Climbing the Expert Pyramid for Appraisers!

​Welcome back to the real value podcast, the podcast about business, life, success; about finding value in anything and everything, and about creating absolutely as much of it as you can with the time we have! Good morning my friends, My name is Blaine Feyen and I am your host for this and every episode of the real value podcast. Thanks for joining me again this week on our shared journey through life and business. And I hope to hammer that point home just a little bit more this week that this IS a shared journey through life, and not just business. Businesses exist to enhance people’s lives, not the other way around. I truly hope that that message is coming through loud and clear in these episodes because it is one of the foundational principles that I believe in, preach, and teach and have been for the past 20 years or so. In fact, I think its safe to say that I believe it even more today than I did 20 years ago when I was teaching it to large groups of mechanical contractors and HVAC companies. Businesses exist to solve problems for their clients and customers, to be sure. But, for the owners and stakeholders, the business’ primary purpose is to make a customer or client, we learned that from Peter Drucker, and to improve the lives of everyone involved with that business in some way and that must include making a decent profit. You might say, ‘well that’s just your opinion Blaine, my business exists to pay my bills!’, to which I would say, ‘how is that any different than what I just said?’ You pay your bills so that you don’t go further into debt, so that you can sleep better at night knowing that the bills have been paid, so that your children can eat and go to good schools, and so that your life is enhanced by your business, not the other way around. We are investing some of the most valuable currency given to each and every one of us each week and it’s the 168 hours we’re given to live and breath and create a legacy. As we say at the end of every episode, that most valuable currency is your time. A currency once spent can never be recovered except through the return on that investment which is hopefully in the positive column of better health, wealth, more time added to the back end, and happiness and enjoyment. 

---

 
Speaking of happiness and enjoyment, this episode is being recorded on the week of the July 4th holiday, our Independence Day in the US, and typically a week of sun, fun, family, beaches, fireworks, brats, burgers, beer, and parades. Hopefully everyone made it safely through the holiday, took some time away from the office, and has made it back safely with all of your fingers. This is one of the weeks that I typically take off from my own businesses to rest, rejuvenate, recover, and recharge and, in fact, will be taking next week off too. Its been an extremely busy several months with no signs of it slowing down but that will not stop me from pulling my fingers from the keyboard, taking my headset off, turning off the computer and phone, and stepping back from it all because I know just how important that particular discipline is. We all hate to turn down business and when its flowing in, and fortunately, in my business I don’t really have to because of assistants and having other appraisers, but I know for many of you that’s a real sacrifice because it is just you and the cost of turning down orders and taking time off has a real cost. So for those of you for whom this applies, if you did take some time away, I applaud and congratulate you for recognizing the benefits of doing so, even at the very real costs associated with turning away work which, by the way, is about 3 times the actual fee noted on the order. You have the fee that would be paid, you have the lost opportunity cost, and you have the time it takes to ramp back up and recover that hypothetical lost fee. That’s the burden of the independent business person and it’s a real one. It is one of the reasons I so strongly encourage having at least one assistant, virtual or paid staff, and potentially other appraisers in your office, virtual or brick and mortar. By the way, I’ve mentioned it several times on the show but haven’t gone in depth yet on this topic, but I will plant the seed for our future episode on the topic of office setup. I am not a fan of brick and mortar offices for appraisers as a general rule. There is an exception and that is if you own, or are buying the building, and using your appraisal business as a way to fund the debt service on the real estate. But even then, I’d love for you to have another tenant in that building making the payments on it, or at least most of the payment on it, so that you can operate your business on as little debt or expense as possible. For those of you renting offices and running a bunch of office equipment, there is a much better high tech low cost way to run a very profitable multiple appraiser, multi assistant  office with no actual brick and mortar location. I’ll go over more of this idea as the show progresses and to reiterate, I am not saying to close your office if you have one. I know the benefits of having a location for all of your appraisers to congregate and have shared resources and I also know there are appraisers running very successful multi appraiser, multi office businesses so I’m not saying not to do that. I just have some rules for doing it if you’re going to and there are two primary categories for those rules, financial and leadership. There are financial rules and requirements for doing something and then there are leadership rules and requirements necessary for making it all happen and making it successful.
 
We’ll talk about it in future episodes though so that we can get to the meat of todays episode which is about pyramids. Yep, you heard me, pyramids. A pyramid, as you know, has a wide base and gets smaller as you get to the top. The pyramid is one of the most stable geometric structures for obvious reasons, but its also a great structure for metaphors and analogies due to its wide base and decreasing profile as you reach the top. The one dimensional pyramid, which is essentially just a triangle, has been used to make points about the wide base of something and the slender top end of something else. The food pyramid that has been used by the FDA for decades, for example, shows the ones diet should be filled with all kinds of breads, pastas, grains and cereals, the next category as we move up the pyramid is fruits and veggies, then meat and poultry, and then the top was fats, oils, and sweets. Hopefully most of you know by now that the FDAs representation of a healthy diet that was the food pyramid is complete and utter crap if you want to be healthy, happy, slender, and active. The only thing they got right back then was to limit sugar and processed oils like corn oil. Everything else is complete BS. Nevertheless, the image of the pyramid helped to make their point that the foundation of one’s diet, so they thought, should be filled with the most of one thing, and then the other things they thought were not as important, or should just be consumed in lower quantities, were located in the smaller categories as you moved up the pyramid. What the visual representation of the pyramid is also good for showing is the importance of something as you move toward the top. The base of the pyramid is wide and stable, but also filled with the most of some category, while the top is seen as either the best or, in the case of the food pyramid, the worst of something that should be limited.  If we look at Abraham Maslow’s hierarchy of needs that I talked about in a past episode, at the base of the pyramid is the most fundamental needs and desires of human beings, which was food, clothing, and shelter. As you moved up the pyramid, the needs and wants became more complex from a human needs standpoint. The next category after food, clothing and shelter is safety needs like protection, having a job, health, and owning a home. After that its love and friendship, then esteem, and ending at the top of the pyramid with self actualization. The pyramid in this case isn’t indicating what we should stay away from at the top, its pointing us in the direction of human motivation and needs and saying that we must first satisfy needs and wants in the lower wider categories before we can move upward toward more intellectual, philosophical, spiritual, and emotional needs. The pyramid could be looked at in Maslow’s example as simply a representation of what his theories said, or it could be looked at as a rough goal or mission for one’s life. I need to get past this food, clothing and shelter thing if I ever want to get to self esteem and self actualization.
 
The pyramid I want to talk with you about today is the pyramid of expertise in the business world. For many industries, the appraisal industry notwithstanding, the top of the pyramid is often viewed by those within an industry as being occupied by those only with the highest designations, maybe the most years in the business, the most letters after their names, maybe those who work for certain companies or government organizations. Whatever it is, the top of the pyramid is small and only peered at from below by the wallowing masses craning their necks to get a glimpse of the top.
If you’ve ever stood beneath a massive skyscraper and looked up, you know the feeling. I have a bunch of pictures and video from being in Dubai looking upward at the famous Burj Khalifa building, which houses the Armani Hotel Dubai, which is the tallest hotel in the world. You simply cant see the top the closer you get so you find yourself squinting as you look up. To get a better perspective, you have to go across town and look at it from a different vantage point to see what the top actually looks like. While I was looking up trying to see the top of the building I noticed something interesting, which you can witness in any major city with tall buildings. You’re typically not the only one peering up toward the top of the building. There are hundreds, maybe thousands of tourists doing the same thing as you and trying to get a glimpse of the top of the building. Its crowded at the bottom and I couldn’t help but wonder who was occupying the top of the building at the moment I was staring upward. I have to imagine the thousands of people staring with me were wondering the same thing. The bottom of the pyramid in any industry, again, the appraisal industry notwithstanding, is filled with beginners and those we might call novices. These are the people still apprenticing, maybe just got state licensed, maybe they’ve even been out on their own for a couple years but still trying to figure it all out and learn more. The reason they wish to learn more is, not only so they can be better appraisers, if they desire to do so, but also because as you move up the pyramid of expertise, typically so do the opportunities and the income. The novice level in anything is always the most crowded so the fees are the lowest, the skills are typically commensurate with the fees, and the product or service is viewed by the market as a commodity. Something interesting about each level of the pyramid is that each level is not necessarily based on skill or knowledge of a particular task alone. I have no problem saying that there are tons of 20 and 30 year appraiser veterans in the novice category because moving up the pyramid toward true expert status entails a particular set of beliefs about one’s abilities, the ability and skill to communicate that to the market, and the right mindset to be able to attract and maintain that level of business. I say this because I have people appraisers emailing, messaging, calling, and wanting to be part of our training and coaching who have 10, 20, sometimes 30 or more years in the business, many with advanced designations after there names, who are frustrated because they fully understand that they still haven’t reached that level in their own markets. They thought they’d be there by now but something has been missing from their approach. They’re seemingly great at what they do, they maybe aren’t the best at communicating that skill and, even more common, they don’t have the right mindset yet to move up the pyramid.
 
Understand that the novice level in anything does not necessarily mean new. It simply means they haven’t fully or adequately developed their brand, their message, their unique value proposition, and they simply have not learned how to offer enough value to justify a higher fee and a higher position on the expert pyramid. The next level after novice is what we called simply the level of being skilled. This is a level that is still very crowded and we don’t see much movement in the fee structure of the skilled appraiser or agent. These are people who, for the most part, know what they’re doing, have a little bit of marketing in place, maybe a website and some basic branding, but they still find themselves competing with the novice. There isn’t much differentiation between the two as far as the market is concerned, again, because they haven’t developed and learned how to articulate their particular value proposition to the market. As we move up the pyramid, hopefully I’ll be able to hammer home this point that having some kind of value add for your potential clients, and then the communication skills and the ability to articulate your value proposition to a market willing to pay your fee become extremely important if you want to go to the upper levels of the expert and value pyramid. I hear appraisers and agents talking all the time about taking more classes and getting more designations so as to potentially beat out competitors. That’s not why you take classes and get designations my friends. You do those things to become more knowledgeable, have more tools in your proverbial tool chest to solve value problems, and maybe most importantly, learn new language and syntax with which to communicate your value proposition. Just saying you’re an SRA or have your MAI designation, for example, is not offering the market any more value. The wider market for appraisal and real estate services, especially the private market, wants value and they want somebody who can articulate that value offering better than anybody else. They, in many cases, want their hands held through a process and to have it all explained to them along the way in language that makes it easy for them to understand. The irony is that there are many who think being an expert means you don’t have to explain anything to anybody because you can simply say, “I’m an expert, just trust me”, when, in fact, at the expert level is a whole group of individuals who have learned how to break down the process into easily understandable language and walk the client through the process with no ego. The expert level is occupied by people willing to give high amounts of client care since that is typically one of several value offerings above the level of the novice, the skilled, and even the next level on the pyramid, which is what we call the authority or specialist level. At this level in business, the appraiser, the agent, the lender, the speaker, the martial arts business, whatever business one is in its similar, this is the level where the competition tends to start melting away because of how the specialist and authority has positioned herself in the market. The authority is well known in the market, they’ve done lots of training, coaching, speaking, hand holding, they use video marketing, video emails, they may have special social media forums specifically for their market, they understand how their market likes and needs to be spoken to and educated, they have developed a reasonably growing base of fans willing to send some referrals and the specialist or authority in any market can pretty much command whatever fees they like, within reason, because clients are typically referred at this level, which means they’re pre-sold to a large degree, and the reputation of the authority in that market is that of a standout.
 
At the level of authority or specialist, an appraiser doesn’t do AMC work or low fee work, at least not as their main source of income. I have several students who I would call specialists and authorities in their markets who have divisions within their companies to handle lower fee AMC and they hand that work off to the novices and skilled employees in their companies at lower pay than what the specialist can command. And for some, this is all they aspire to and I have no problem with that. I’ve had many students over the years that simply wanted to reach a certain level of expertise and income and they were set. No drive to be or do anything more than that and that’s just fine with me. I can only encourage and show them a particular path but its up to the student to walk it and when they wish to be done walking, they stop. We shake hands, we hug, we thank each other for the shared journey and remain friends forever more. But for those who wish to keep growing, we keep walking the path up the pyramid toward the top level, which is the level of the expert. This is the level where an individual has decidedly separated themselves from the pack. The expert has high level brand equity in their market, which means when somebody asks, “who would you recommend to do an appraisal on…?”, the vast majority of the market yells your name. The expert has developed a particular mindset and set of skills that allow them to pick and choose their markets, their clients, and their fees. The expert is typically somebody with their own following of novices, skilled, and specialists who are learning from them as they grow. The expert has a large base of raving fans that have been nurtured and taken care of very well for years. The expert has very little competition at their level primarily because nobody else has been willing to develop the same skill sets that the expert has, the same level of communication, the same mindset, the same value offering, and the same level of client hand holding that is required to build this kind of base of raving fans.
 
Now, I know what many of you might be saying because I hear it all the time. “Blaine, how does an appraiser reach the level of expert, based on your definition, when everybody just wants us to hit a value?” To which I will simply say to go back and listen to the past year of weekly episodes where I lay out, brick by brick, the mindset, the attitude, the vision, and the skills required to become and expert in your market. If you’ve listened to the past episodes and are still wondering how its done in an industry that is constantly being commoditized by the market, even by appraisers themselves, then you weren’t hearing the message. I wont blame you and I certainly wont punish you because I know a secret. The secret is that an individual needs to hear something 7-10 times before they start to really hear it. If you weren’t prepared to hear something 2 months ago, you simply wouldn’t hear it no matter how I communicated it. You have to hear it again and again to really have it hit home and some of you simply aren’t there yet. That’s ok! Stick with me and I’ll do my best to get you there. But understand, as I say that, that the base and first levels of the pyramid will always be the most crowded, the most competitive, and the lowest paid levels to operate in because you and your offering are simply seen as a commodity. Until you fully understand how to remove yourself from that level with a new mindset, a new attitude, a new set of skills, new knowledge and understanding, and a new path to walk on, you’ll always be struggling to survive and breathe. Trust me when I tell you that, at the level of expert, there are very few who have considerably more technical skills than the skilled and the specialist. In fact, at the expert level, there are many who have fewer technical skills than many at the lower levels but they have a particular set of skills, primarily communication and client service skills, that they’ve leveraged to separate themselves from the masses at the base of the pyramid. I’m not encouraging less knowledge and expertise, but I am strongly encouraging developing your skills as a communicator and constantly asking yourself how you can provide more value than your closest competitor for the same fee. Once you’ve successfully answered that question, your fees will start to increase and the competition will decrease. You haven't reach the level of expert at that point, but you’re definitely on your way. Always be the best you can possibly be at what you do. But the person who can articulate that skill in the language of their market wins first and always. Have no fear my friends, like the path to black belt in a martial art, the longer you walk this path, the more the competition fades and falls off. As you grow, you’ll have fewer and fewer willing to put in the time and effort to reach the higher levels of growth. For those of you concerned about everybody heading toward the private market out of fear of change in the lending market, fear not my friends, the highly skilled authority and expert in every market has very little competition. The only fear one should have is in staying at the same level where the competition is fierce and the fees are shrinking. Very few will have the guts to walk this path and develop the necessary skills required to operate at the level of expert, or even a market authority. The higher you go, the better the air gets and the fewer people you have to contend with. And as I’ve said before on this show, when you start to reach the upper levels of any business, skill, or industry, there are fewer people, but more of those people willing to give you a helping hand. The attitude and mindset shifts required to reach the upper levels pretty much ensure a team of helpful experts who know that one of the best ways to reach those levels is to help others along the way.
 
I’d like to thank you my friends for tuning in again this week and investing your most valuable currency into your most valuable asset, and that is investing your time into your mind. I hope you’ve gotten some small takeaway from this episode, as is my hope from every episode of this podcast. I truly appreciate you wherever you are on your growth journey. Don’t hesitate to reach out if you think I may be able to help you with an issue and I’ll do my best to help. Until then, I am going to enjoy another week of relaxation, recharging my own personal battery, rethinking my business and value proposition, and creating more content for next week. Let’s meet back here again next week and grow a little more together. Sound good? Great, I’m out…