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Pricing
Posted by mattharnett on December 23, 2013 at 4:05 pmWhy, as surveyors with at least 12 years liability, do we not price jobs like realtors? Why can’t we get 3% of the appraised value of the property for standard boundary surveys? I’m sure this has been discussed before but I’m curious if there are any solid reasons why we don’t or can’t. I realize this would have to be a concerted effort and some would not want to go along with the idea but why? Maybe some of you are already doing this. As a surveyor, I’ve taken responsibility for your boundaries for 12 years. I may be called upon to defend this survey and would that cost extra? What do you guys think?
Tom Adams replied 10 years, 8 months ago 18 Members · 28 Replies -
28 Replies
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What you suggest is unAmerican ;-).
Realtors are tied to a perceived wealth generating activity which is the transaction. Also their fee is based on how much they can persuade a buyer to pay. There is a stream of cash for them to dip into. If the transaction completes then they get paid, if not, they start over. This would be considered unethical for Surveyors. Attorneys have a similar thing known as contingency fees.
If the traffic will bear a percentage of value then go for it.
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Here’s one reason.
The other reason is that if we fixed, say 3%…some numbnuts down the road would start charging 2.9%..
just sayin’…
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As long as the percentage is negotiable between LS and client then there is nothing illegal about doing it this way. We just can’t collude and set a percentage. The other problem is what do you use for a value? That could be negotiable too.
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haha, 3% of a 3 million house? I’d only need two or three jobs a year!
If we had as few surveys as broker have closings per year then we could charge that much, but really…
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It is my understanding that we can’t tie our fees to the percentage of the sale because then there is the potential for our boundary decisions to become corrupted. For example, if I survey a 1/2 acre lot and the fences are all over the place and there is shed in the back over the line, what is my incentive to show such encroachments? If my fee is dependent on the sale then the real incentive in that scheme is to NOT show the encroachments. It would really muddy the water AND create even more distrust of our profession than there already is. Tying our profession to the sale or closing isn’t ethical and doesn’t solve the problem of our profession. Yes, we need to charge more, yes we need to educate the public as to what our liabilities to the property are, but first we need to agree on something, anything that would benefit us as a whole.
I am with you on the rates and the expense of liability. I wish we could structure ourselves more like an insurance company and charge monthly fees for guaranteeing the boundary lines. We would make more money and the clients wouldn’t blink at a “Surveying Boundary Rider” on their insurance every month.
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As for me, myself, and I, we generally try to charge twice as much and work half as much.
I like to leave the other half for the numb nuts.
Sometimes I call this “semi retirement”.
Basically I am saying, just do it, go ahead, charge more.
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What’s to stop you from showing the encroachments under the current system? Unhappy clients are less likely to pay.
I would set no problem with setting the survey fee based upon the tax appraisal.
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[sarcasm]Just like the real estate broker’s percentage is negotiable.[/sarcasm]
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Don’t get all excited about charging what realtors do. Their days are numbered. They are trying control the information flow between buyers and sellers. It will catch up to them just like it caught up to travel agents. Thanks to the internet, being a middleman isn’t cracked up to what it used to be.
> Why, as surveyors with at least 12 years liability, do we not price jobs like realtors? Why can’t we get 3% of the appraised value of the property for standard boundary surveys? I’m sure this has been discussed before but I’m curious if there are any solid reasons why we don’t or can’t. I realize this would have to be a concerted effort and some would not want to go along with the idea but why? Maybe some of you are already doing this. As a surveyor, I’ve taken responsibility for your boundaries for 12 years. I may be called upon to defend this survey and would that cost extra? What do you guys think?
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:good: :good: Absolutely. It works. Only take jobs that are truly profitable-you didn’t want the other kind anyway! If I want to “stay busy”, I’ll go hunting or fishing…
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Your costs for providing your services to a client should be based on the costs you incur plus something for a profit. Your client needs to know the value of your service to them so they can understand what he/she is actually paying for.
When I have a buyer come to me to discuss doing a survey, most all will make a comment that the costs for the survey are kind of high. They got a quote from another surveyor for much less. I rebut with a lot of typical clichés similar to “you get what you pay for” or “pay me now or pay me later” type of comments. I do tell them that the other surveyors are quite capable. I also, tell them if costs are their only concern, then they should go with the lessor fees. Sometimes I give them examples of the realtor’s commission and the typical mindset of the realtor is to get the sale closed. Then I ask if they would consider paying for the survey at only 0.5% of the sale price with them understanding what I am doing for them and the actual benefit they receive from my service. I’ll even accept a fee of 0.25% of the sale price and I’ll stand by my survey and defend it as well, if any issue was to come up. My fee is based on the belief that I will have a complete survey that will settle any issues I confront doing their survey.
In short, communication that educates my potential clients has a better return than lowering my fee just to get the job.
I charge more – yet work less hours cranking out a volume of surveys.
A recent example – a buyer walks in and wants to know the cost for a 4500+ acre boundary survey in 3 townships and 12 sections. I made some quick assumptions, because he wants to know right now, and I tell him it could be up to $28k. His jaw drops and I tell him I don’t know much about the property at this point, but I’m familiar with the area and its history. He comments that another surveyor he just spoke to before coming into my office quoted $7k-$9k. We spent the next 1 ½ hours talking about what I would be doing, the details involved and what I would be giving him in the end. He left after signing my contract we prepared together. He has made an offer to buy this farm for $13.5m and understands I will be paid whether he buys it or not.
Don’t be afraid to charge a fee you are happy with. Good service is priceless.SD
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> Why, as surveyors with at least 12 years liability, do we not price jobs like realtors? Why can’t we get 3% of the appraised value of the property for standard boundary surveys? I’m sure this has been discussed before but I’m curious if there are any solid reasons why we don’t or can’t. I realize this would have to be a concerted effort and some would not want to go along with the idea but why? Maybe some of you are already doing this. As a surveyor, I’ve taken responsibility for your boundaries for 12 years. I may be called upon to defend this survey and would that cost extra? What do you guys think?
Your entire premise is based on your perception of the value of your service. The fact is your clients do not give a rats backside about your perception of value. They care about their own perception of the value.
How long you might have to defend your work means nothing (zero, zip, zilch, nada) to the client. Nor should it.
You say you might be called upon to defend your survey. So. Why is that a problem for the client? The fact is, it is not a problem for your client.
You seek to tie your price to something that means nothing to the client. Ultimately that sort of effort will fail. Instead you must base your fee on what does matter to your client. Base your fee on the clients perception of the value you have provided. Then and only then will you (and me and every other surveyor willing to learn and apply the methods) be ready to value price.
For more see the entire series of articles in POB.
Larry P
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It was my experience in trying to sell a house myself that the problem wasn’t the basic information flow about the house. You might find somebody who wanted the house, but they were scared or unable to figure out the process.
Most buyers need an “expert” to hold their hand and guide them. The average buyer doesn’t know how much of a mortgage they will be able to get, what info to take to the bank, how to deal with title insurance (or in Iowa an attorney’s opinion on the abstract of title), etc. Even though the agent’s primary duty is to the seller, the buyers feel like the agent is their best friend.
The seller also needs to know a lot of this stuff to go without an agent. Groundwater Hazard Statement? Discosure of any Radon testing? Probably a lot of other required forms, by now. Unless the seller is very knowledgeable about the current “how it’s done” process, he isn’t going to sell the house without the real estate person.
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> Your costs for providing your services to a client should be based on the costs you incur plus something for a profit. Your client needs to know the value of your service to them so they can understand what he/she is actually paying for.
With all due respect this is the sort of thinking that has brought us to where we are today. Please, please, please we must abandon this logic in favor of something new.
Your clients do not care about your costs. They only care about their perception of the value they will be receiving. There are no “magic numbers” that can be multiplied by this cost factor or that cost factor. Your costs are irrelevant.
Instead we must focus on the client. Focus on what they value and find ways to create more of that value. Once we begin to view things from that prospective we will be free to capture a fair portion of the value we create.
For a step by step guide to how to do this, see the series of articles in POB.
Larry P
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Of course, I’m not suggesting we violate the Sherman AntiTrust Act.
Clients THINK they’re getting the same service at a better price when they get Mr. El Cheapo out surveying their property. I know that they are not. I’ve seen what they get. I’ve had to fix what they got and they ended up paying twice for what they wanted. If we base our prices on what clients perceive as our value, we’d get a pat on the back and a 6 pack of beer. Or we get the old, “My pap only paid $25 for his survey back in the ’30s. Why do YOU want $600? Here’s the map my pap got. Can’t you just go off that?”
I guess a better question might be this: Why are people so shocked to hear how much surveying costs? They don’t know how much a survey is, but they always think it’s too high. Based on what?
I’ll even tell you this: A potential client told me her realtor only had her set back $10K for the surveying. Needless to say, my price was well above that and I haven’t heard from her. She even said someone would do it for less than what she set aside. I say, “Get that fella.” Take the time to work up a cost for services and be told that the realtor said it would be about ten thousand.
I guess I’m just ticked.
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I feel your pain. I work at a large firm now, but owned a small shop for 5 years. My conclusion, I guess, is that you can’t squeeze blood from a turnip. The volume required to make money $7-8-900 at a time is massive and the administrative costs were huge.
When on my own, an honest assessment of my ledger concluded that the small jobs were “make work” for my employees, and did not add a nickel to the bottom line. Sure they are fun.
Personally, I decided to finally separate the “money-making” part of my brain from the “having fun” part of my brain. It makes business decision far easier.
Within the last month, I have chatted with two developer friends who said they were surprised at how low the survey costs were on their projects. How low! And they hadn’t even price shopped! One said, “I don’t know how these small-timers make any money”. They don’t, and they’re the competition.
Rant off. Best wishes, the residential stuff in my market is a race to the bottom. If your competition is willing to work for almost free, and they are, it’s time for a different market.
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2 problems:
1, realtors have no idea if their house will ever sell, but they invest a lot of time and money into selling it, many times for naught.
2. Surveyors do not, under any circumstance, agree or cooperate to do anything for the good of the profession.
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1/2 %
0.5% from 0.5M to 2M.
0.25% for anything above 2M.that is: regular fee for that size lot
+ 1/2% for value between 0.5M and 2M.
+ further 1/4% of value over 2M. -
I agree with what several others have said. from the seller’s standpoint, they want the best price they can get for the house, and a good realtor should be working for them to sell the house. In theory, the percentage they make is made up for getting more than if the seller sold it themselves. The incentive for the realtor is to sell it at the best possible profit so s/he can make a larger commission.
For you to charge anything other than for professional expertise is wrong. You charge what you are worth and Larry’s “value” concept. For you to make more money if the house sells and for however much the house sells for is incentive for you to be biased in your fact-findings. You don’t want that to be a factor in court or anywhere else to compromise your professionalism.
You want to make money based on the value of the house and based on a percentage of what it sells for, you need to become a realtor and you need to learn how to market houses so that you can provide value to the seller in such a way that they are happy to pay you a percentage of the selling price.
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