Last week Washington Mutual announced it was cutting some 900 jobs, including hundreds in its in-house appraisal department, in favor of outsourcing appraisal management to two Appraisal Management Companies, LSI and a First American unit. The transition is underway and will proceed "throughout the remainder of 2006."

At the same time, other national AMCs affiliated with top five mortgage lenders have contacted some appraisers on their fee panels to announce planned fee cuts. Some appraisers have received written take-it-or-leave-it "offers" to stay on the panels in exchange for agreeing to drop fees.

What's driving all this? A slowing residential mortgage market, surely. The market slows and speeds all the time. So many people involved in the mortgage business, from production to processing to vendors, are relatively new to it after a historic housing (and hiring) boom. So they've never seen a hot market cool to normal. But we certainly have, as have many of you.

It's the peg many of these lenders and AMCs are hanging these decisions on that's interesting. There is increased regulatory scrutiny to ensure production staff aren't involved in choosing appraisers or ordering or managing the appraisal. WaMu and other companies are pointing to this new thrust toward ensuring appraiser independence as a reason for relying on AMCs more.

But reducing fees has nothing to do with assuring appraiser independence. That part of it has to do with what you'd think it has to do with — trimming overhead and buffering the bottom line at a time when revenue is dipping.

Home buyers and refinancers — so many of whom, these days, are rolling their costs into their loans anyway — are not clamoring to save money on appraisal fees. And remember, they're the ones that pay them.

AMCs' business models rely on paying their vendors (you) $X and charging their customers (lenders) $X+Y. If lenders are more anxious to use AMCs' services — as many are with the regulatory environment what it is — competition among AMCs for that pool of $Ys increases. The larger AMCs, with more appraisers relying more heavily on their work, can promise and largely deliver a reduced $X, allowing them to reduce $Y but net the same difference.

There is nothing wrong or surprising about businesses trying to rein in their costs when faced with a normalizing market for what they sell. But it's only tangentially related to new regulations or promised enforcement of appraiser independence from production staff. It's directly part of a market cycle, something veterans of this business have seen time and time again.

And somehow, we always survive. Many of us even grow and prosper. The key is staying on an even keel, doing great work and not overreacting to every fit and start of a real estate cycle.

Before you "diversify" or troll for new clients, take care of the ones you have

All the tricks of the marketing and client retention trade won't keep all your clients ordering at the same pace they did in 2003. But that's not a reason to take your eye off the ball, it's a reason to bear down and do everything you can to be sure your phone keeps ringing (or XSite keeps pumping out orders) while your colleagues' go silent.

The old adage "if you love something, set it free" does not apply to client retention. You need to pay attention to the business you have. And then pay more. Your goal should be to turn existing clients into fans. You know how fans act if you follow sports or know someone who does. In business they become living, breathing testimonials for you. They recommend you to others and even pick up the phone to let you know of an opportunity to help your business grow.

By following a couple key strategies you can help turn existing clients into satisfied, long-term fans. Try this:

	Be a squeaky wheel. Thank your clients for their business. If you haven't heard from them in a while, get an e-mail or phone call in front of them. If they refer you to someone new, definitely thank them for that. XSellerate helps with all this, and it's part of an Enterprise level XSite, so you may have it already. If not, pick up the phone or dash off an e-mail.
	Consider a "customer rewards" program of some sort — formal or (more likely) informal. Buy a certificate for 18 holes with cart for two and send it with a note thanking your client for ordering 10 appraisals last month. Your biggest volume client for the first half of 2006 might merit a day for the family at the local amusement or water park. (It helps to know whether your client contact has a family, plays golf, etc. But make that effort!) A punch card entitling them to one free appraisal when they buy 10 is probably going a little too far. But rewarding your highest-volume clients goes a long way in relationship building and maintenance.
	Don't just be a PDF attached to an e-mail. When was the last time you dropped by your client's office? Do you go to mortgage broker association and other group meetings where your clients are likely to be? Even without, or in between, face time, consider sending holiday greetings and birthday wishes. Even passing along interesting articles you've read online or — maybe as a last resort! — an e-mail joke you got accomplishes "personalizing" you. Your clients are largely salespeople, and value personal contact. Give it to them.

You can spend equal amounts of time and effort rooting around for new business and feeding and watering the business you already have, and your work on existing clients will almost always reap the most, and most immediate, rewards. Give it a try.