When Michael Tedesco founded Appraisal Nation, customer service paved the way for rapid success and long-term client relationships

Appraisal Nation is one of the fastest growing appraisal management companies in the nation, with a list of numbers to back it up: 40%-65% growth annually, 6,000 broker clients, 28,000 appraisers, 100,000-plus valuations this year alone, and the company is licensed in all 50 states and over 3,000 counties. But Michael Tedesco, Founder and CEO of Appraisal Nation, wants the company’s clients, employees, and partners to know it’s not just the numbers that are important – success is all about relationships. Originate Report asked Michael about what drives Appraisal Nation and how the company values success.

Originate Report (OR): How did the company begin?

Michael Tedesco (MT): I used to work with a large AMC (appraisal management company), and my partner and I noticed their focus was on the top five lenders in the country, which at that time were Washington Mutual, Chase, Citibank, Bank of America, and Wells Fargo. If you weren’t one of those five lenders, they really put you in the bottom of the barrel. They gave you their lowest-skilled employees fresh out of high school and put no effort into customer service. But if you were one of those five, they gave you their best employees, best training, best resources, best price breaks, everything they could give you. I said to my partner, “If we treated the little guy the way they treat the big guy, we’d have an amazing company.” That was the first idea for Appraisal Nation. Fast forward a few years, and I came to North Carolina and recruited my two partners, Brian McSheehy and Anthony Mattia. We went to work in my attic with two clients and self-funded the startup of Appraisal Nation. That was over 11 years ago. Now we have well over 850 clients and complete 10,000 orders a month, every month.

OR: How do you keep up with 10,000 orders?

MT: Our people are the most important thing. We have a great staff, provide excellent training, and everyone is dedicated to the philosophy of doing whatever it takes to help our clients. As we’ve grown and developed, we’ve found processes that really help to expedite orders. We then utilize those processes with a higher than average ratio of employees to orders. Having a larger staff gives us the ability to dedicate specific team members to specific Clients and gives them the ability to know each other and build out those relationships on a processor level. That’s one of the ways we’ve been able to maintain some of the fastest turn times in the country while continuing our focus on being the #1 AMC in customer service.

OR: How do you maintain relationships with all clients, big and small, when growing from 60,000 to 100,000 valuations in just 3 years?

MT: That’s a big challenge for us: managing growth. Having a great staff helps, being in a robust area such as Raleigh, NC allows us to pull truly qualified candidates from a large pool of great colleges. With proper training, and employee recognition programs we are able to have an excellent retention rate of our staff. By building and keeping quality employees, we are able to replicate our service levels to all of our customers. Couple that with today cutting edge AMC software and we can forecast trends or look to fix issues before they ever become problems. Our VP Of Client Relations, Bethany Thompson, has a team that runs monthly reports for our clients making sure our service levels are where they need to be, and the Account Executives are always involved to ensure their accounts are getting serviced to the highest standard.

OR: Tell us about specific challenges Appraisal Nation has faced over the years and how you overcame them.

MT: Anyone who’s had any business will tell you immediately out the gate there are challenges. We probably had more than most, because within one year of when we started (2007), the market crashed. The bottom just fell out. That was our biggest challenge: to persevere, develop, and grow a company in a market that was collapsing, but we had a game plan to focus on the individual, build a relationship, and grow with that person. We did just that and it worked extremely well. A systemic relationship is more than just doing business together. It’s understanding each other and finding multiple ways to maximize your value together.
I’ll give you my favorite example: We have a client, RCN Capital, a big lender now but 7 years ago they were a very small private lender working primarily in the Northeast. We invited them to one of our events, and we instantly got along famously. We asked for the chance to work together but they said, “We’re too small to work with your size company, we don’t have a nationwide footprint so there’s no reason for us to utilize you.” My brother John, and our SVP of Development said, “You are exactly our customer. We can provide you a quality consistent valuation product that can be replicated throughout the country and be ready anywhere you grow. We want to grow with you.” Over the last seven years, that company has become one of the top private lenders in the country, and we have gotten to work with them on a daily basis on every order all over the country, making that part of their business effortless. More important than the success we have shared together is the personal growth. Their director Jeff Tesch and I are close personal friends, and our teams host events together all over the country. They’re like family to us now. Those are the types of relationships we strive to have.

OR: Talk about the current climate in your industry.

MT: It’s interesting now, looking at the horizon of 2018-19, there is a slowdown in clients now as rates continue to tick up. The refinance side has not kicked in yet, but I expect the refinance market will come back in the next few years. With the larger purchase market and the rates going up and the volume of most lenders, it has come down a little. I believe you’re starting to see the larger institutional lenders struggling. Because the Internet as a whole has really developed and provided more information, the average borrower is getting savvier. As they get more info in their hands, they’re not going with your typical Wells Fargo or Bank of America. They’re looking at that alternative lender. That’s what Appraisal Nation’s original focus was on. So where everyone else is seeing a slowdown, we’ve been growing leaps and bounds. During the last three years, we’ve been growing an average of 40% to 60% per year. So for us, we don’t see any slowdown at all. The borrowers look for more alternative lending solutions, smaller retail lenders or brokers in wholesale environments, or even investors looking in the private lending market. We’ve diversified our industry and our business model so that we touch all of those facets and acquired business in each of those channels. So it’s helped us tremendously.

OR: Tell us about the role of compliance at Appraisal Nation. Specifically, explain this quote in the company’s brochure: “In our industry’s ever-changing world of regulation, Appraisal Nation views it as our responsibility to answer the call of compliance. They trust their valuations with us and they should.”

MT: That was Dave Roberts, our director of compliance. His purpose is to make sure all of our clients stay within 100% compliance with regulations and industry requirements, whether it be retail, wholesale, private lending, brokers, etc., and he’s absolutely right. One of the reasons you should trust Appraisal Nation is that if you give this part of your process to us, you have one less headache to worry about. And there’s so much compliance. Since 2009, the inception of the HVCC, the Dodd-Frank Act, and then the CFPB– so much compliance has been put onto the appraisal aspect. It’s been tedious to so many lenders, loan officers, brokers, and processors, to make sure every little regulation is done correctly. And that’s what Appraisal Nation does. We take that headache away because we handle it for that lender. Having a partner you can trust with compliance is a big peace of mind for our clients.

OR: You’ve expanded a few divisions in recent years. What prompted this?

MT: We launched our BPO division to provide broker price opinion. That’s a report focused on realtors doing smaller evaluations from an appraisal. That’s done extremely well for us. Then we expanded into title and settlement services the following year, in Pittsburgh, PA. Add in our partnership with Credit Plus, that allows us to do tax returns and flood search, and we are now able to be a complete solution for our lenders. We provide every solution under one umbrella: title, closing, flood, tax, credit — you name it. It’s really a one-stop-shop now.

OR: Appraisal Nation has received several awards lately. What does this mean for you?

MT: In 2013, I was honored with MBA of the Carolinas President’s award. It’s only given to a mortgage professional who has really contributed to their work and shows success in their field. It was the first time it was ever given to a non-lender, so it was a big honor for me. I was thrilled with it. The following year, Rising Star listed their Top 40 Under 40, which is the top 40 professionals in the country under 40 years old who were making a difference in the industry. I was blindsided to receive this one, but it was clear then that Appraisal Nation was making a real impact in the industry.

Since that time, we’ve been exploding with growth. We’ve been in the Inc. 5,000 for three years in a row. That’s been a big honor for us. The first year, we were 842 in the U.S. and the 16th fastest growing company in North Carolina. The next year, we were 1260. The number is based on the percentage of growth so it’s hard to maintain that percentage of growth in the tens of millions of dollars. To do that twice was a big honor. To do it three times was a tremendous accomplishment.

One of our best accolades is probably the Morningstar ranking. Morningstar ranks vendors for their clients. So if someone is going to sell a portfolio or look up outsourcing, they want to be sure the vendors are properly vetted. Morningstar will do a thorough vet for AMCs. Appraisal Nation was given the highest designation two years in a row by Morningstar. Only two other AMCs have ever been given that award, and they are global enterprise stock traded AMCs.

OR: What about your new technology, such as Appraisal 360 and Dollhouse Imaging? How are these changes affecting the company?

MT: We’ve put a substantial amount of investment in both technologies. What we’ve found surprisingly was the average lender wanted to focus on the meat and potatoes of the report. It seemed their focus was on the appraisal itself. So we still have those products available, but our biggest technology now is a hybrid product in the private lending space that gives valuation from an appraiser without having to do a full interior appraisal. The hybrid allows the lender to receive a report a little faster and discounted. For people in the private lending space, that’s a very value-added concept.

Now the Appraisal 360 product using drone technology for overhead imagery is still a popular product. If someone needs a large commercial summary, it’s a nice add we can throw into the report that can check anything on the roof in addition to mapping out the entire boundary line.

OR: What do you advise clients not to do?

MT: So many times when you get into the smaller clients, private lenders, or individuals doing their own investing, they confidently feel they can do that valuation on their own. There is such a huge gain for them to use a company like Appraisal Nation, in terms of understanding the market and what value we can add that they’re not familiar with.

OR: Tell us about your internal team.

MT: It really is a team effort here. I’m grateful to have two wonderful partners, Anthony Mattia, our COO, and Brian McSheehy, our CFO. I like to think of us as a tripod and if anyone of us were not here then Appraisal Nation wouldn’t be here. Another tremendous asset that makes Appraisal Nation what it is today is our EVP, Al Ballard, he along with Anthony oversee the entire operational piece which allows me to focus on our development. Our entire team does such a great job understanding the needs of each of our clients, but it’s more than having a good relationship with the client; it’s also about having a good relationship with the appraisers. And that’s one thing we do better than other AMCs: We focus on taking care of our appraisers. Treat them better. Pay them better. We realize the relationship is more than just the client and the AMC. It’s anyone you interact with; you have to have a good rapport, and treat them the absolute best you can. Anytime we talk to anybody in the process we reflect our client, and we want the client to know that they’re reflected in the best possible way in every communication.

OR: How hard is it to find appraisers?

MT: We have a great network of 28,000-plus appraisers. According to Fannie Mae, there are 77,000 licensed appraisers in the United States. Of those, Fannie Mae received work from 39,000 active appraisers in 2016. Which means we have 28,000 of the 39,000 active field appraisers in our network. So it’s substantially built out.

OR: What do you want the readers of Originate Report to know about you and your business that may not be immediately apparent to a new client?

MT: There are appraisal management companies that understand their needs, who get it. I think when they look at an AMC, the first thing that crosses their mind is, A) they don’t understand what we do and, B) we don’t need them. There is significant value in using an appraisal management company for so many reasons, whether its peace of mind, protection, quality control, or having a nationwide network that is not only monitored but also regulated. Appraisal Nation, more so than any other AMC in the country, understands the private lending industry.