sound like a different data structure rather than a new template. That's a training cost as much as a software cost.

Selfish question. If that trainee slot opened up, is 46k plus per-file bonus normal for someone 700 hours in? I've been trying to figure out where I fit and appraisal keeps coming up as one of the few licensed lanes you can enter without a big capital outlay.

@plumb it varies a lot and the bigger issue is that the license itself is state-issued. Education, supervised hours and the exam are set by your state board, and moving across a line usually means a reciprocity application rather than a straight transfer. Worth knowing before you pick a supervisor in a state you don't plan to stay in.

@fathom, on the deal, the seller not knowing his own file mix by loan purpose is the answer. Every order form he received had the intended use on it.

Two owners at 58 and 61 with no third certified appraiser is the whole story. Everything else is decoration.

I watched a shop near me go from about 60 orders a month to 12 in three quarters when refis dried up. They didn't go under, they just stopped being worth anything. Whatever multiple you land on, ask what the worst four consecutive quarters in the last five years looked like, not the trailing year. Appraisal volume tracks transactions and refis, and both of those move with rates in a way nobody in that office controls.

Revenue per appraiser day is the number I'd build the offer on. 712k over two and a half producers over roughly 230 working days is about 1,240 a day gross. Then subtract the vehicle, data and E&O per head. If the 15 percent litigation work is 1,640 a file and takes two days, it's earning about the same per day as the AMC work at 512 and half a day. That changes which part of the book you're actually buying.

@thatch is right about replacement cost but I'd add that a small team's capacity is set by the slowest step, and in this business that's usually report writing, not inspecting.

If any of that estate work touches farmland or larger acreage, check the credential. A certified residential license has property-type limits, and agricultural or mixed-use assignments generally need a certified general. I've had two estate valuations done on land and both required the general cert. If the 1,640 average is propped up by work only one of the two owners is credentialed for, that's a hole.

Seconding @orchard. Land assignments in thin markets also chew time, because you're hunting comps across county lines and sometimes across a non-disclosure line where sale prices aren't public at all. High fee, terrible hourly.

Whoever handles the purchase agreement needs to look at the workfile obligation and the E&O tail. USPAP has a record keeping requirement measured in years after the report, and liability on a report signed before closing doesn't move just because the entity changed hands. Ask whether the AMC agreements have indemnity clauses that survive assignment, and whether they're assignable at all. Plenty aren't, which would mean the panel relationships terminate on the sale. That's a question for a lawyer who does professional practice deals, and it's worth the fee here.

Also ask for the last three years of complaint or state board correspondence.

Would either owner stay on for two years as a signing appraiser? Everything in the thread points at that being the only bridge.

I'd stop valuing the whole thing and value the three pieces separately, because they have different futures and only one of them is really for sale.

The AMC block, 61 percent of files and roughly 335k of revenue at 512 net, is the segment automated valuation is taking. Home equity and low-risk refi work is where waivers and AVMs land first, and the trend you cited points the same direction into 2026. That block is worth a low multiple of its contribution margin and nothing more, because its volume is not yours, it belongs to whoever the panel is keyed to and it moves with rate cycles you don't control.

The direct lender and attorney block plus the estate and litigation work, call it 275k of revenue, is the durable part. That's the work automation can't do, because the assignment exists precisely when someone needs a defensible human opinion. But it's a relationship book attached to two people who are leaving, so its transferability is the thing you're actually buying and there's no way to price it from the package.

So the question I'd put to the seller before making any offer is one page. Break the 1,050 files by loan purpose and by client, name the referral source on every non-lender assignment over 1,200, and tell me which owner signed each one. If the answer is that the older owner signed 80 percent of the litigation work, the deal is an employment agreement with an earnout, not a purchase at 3.1x.

And the trainee only matters if the remaining owner is a qualified supervisor under your state's rules, which is a board question, not a broker question. If he is, that pipeline is worth more than the goodwill, because the constraint in this business is credentialed capacity.

@anchor got there. I'd only add the normalization step. Replace both owners with market-salaried certified appraisers, add employer payroll cost, and the 205k SDE is likely under 60k of actual operating profit. Price the goodwill off that number, then treat anything you pay above it as prepaid salary for yourself. If you wouldn't take the job at that wage, don't buy the firm.

One thing in the firm's favor. If this metro sits in a state where sale prices aren't public, the data barrier is real and AVM coverage tends to be weaker, which slows the encroachment on the low end. Worth knowing which side of that line you're on, because it changes the five-year picture more than the software contract does.

"Asked twice and got nothing" is a price adjustment, not a follow-up email.

What's your walkaway number? You've written 900 words about what's wrong with 640k and none about what you'd actually pay. @sextant's normalized profit plus a real earnout on the litigation book would put me somewhere near 300 to 350 with half of it contingent, and I'd expect the sellers to laugh. Then you find out if there are other bidders.