Appraisal Management Company: How We Vet 150,000 Appraisals A Year

Hey everybody, this is Toby with Global Integrity Finance, and today we're here with Mike and John Tedesco with Appraisal Nation. We're going to talk with them about what Appraisal Nation is, kind of go through the, the growth of Appraisal Nation and how they work with us day in and day out to ensure that the appraisals that we get for your projects are valid appraisals. They're not just numbers that somebody put on a report and sent it and got paid. It's numbers that have been vetted out They make sure that every appraiser they use has been vetted and that each appraisal that comes in from that appraiser is vetted. So there's a lot of checks and balances going in. We want to share this information with you so that you understand that when we look at these appraisals as a lender, that we've got somebody else kind of vetting them out for us, and we entrust through those checks and balances that your value of your property is accurate. And this helps us to ensure your success and profitability. So I want to welcome Mike Tedesco and John Tedesco. How you guys doing?

Great. Thank you for hosting us here in the beautiful state of Texas.

All right. Well, appreciate you coming in. So I'm going to start with you, Mike, since you are the founder of Appraisal Nation. Tell me how you got started with Appraisal Nation.

Sure. So originally I had the concept in early 2000 and I had the opportunity in 2007 to build a nationwide platform that was specifically designed for small to mid-sized lenders. I had a partner who is an appraiser, another partner who's a 30-year veteran of the AMC space, and then of course I was a lender. The three of us combined, we walked up into my attic one day and we started a presentation.

How hot was that? So obviously you had an attic you can walk up in and kind of put some furniture in. It wasn't like most attics. Or it's all Christmas presents.

No, no, no, it was a nice finished attic.

Yeah.

So we actually built it for that. We used our own capital. We've never invested in other people in terms of that. And the model was to be a relationship-based business. And that's what we did. We went door-to-door building relationships for many years. And then the service levels picked up. We focused specifically on private lending. And over the years we've developed from starting with 2 clients and 3 guys in an attic to 125 employees and still growing. And this month we'll do 12,000 appraisals.

12,000 appraisals. 12,000 appraisals a month. So close to 150,000 appraisals a year. Yes. And this is a mix of fix and flip, private lending to Fannie Freddie, primary residence. I mean, anything to do with the residential property.

Correct. So we have several channels of business. We have our retail channel, which is the primary channel that we started in. We have a wholesale channel that focuses on wholesale lending and brokers. And then we have our private lending channel, which has really developed into our niche and presently sits about 55% of our business.

Nice, nice. So when you are looking at taking on an appraisal in a certain area and you're looking at the appraisers, tell us how that process works when you're vetting them out.

So we've spent the last near 13 years now with a rating system. So every single time that we get an order in an area, we rate them on turn time, quality, and communication. We then aggregate that score together and do it over and over again. So we can tell you down to the very specific area who the best appraisers are in that specific area.

Based upon that rating. Now that's based upon your experience and history. What if there's somebody brand new that you've never worked with? How does that—

So they have to have— we also have a criteria. They have to have 5 years experience. They have to have a criminal background check with us. They have to meet our extensive criteria to be approved and vetted by us.

Is there a difference, uh, different approval for a Fannie Freddie appraiser versus a hard money lending appraiser?

There are different levels of appraisers.

Okay.

Uh, versus— so someone just starts out, they're a trainee, then, and some people may accept that with a licensed person on it. Then there's licensed appraisers, and then there's certified appraisers. Okay. Uh, typically we only use certified appraisers, but there are specific requirements from certain lenders that say I only want certified, or I will accept, uh, licensed. And then for commercial projects, some may say we want an SRA or an MAI designated appraiser.

Okay. All right. So I want to back up. So you're up to 125 employees. I assume they're not still in your attic.

No, they are not. We have a beautiful office space in Cary, North Carolina.

Cary, North Carolina. Okay.

And in there is a secure facility that we're able to monitor, keep backup, keep track of everything that happens minute by minute.

Nice. Congratulations on the group. Thank you. Um, so let's go over to, uh, John. John, I assume your role is marketing. I see you at all the trade shows. So tell me about when you came on and what your roles and responsibilities and duties were.

Sure.

Still are today.

Yeah, so in my context, I work with— as our Senior Vice President of Development, working closely with obviously my brother and our CEO, yeah, to coordinate marketing and sales, strategic partnerships, We currently do some 50+ trade shows all across the country. Okay. We work with over 1,300 national lenders in every corner of America. And so that's our niche of things.

Nice. And so when you're looking at bringing on a company, is that like Global Integrity Finance? Sure. What are you looking for in that company? And tell us how that evolves into a working relationship.

Sure. So for us, one of the things that's important to us We really look at saying who we want to be a partner with, because we're all about the idea that we want to be a partner, not a vendor. We want to understand your programs, your model, what you're trying to accomplish, how can we help you accomplish that. So you were talking to Michael a moment ago about the appraisers and qualifications. So while certain ones have different qualifications, say licensed or certified, the other thing we look at very extensively is their expert teams. Okay, so we've identified, hey, These are the best appraisers in this market for fix and flips. These are the best appraisers in this market for commercial deals, right? For larger scale, mixed-use property, family, etc. We have that data over 10 years, over a million appraisals. We know who's good at what. And then how can we leverage that to help you as a partner? Our philosophy is, you know, rising tide lifts all boats. We love the way we've grown as friends, as partners, sharing in the experience with our clients. You know, we're at a point in our lives, I know me personally, but I think Michael, my brother, in the sense that I want to work with people I like now, right? Yeah.

I don't— It makes life so much easier.

Right. I want to work with people I enjoy.

Agreed.

I don't want to have to work with people who are, you know, not aligned with our vision, not aligned with our mission, not able to share our same common values and beliefs. So we look at that. We also look at from a business standpoint, We're probably one of the most diverse mortgage service company providers in America.

Okay.

So we really look at cross-sector of the industry.

Yeah.

These are guys in the conventional space, these are guys in the private space. Let's dig down deeper. In the conventional space, these are the guys doing new purchase loans, these are guys doing refi, and these are the guys in the private space doing fix and flip, these are the ones doing rentals, these are— and we really, really diversify that extensively.

Okay. When we got rated by Morningstar, I remember the agency representative coming in, and he was floored by the amount of diversity we had. Really? The average AMC at that time, he said, would have one anchor client, 50 to 60% of their business, and then maybe a handful of other clients. We have 1,300 lenders.

Yeah.

Our largest client is 10% of our business.

That's nice.

So when he went through that ranking and rating for us, it was important that we met the criteria for every single channel of business.

And for some of your listeners, just— we talk a little acronym soup sometimes in the appraisal industry. So AMC is just an appraisal management company, right? And Morningstar rated us against every appraisal management company in the top tier. I mean, there's a lot of small ones, but all the national ones, and gave us the number one quality rating in America back to back.

And that was based upon your diversification of your clientele?

No, no, no. Overall operations, operational efficiency, quality control. Background systems, checkpoints, nice client diversity of the organization, helps add to the strength of the organization.

So, so in essence, in your world, you guys know what you're doing.

I mean, in a nutshell, over a million appraisals a year for over 10 years in every single corner of America. You'll probably find no one with more experience and expertise, particularly in the private lending space.

That's amazing. So What does a day-to-day operation look like in your office? Not for you two, but so if I'm a broker out there and I'm going to work with Global, and I hear that they're ordering the appraisal, how does that work? And what can I expect that's going on behind the scenes for my client?

Just as we build relationships, just as you and I have met at shows and built bonds and relationships and broke bread. We have those same experiences with the brokers on an individual level with our client service team.

Okay.

So our client service teams are assigned to specific brokers. They'll get to interact with them on a daily basis over and over again, and they'll know who to contact. When they get an order, we have a very robust online platform. They can place that order online. They'll get a confirmation from their representative letting them know that we received the order. We'll follow up through the cycle of the order through the assigning process of the order. We'll let them know each stage of the order for them, when it's going to be completed, when it's going to come back to them, if there's any issues. All of that happens via online or on the phone or however they recommend the best processes for them, and they're always followed up with the same team member keeping them up to date.

Okay, that's amazing. Go ahead.

To that point a little further, While we, Michael, myself, and some of our sales guys will have relationships with folks like you and lenders, and our processing team he's talking about has relationships with the brokers, and they're dealing with them, we also have those same kind of relationships with 26,000 appraisers in all 3,100 counties in America. So a lot of companies that do our business model, they use technology nowadays, which is great. We have the most sophisticated technology as well as everybody else. Platforms and algorithms that check everything, but they limit themselves to the technology, right? So they do things like what's called auto-assign. You just hit a button and just randomly send it to the next appraiser in the queue.

Whether he's qualified for that area or not. Correct.

We don't do that, right? So Michael told you a little earlier about our rating system, but the other thing we do is we pick up a phone. We say, hi, hey Bob, how's Sally and the kids? Great. Good to hear from you. How's your workload looking this week? Can you actually handle another file this week? Are you going to tell me it's going to it's going to be done in 5, 6 days, and it's going to be 2 weeks because you're going on vacation next week. Right. We check, we check those type of things and build those relationships, hold them accountable. Nice. When that order comes in from your broker, yeah, they're going to put that order in. My team's going to immediately jump and make that call to Bob the appraiser and Sally the appraiser, whatever, in that area. They're going to find the best appraiser available based on our ranking system. Hey, these are the 5 best in this area. Bob's not available, let me go to the next best in that area, right? They're going to sign that order. Then we're going to have our client service team work with that appraiser over the lifecycle of the appraisal, get it scheduled, get the inspection done, any docs you need sent to the appraiser. Maybe it's a rehab list or something like that. Make sure he has everything lined up so that he can be successful. So we're basically giving him a support staff, almost an admin, to help him move that thing as fast and efficient as possible for all of your goals as a lender to meet those qualifications. Then on the back end, once he sends his report into us, we have a whole team of quality control experts, in-house appraisers, who double-check every order that they feel—

that's part of that 125 staff member you've got.

Those guys on staff, they're giving a line-by-line review, looking at every one of your files and going, yes, this meets all the standard appraisal guidelines or USPAP guidelines, and let's check Toby's guidelines for global integrity, which may be different than Wells Fargo's guidelines or Bank of America guidelines who have different goals. Correct. So they cross-check those guidelines as well from a real appraiser. If there's a problem with it, that appraiser is going to call that appraiser again, Bob or Sally. And what I always say, they speak appraiser-ese. They know the lingo, right? They're going to say, hey, did you miss this or that? And they're going to get it resolved for you in a quick manner. So you get a clean report that's not only done by an expert in the field, managed by the relationship professionals across America, and then cross-checked by an expert in-house.

Outstanding, outstanding. Um, when a, uh, when a client brings us an appraisal that's already done for somebody else and we want to have it reviewed by your team before, instead of ordering another one, you know, we're all about saving our clients as much money as possible, especially on a commercial multifamily where they can run $2,000 or $3,000. How does that process? So we contact appraisal next and say, hey, We have this in-house appraiser, or we have this appraisal brought to us from a broker. We want you guys to do a checks and balance on it to make sure it matches up. How does that process work?

So we can do what's called a desk review. Okay. We'll review any report for you. That's just a separate product that you would send us the report or the product. We would send that out to a qualified field appraiser in that local market.

In that local market, not in-house, but somebody in that—

Geographic competency is key.

Here.

Okay.

We're going to review something, especially from someone else, we want to make sure the person reviewing it has the same expertise in the same market. Okay. They review it, you get a desk review whether they felt that it was substantially qualifiable or quantifiable or not for you. So that's one option. Another option is what they call a reassignment, and that is if you're comfortable with the report, we can reach out to that appraiser.

To that specific appraiser?

Right, and have them do what we would call an appraisal update. They would go, they would get that report because again, the time frame of that report is an issue.

Right.

So what if they did that report a month ago? Not a problem. They go by, they just run by the house, make sure it's still standing. They do a quick update to make sure the comps are the same and they shoot it back. But what if they did it 6 months or 7 or 8? Well, maybe the market's changed a little.

Absolutely. And today we know that it does.

Right.

So it just depends on Several different issues like that. So, timeframe's a big one.

And so, in some cases that's going to also be dependent upon investors that you may be working with, right?

Right.

So your investor will have requirements and they won't allow for the reassignment or putting them in someone else's name. And some of them won't allow us to take an appraisal we didn't manage from the beginning.

Correct.

Because they trust us as the nation's leader as a third-party asset evaluation. Well, we don't know if that guy who's your borrower You know, and certainly we hope— and who may have picked his buddy Bob the appraiser down the street, right? So they want to make sure we do the start to finish of the process. We picked it, maybe a few months later something happens, we have to send a lender name change to a different client. As long as we did the original one, we can do that.

Correct. But when you have it, then it's a little bit different. It's like, it's like if I had you as a contractor on a job and you get halfway through and you decide you don't want to do it anymore, you walk off the job and I bring in Mike here and say, Mike, I need you to finish this job. Well, Mike's going to be reluctant to do that because anything you did wrong, he's going to be held responsible for. Uh, so we see that all the time, and that was my biggest question is we do allow these to come in every now and then, but then we're entrusting in you guys to vet it out to make sure it's valid. Um, if that appraiser happens to already be in your list, would you let us know, hey, we do know that this 'Hey, we know this guy, he's part of one of our appraisers and he does good quality work. We can do a review on that real easy.' Or even vice versa, 'No, we don't know him.' And we would be happy to do that.

Just keep in mind, anytime an assignment is given to Appraisal Nation or given to an appraiser, it is considered a new assignment. And that, that actually changed several years ago. But one of the new requirements would be that even if the appraiser completed for Lender A down the street. If Global now wants to take a look at that report and they want to lend on that report and they want it in their name, changing that lender name is a completely new assignment for that appraiser.

And they have the right to ask for a whole new fee if they want.

Now that's not Appraisal Nation's rule, that's regulation.

Regulations by the— yeah, and I get that. And I know that because I look at it and I say, okay, so if Mike had done an appraisal for me and John brings it to me as a broker and I want to send this— let me see if I can say this right. So you did the appraisal originally and you were the broker for the client and you brought it to Global and I want to get that reviewed. That person that's reviewing it really doesn't want to take the time from doing a full-blown appraisal to review something he did. As a tradition, right? Let's say Chris had to be the appraiser reviewer. So he's taking the appraisal that Mike did and he's now reviewing it versus I would, instead of charging you $250, I'd rather charge you $450 and do the whole appraisal myself and know that it's right. Isn't that the mindset?

It may be the mindset, but that product is available. So there are desperate people.

There are appraisers who do that, who like doing that. Some don't want to have to travel.

I don't want to—

10 of these a day.

Okay, that's what I was trying to get to. Is there— is that a viable option? That really is a market for it from the appraisal industry.

It's a viable option. Okay, right. From a process standpoint, from the lender's guidelines, from the investor's requirements, it's questionable, right? Right. Your investor may or may not allow this, right? Lenders may say that's fine. You may say I'm willing to lend off something that Appraisal Nation just did a check on, even though that I don't know who controlled— yeah, who started the process, right?

In many cases, we'll do a desk review just to verify the legitimacy of the appraisal, and then they'll still order a new appraisal in the future.

Yeah, and I mean, we— it's probably less than 10% of our appraisals that are that way, but we do know the clients get to underwriting and/or closing and then walk from the table and now they've only got 3 or 4 days left to get this loan done. So they bring us everything and say, "Hey, I walked because these terms changed," or, you know, "Once I finally got to look at the final docs, it wasn't what I thought. I need to go somewhere else." So we're trying to circumvent time and get this reviewed.

One of the biggest values Appraisal Nation provides to any lender is the independence separating any undue influence to the appraiser. So for example, If someone brought you an appraisal, how do you know that person didn't go to that appraiser in some way, shape, or form trying to influence them into a number? So now that report may look slightly inflated, and to the, the eye it may appear normal, but it could possibly be even just slightly inflated.

And that's what we're coming to you for.

And that's what Appraisal Nation does. We're able to give you that level of independence, and we guarantee that you are not going to have any undue influence ones, and that value is that value. The last thing that you need as a private lender is someone saying that your asset is worth more than it is.

Correct. And that's what we as Global Integrity Finance is banking heavy on you guys to be those eyes and ears of that level of expertise. Yeah, we got this in, I need an estimate. And what I want to make sure is that if it comes in, if it is inflated because there was a buddy system them in place or heavily influenced, that we catch that. And I have no problem going back and saying, you know what, based upon what we researched, what we did due diligence on, espresso isn't worth crap. And we've seen that over the 24 years I've been in the industry. I've seen it. And I just want to make sure that that's how you guys see it also.

We have a mutual friend, one of the foremost legal minds in the private lending industry, John Hornick.

Do not put that on camera. His head's already big enough.

But anyway, one of the things that Mr. Hornick says all the time, right? And you've seen him say this numerous times, there's power in no, right? There's power in saying no.

Absolutely.

And there's a reason someone else said no, correct?

Right.

So if you have somebody took this to some other lender, yeah, and 3 days before supposed to close, that lender had to say no to that deal, there's likely some things that weren't so wonderful.

Everything doesn't always measure up.

Doesn't always measure up. So us We will do the best we can to be accommodating on the valuation side, to work with your borrower within some reason and guidelines. But a lot of times it might just be a no.

And sometimes there's more times than not power in that. Usually when a deal gets that close and it doesn't close, 99% of the time it ain't gonna close. So I, I agree with you, but we have brokers who have that argument all the time. Well, you know, the rates and terms change. Can you send us the, the original term sheet? Well, they don't have it. When we can't get enough answers, then we know that there's something not straight. So let's get back into appraisals and, and the— where is the real estate industry headed? Now, you know, we're coming into another election. Back for 2 and a half years ago, um, there was all this, um, nervousness about the election, potential Trump winning the election, what was going to happen to the economy, what was going to happen to real estate. And I don't know if you guys caught this, but I think— don't quote me on this— but I think it was Bernie Sanders had said that in one of the Democratic debates that he was going to impose, if elected, a 25% tax on fix and flip properties.

He just said that in a speech last night.

Was it a speech?

At North Carolina UNC, he gave a speech.

So let's, we'll table that, but let's talk about where are we going in the real estate industry from your guys' perspective. I mean, you guys are seeing property values nationwide by the hundreds and thousands.

So the market's cyclical. I think we all know that there are ebbs and flows and that the economy goes up and down. I could steal a line from most January presidential addresses and say the state of our union is strong. And I believe that. Yeah, my personal belief is that it will carry over for several more years. I see no slowing down of the economy, of the economy, which is a direct reflection of housing.

Okay.

And housing will continue to grow. Okay. Especially in, uh, the mid-urban markets. That is the strongest areas of growth. Your, your Austins and your Raleighs and your Nashvilles, your Denvers, your Tampas. These markets are doing phenomenal.

Okay.

They are great markets that are continuing to grow.

What's, what's, what's, what's spurring that on?

Jobs? Well, definitely jobs, but there are, there's a lot of migration to those areas.

Okay.

People are seeing the value. They, people are leaving, say, you know, the New Yorks and the Chicagos and San Franciscos, right? What's happening in California, that the housing right now, they have priced so many of the middle-income families out of the house, right?

That's traditional California.

But they know that if they come to Texas or if they go to Florida or if they come to North Carolina, they can find a great value on a house and a great job and raise a, raise a very happy family, have a better quality of life.

Yes, absolutely.

I think to your question though, there's a couple other things. So you're looking at a big picture here, the real estate market today, okay, and what's going on. Certainly key markets will experience growth. Certainly the overall economy, if we're fortunate to continue in a positive direction with someone who in leadership supports some of those goals as opposed to someone who you referenced may, you know, tax things. Certainly those are all factors. But there's also, you know, the national trend of what's happening with the population, right? So you have the baby boomers aging out. You have the millennials coming into homeownership for the first time. You have all these things that are happening on a on a major macro scale with the housing market in America. And you're starting to see shifts in those patterns. So for the baby boomers and the next generation, part of that American dream was a single-family house with the white picket fence. For the millennials, that's not what they want. [FOREIGN LANGUAGE] They're looking at multifamily housing, more urbanization of the housing. And what you're seeing in the products that we're supporting in valuations for our clients is more ground-up construction, more multifamily lending, right? [FOREIGN LANGUAGE] And you're seeing that happen across the country. So from a point of view of investors who you may be working with, I think those are certainly key things they should look at. So not just key markets, like Michael just identified, but also key products, key segments, because I think you're going to see key growth over the next few years in those particular product lines.

So from what you guys are seeing, how much, how much is the ground-up construction becoming more and more of the predominant of your product in appraisals versus— because it didn't— ground-up construction kind of died after the crash. Your builders went out, they closed their doors, fix and flip was kind of the deal, and now you're seeing ground-up here in Texas, of course. But how are you guys seeing it nationwide?

And again, that goes back to those same markets I just spoke of. They can't build them fast, they can't build them fast enough.

They can sell them when they, when, when they uncover the dirt, they've already got it under contract, right? Yeah, we're seeing that too. And so we have been pushing extremely hard to really find a, a favorable ground-up construction product because I've seen it here in North Texas. I've even brought Torak in and said, because as you may or may not know, their ground-up construction product was not very competitive, and we would show them deals right here 2, 4, 5 miles from here, but when they would Google Map it, all they would see is pasture land. Right. So we had Daveon and Merrick come in, brought them to lunch, and took them, and they saw nothing but housing after housing after housing after housing and said, these are the deals you're turning down because you're seeing it as rural property, and I'm showing you this is infill.

Right.

Like, from now on, send them, we'll approve them, because Google Maps is 10 years old, or 7 years old, 7 months old, right? Yeah.

So from a— our business model standpoint, there are certainly challenges there, right?

Yeah.

So what used to be a rural field doesn't have a lot of comps around it when you're creating an appraisal value, right? Right. Now, the flip side of that, you're also seeing a shift in the type of housing. Uh, we're seeing, you know, it's small right now, but I think you're going to see more of it in the next 10, 20 years. You know, all these smart homes that are coming out, right, that do everything under the sun. So you talk to the house, it does this, it does that.

So you have a cost of construction that's higher, but you don't have anything to show it that it's worth that.

How do we give you a comparable value in the marketplace?

Because that value right now is only between the buyer.

And where does that value hold water? In what market? So I had this debate with a friend of mine over solar panels. He said, do I get more out of my home on solar panels? Well, it's market-driven, right? So in a place where, say, here in Dallas maybe, right? You're not having that drive for solar power as much, right? So the marketplace isn't dictating it as much. So someone who puts that on their house, it's a little more of an anomaly. Place in California where that's more common, people are going to expect it. It's going to impact their value if they wanted the house on the block.

More of a demand than a luxury.

So market can sometimes impact product in that sense when it comes to valuation.

Like the smart homes. Systems and all that because, yeah, you know, used to be central vac systems was the neat thing to have, what, 10 years ago. Now if you don't have it, it's, it's, the house is not valued. But I remember when we built our house in '90, I'm trying to think back here, it's going to be hard to say. So like '99, I think it was. We, you know, saw the central vac system, thought, man, this is awesome. We'd seen it at a trade show, put it in, and none of, none of our neighbors, none of our family members had it. So we were the pioneer of that. But today, if it's not in there, it's kind of like, well, why did you build such a cheap house? Because we didn't put central back system in. But right now you've got the keyboard on the wall that programs the lights, the radio, the coffee maker, security, everything. And it's completely wired and remoted with our phones and so on and so forth. How we— how does that compare with the single-family ground up to multifamily and mixed-use? Are you seeing that commercial side moving just as prominent, or is it on a slower trend?

I am personally hearing more ground up for multifamily and mixed-use than I am for single-family.

Oh, really?

You're seeing the single-family ground up, and this is coming from not only our experience within, you know, thousands of appraisals based on clients who are ordering for what types of products, but also as we travel the country, there's 50+ conferences a the year.

Right.

You hear speakers and sessions and lenders talk about what they're doing, what markets are happening, what products are happening. I mean, everywhere I go, it's multifamily, mixed-use, ground-up in that section, not single-family. Certainly there's some single-family, some markets, you know, more suburban markets, a bit of a mid-tier, mid-age market. The other thing you're seeing actually is single-family high-density communities for senior living, right?

Right.

So a bunch of senior villages, yes, that are popping up. We're going to build 50.

All the baby boomers got to go somewhere now.

They're kind of single-family, but they're not. They're like all attached with a community center and that whole model, right? So you're seeing a lot of that as well. So baby boomers are going one direction, millennials are going another direction. If you're fortunate to be like me in the middle, you're okay in your single-family house with a yard, cutting some grass.

Stabilized, right?

Stabilized.

It's stabilized. Well, great. So, so what's next with the Preservation? What's you guys' next big bust out? Are you guys just status quo?

I definitely wouldn't say we're status quo. We have a lot of growth and a lot of plans. Great.

Not only would you not say that, most of America would not say that. In fact, we were very proud just a few weeks back to get awarded by the Inc. 5000 again as one of America's fastest growing businesses in the nation of any business.

That's awesome.

So not the mortgage industry.

When you had that award and then you had the other one, what was that again?

Oh, we were Service Provider of the Year for Pipple.

Service Provider of the Year.

Yeah, absolutely. That was a great award, a great surprise. Really appreciative of the Pipple organization for that.

Nice.

And nominated for AAPL Person of the Year.

AAPL, yeah, Person of the Year.

So there's a lot of great things that we have going on now.

Yeah.

But we're positioning ourselves for the future. We still see this growth riding and, you know, we're looking at different channels of business always. Okay. We focused on retail originally, we moved into wholesale, and private lending right now is an absolute boom. And as you know, we work with well over 60-65% of all institutionalized private lending. And we want to take that number to 100%. We believe that we have the best product out there for private lending, and we want to be able to help everyone with this.

Some 10 years ago, private lending may have represented 5-6% of the overall lending in America, right? Now it's 9-10%, right? It's getting bigger and bigger.

I think it's higher than that. I do. So yeah, I think you're closer to double digits easily with the private lending. And everybody, here's, here's what I'm seeing. You guys can validate. We're seeing that And not to say Wells Fargo, but the Wells Fargos, the Countrywises, the Bank of Americas, those big—

they're coming into this space.

They're getting into this space.

And you could say Wells Fargo, you could say them. In fact, a couple years ago, you may recall, Goldman Sachs bought Genesis Capital, right? They're starting— those conventional lenders see what's happening in this space.

And now they want a piece of the pie.

And they're knocking the door down. They want a piece of that pie.

And we're seeing that with our competition. Now that they're starting to see it— well, we entered this space 2012. Over 7 years ago.

Most private companies were only doing—

Now we're seeing these miscellaneous flyers come out from all sorts of AMCs you may have never heard of saying, "Hey, we're the best in private lending." You've never heard of them, and now they're the best in private lending.

Anyone trying to capture— We hear that all the time. So trade shows, tell me about— you guys said you do over 50 trade shows a year. What— tell me about that. And has that been a value? Has it been a hindrance? Is it like a billboard where you just— your name's out there? Tell me about that.

Now see, for us it's a whole different process, right? So everybody attacks their business development strategies differently, their growth planning, marketing plans differently. Well, Michael made a commitment a long time ago that we were going to be a relationship business.

Nice.

We were going to shake hands, we were going to press the flesh. And the trade shows have sort of served as an anchor to those opportunities to shake hands, meet people, but then as a starting off point to continue those relationships with our clients as we've gone from 2 to 1,300. So a great example today, you know, we're here in town, there's a trade show. While we're in town, because we are national, because we are everywhere, while we're in town for the trade show, We're making time for a couple of days. We're visiting yourselves and several other clients in the Dallas metro.

Yeah, we're trying to make it across the country, different cities.

So we're going around visiting clients, having lunches, having dinners, talking to folks in the office, making sure the systems are working well, the processes are working well, pressing the flesh. Even though we're based in North Carolina, right? We're going to be in Dallas this week. We're going to be in New York next week. We're going to be in Florida the week after. We're going to be visiting those clients regularly. Every couple of months, we're going to be shaking hands. Pressing flesh. We're not going to have some, you know, online bot just posting an ad that we're number one. We're going to show it to you.

Gotcha. And the trade shows are a good part. So trade shows get you into that area, then while you're there, we go shake hands and kiss babies during that time.

So we use it in that. So we're at the trade show, we're obviously, like you said, a billboard. We're promoting ourselves, right? We're making new contacts and new prospects that we follow up on over a period of time, and we build those relationships. But we're also using it, as you say, kiss hands, shake babies for existing clients, build on those relationships.

Shake hands and kiss babies. Don't kiss hands and shake babies, you'll get in trouble. If you start shaking babies, you're going to get in all kinds of trouble.

One thing that's really been great, I said to you earlier, we really got to a point where we want to do business with people we like. When Michael first asked me to get involved in this to work on this. I was in another industry, something that to me was much more sexier than selling appraisals. And Michael says to me, you know, I need you to come help me. I want you to help me grow the business. I have this vision. I want you to be a part of it. And I said, why do I want to go hawk appraisals? He's like, you're not hawking appraisals, idiot. You're helping your family. You're helping your brother build a business. You're really going to take this to another level. And we didn't have much growing up as kids. Dad worked in a steel mill for 6 kids. We never had a lot of opportunities. Opportunities. And I said to Mike, I said, listen, I'll do this on one condition. Every time we go somewhere around the country, you add a day that me and you get to do something cool together as brothers, and I'm in. Since then, we've been to some 25 baseball stadiums, 25 football stadiums, chased alligators on a fan boat in the Everglades, been to Smithsonian, Alcatraz, all hanging out with my brother. You see it all the time.

Presidential libraries right now.

We're doing the presidential library. But to that point, yeah, with the conferences and with the fact that we built these relationships really on friendship over such a long period of time— we're not a fly-by-night group who came to one or two conferences you don't see again. You've been seeing us for 10 years at every show in every city in America.

Yeah.

And to that point, those relationships are our friends. So now they're sharing in on that with us. We had a client of ours take us on the, uh, Everglades boats chasing alligators. We had clients of ours who ball games. Clients of ours who go and do things. I took another client of ours one time, we had a conference in Vegas, I said, "Let's drive out into the desert 2 hours and find this abandoned ghost town because I read about it, it sounded cool." I just took another client to NASCAR. It's all about— now those folks are part of our family. We're Italian, we're a big family, right? You're now part of our family and we're sharing that together in those relationships.

What kind of advice can you give to our clients, whether it be a broker or the direct client, on helping them understand what we're looking for in appraisals and how they can be better prepared for those valuations?

So for me, the first and most important piece of advice I could give to any lender is try to have completed documents. Try to have the information prepared from your borrower ahead of time. If it's a fix and flip product, right, let's know exactly what the project is and what all the details are of that assignment going into it. We see so many times where they'll say it's a fix and flip and we're going to update the kitchen and they send the order over and then there's no repair sheet, right? Or the repair sheet says, the scope of work says no New stove, new fridge.

That's it. All right.

Wow. So the more detail, the better, especially with scope of works.

I mean, that was going to be my number one tip too. I mean, there's people who put, hey, here's my budget on a napkin, right? I'm gonna do $50,000, $20,000 in the kitchen.

You guys really get that stuff?

Sometimes.

Yes.

Yes.

And we've actually completed appraisals off it. And then when they come back and they say, wait, what? You missed this and you missed that and you missed this. That wasn't on your napkin.

That wasn't on your napkin.

The more detailed your borrowers can be with their scope of work on the upfront, when the order is placed, at the point of placing the order, the better it will be for A, the appraiser in general to give you a realistic quote, right? You know, you're putting some paint on the place and a new kitchen in there, that's one thing. So the appraiser says, yeah, maybe I can do this in 6 days. I can do it for X amount of dollars. But now you're adding 1,500 square feet, you're adding another roof, the appraiser, it's going to cost them more. It's going to change the comps he has to pull. And what happens is a lot of times borrowers change that in the midpoint of the process. So they say, well, we're going to get you the scope of work, or we're going to do XYZ, and it's not as thorough. And then later in the process, it comes out to X, and the appraiser goes, well, that's going to take me another few days, right? I'm going to need, it's got to be another $200,000. $100, or it's gonna take more time, and the borrower's gonna get frustrated, everything upset. So the cleaner and clearer and more detailed you're going to be in the beginning with that scope of work from an ARV standpoint, the better of a report you're gonna get, the better of a process you're gonna get.

So we can quote Jerry Maguire and say, help me help you, right? Help me help you by getting me everything that's in your head into a form that we can understand and we can apply to, you know, the valuation.

Do you use standard templates at Global for budget templates and all that?

Yes, we have one template. You guys will always get it, and we don't ever order without that template being completed. It's got 60 or 70 line items on it, and they go line item.

So your borrowers—

and you're a great example. We never have an issue with your product.

So, and, and, you know, uh, it, it is that deal that we want our clients to know that You may know the whole picture in your head, but trust me, you don't want us in your head, and we don't want to get in your head. So put it on paper, lay it all out so that we can turn it into our appraisal firm and they can do a true valuation on that project without any variables or hypotheticals or what-ifs. That's been the biggest struggle, wouldn't you agree, from what you're seeing from everybody?

Certainly.

Well, I want to thank you both for coming and taking time and being a part of Global Integrity Finance. We do appreciate you guys as one of our partners. We use you exclusively. You have basically taken over another company that we were using that's here in Dallas, but we love the relationship. We love what you're doing. We see this guy everywhere, so I, you know, have no choice, but I've enjoyed it. I love the partnership. I love the opportunity. And I believe that you guys do have our backs 99% of the time, if not a true 100% of the time on every valuation.

Well, we appreciate it. We're glad to be here with you again, my friend. Thank you.

Thank you guys for watching. Again, if you need anything or have any questions, reach out to Global Integrity Finance at 214-548-5190 or go to our website, globalintegrityfinance.com. Talk to you soon.