Issue Date: June 9, 2008, Posted On: 6/9/2008

Dual business models help appraisal firm power national expansion

If you’re serious about growing an appraisal business in this market, risk mitigation needs to play a large role in your plan.

With the new Home Valuation Code of Conduct (HVCC) hanging over the industry — and little insight into what form that code might take when the GSEs offer their final version — it’s hard to plan for the future.

One Michigan-based appraisal company believes it has found a way to proceed with national expansion while remaining prepared for various interpretations of the HVCC.

Metro-West Appraisal has corporate headquarters in Farmington Hills, Mich., and describes itself as one of the largest staff residential appraisal companies in the country, with coverage in Arizona, Florida, Michigan, Nevada and North Carolina.

Clients include mostly brokers and lenders. Larger customers include Quicken Loans, LaSalle Bank (now Bank of America), Countrywide and GMAC, as well as SunTrust and Wachovia in Florida.

The company is expanding into 15 new states and recently announced it has opened a new branch office in Charlotte, N.C., its 10th national office, with a starting staff of one area appraiser (the company employs full-time state-certified and state-licensed appraisers).

“We usually start with one and end up with four to five by the time we get everything up and rolling,” said Kelly McClain, the company’s vice president of client relations. “We open up, get our presence known, let our clients know, hire the person and once we see that business is growing and thriving, we add more staff.”

New appraisers in expansion areas receive a bonus for any clients they bring to the company.

President and Owner Donald Rousseau founded Metro-West in 1987, and the company began investigating options for expanding nationally about 10 years later.

“That’s when we decided we needed to get a presence in every state,” McClain said.

In researching where to expand, the company tracks activity with relocation companies, read about areas that are expanding, uses Realtor.com and other resources to get statistics on how many houses are selling in target areas and how long they’re sitting on the market, etc.

“We’re picking those areas where we know there’s a large present in terms of employment. We try to base it on how many loans closed in those areas,” McClain said.

The company plans to expand into Virginia next, followed by Hartford, Conn.

According to the press release announcing the North Carolina expansion, the company expects to “open offices in hundreds of cities across the United States within the next several months.”

Dual business models
Metro-West co-exists with a sister company, World Appraisal, an appraisal management company that covers all 50 states with both staff and contract appraisers.

“We wanted to make the companies different,” McClain said. “A lot of people like to have staff appraisers doing the work. They feel you have a little more control, versus when you go across the nation, you can’t always guarantee someone in Montana wants to be a staff appraiser.”

The companies’ goal, she said, is to be able to meet any type of real estate need for any of its clients, “so we’re able to complete an appraisal in any state whether we run it through the company with all the staff appraisers or we send that order to our sister company.”

“With everything going on in the industry, we’re not sure what’s going to happen by January of ’09, but at least we know we have a presence either way in terms of having a name out there and being able to service companies through an appraisal management company or through regular staff appraisals,” she added.

If the HVCC is implemented with its current emphasis on independent AMCs, McClain said, Metro-West might be merged into World Appraisal.

“We could merge or contract through the other if we needed to,” she said.

Metro-West recently renovated its Web site to give clients access to status of their appraisal orders 24 hours a day and to improve integration with World Appraisal.

For example, map-based navigation lets users determine coverage across the country. Users can enter a Zip code to learn about appraisal fees for an area.

“We’ve made it very easy for people to figure out if we have coverage,” McClain said. “If we (Metro-West) don’t cover it, it’s going to refer them to our sister company, World Appraisal.”