It seems like every few months there is news of another AMC shutting its doors and leaving appraisers unpaid for their appraisal services. I recently heard of yet another one in Washington State. Every time it happens, I send a frantic note to my office staff that sounds something like, “Will you check our database to see if this company [name of defunct AMC here] owe us any money?” Then I wait on pins and needles while they get back to me. If no money is owed, I sigh with relief, but if there is money owed, I get a little heated as I know I will likely never see that payment.
So, what can an appraiser do to collect the fees they are owed? Honestly, once you hear a client you have been working for has either filed for bankruptcy or gone out of business altogether, it may be too late. Sure, there is paperwork that can be filed. There is a legal process that can be participated in, but I would not get my hopes up. I have been through that process as a wanting payee only to find it is a lot of time consumption and waiting for deadlines with only pennies on the dollar paid in the end (if at all). Trust me, if you are not owed a lot of money by the defunct AMC, it is likely not worth your effort. Write it off and move on.
You should check with your state appraisal agency to see if the AMC has a bond in your state and to see if there are any protections it may offer. If there are, be prompt in filing as you want to be first in line as the bond will likely be quickly exhausted.
That being said, do not think there are not preventative measures that can and should be taken. There are and they should. In fact, the best chance of you getting paid for your appraisal services is to be aggressive about it BEFORE the company/client you are working for is in financial trouble.
First, remember why you are in business in the first place. You are not providing a charity here. I hope you like your job, but that better not be the only reason you do it. You work your tail off for one reason – to make money. So, do not forget the most important part of turning in an appraisal – the invoice! Make sure you understand each of your clients’ billing process. Do you need to send the invoice to a certain person? Does it get attached to the report or sent separately? Knowing how your clients want their invoices can make all the difference in getting paid now rather than later.
Secondly, have an accounts receivable process. Who sends the invoices in your office? How do you keep track of what has been billed, how long it has been, if there has been any follow up, and marking when a appraisal service is finally paid for? What? You do not have a process? Get one and stick to it!
Do not sit waiting to receive payment. Get aggressive with your clients. If you are not paid in 30 days, find out why. If you are not paid in 60 days, annoy them until you find out why and when you will be paid. Worried about losing a client over your aggressiveness? Don’t be. They were insistent you meet their turn times. In return, be insistent that they meet your payment turn time. If they do not like to be pestered for payment, they are likely a company you would not want to work for anyway.
Accounts receivable is sometimes a neglected aspect of our businesses. It should not be. Appraising is what you do. That is your part of the bargain. Paying you for your services is what they do. That is their part of the bargain. Make it a priority and you will likely not be left empty handed when one of your clients ends up closing its doors.
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