How Technology is Changing the Appraisal Industry
From measuring tapes to Distos, and note pads to iPads, the tools of the appraisal trade have changed dramatically in the past few decades. But change isn’t always easy, and it often takes time and money. Are appraisers embracing this new technology or resisting change? We talked to several key professionals in the industry for their take on how technology is changing the profession.
“People used to poke fun that the mortgage lending industry was on the cutting edge of 10-year old technology. Sadly, for much of our history, that was the case,” said George Opelka, Senior Vice President of ACI. “New technologies often carried new risks and we live in the business of risk mitigation. It was often considered wise to stick with tried and true instead of blazing the trail of the unknown. That's not the case anymore. The IT profession has matured and learned how to deliver cutting edge solutions that don't put institutions at risk.”
One of the biggest changes, according to Alan Hummel, SRA, VP & Chief Appraiser at Forsythe Appraisals in St. Paul, Minnesota, is how technology has leveled the playing field. “It has given virtually everyone, including the lenders and the homeowner, access to much of the relevant information that goes into an appraisal. It used to be that only appraisers had that data, and it was like gold.”
John Forsythe, SRA, President & CEO of Forsythe Appraisals, agrees. “Appraisal data used to be more of a “black box.” Non-appraisers and Realtors simply couldn’t access that information. Now, with technology, lenders, Realtors, homeowners have access to much of that data and are able to really scrutinize an appraisal. So because the data isn’t all that rare of a commodity anymore, what appraisers are really selling is their analysis and neighborhood expertise.”
“Appraisers are taking advantage of far more than just their experience with a neighborhood and a couple of comps with access to databases and models where appropriate,” Opelka said. “Perhaps most importantly, they have become faster and more efficient, creating detailed reports that provide exactly the kinds of information lenders and investors need to mitigate their risk in the mortgage transaction.”
But do appraisers sometimes miss the old days before technology became such an important part of their job?
“Heck, no!” said Mark Verrett with Acorn Appraisal Associates in Houston, Texas. “The Disto, tablet computers, sketching programs, aerial photos, public street photos, etc. have all made the process of appraisal exponentially more efficient. There is not a wall I measure where I am not thankful for the Disto. I have been using a Disto for at least 6 years, and even today I remember trekking through brush, whizzing by wasp nests, or doing my best to estimate how much to subtract from a measurement because of an unavoidable bend in the tape. The Disto has made my measurements much more accurate and faster; not to mention there is not a homeowner that sees it and doesn’t show curiosity. In a small way, that Disto seems to add to my credibility with the homeowner.”
“I wouldn’t say too many appraisers miss the ‘good old days of paper and pencil,” Hummel said. “The computer in particular and other technology in general have absolutely been a boon to many aspects of our profession. But one thing that has fallen by the wayside as technology has advanced forward is the personal connection that appraisers have with their clients. You know, we used to drop off doughnuts and then have a conversation with our clients. We used to talk on the phone and have a conversation with our clients. Now, in the age of e-mail and texting and instant messaging, we have sound bites with our clients. There is a noticeable decrease in the human, one-on-one connection between appraiser and customer. And unfortunately, you just can’t e-mail doughnuts.”
So what’s the must-have gadget for appraisers these days? “That’s a tough question because in my opinion, there isn’t a Swiss Army knife that applies to the field,” Opelka said. “The all-in-one gadget usually doesn’t do any one particular task extremely well. If you’re talking about the basic field staples, every appraiser needs a GPS, a smart phone for contacts and appointments, and a laser distance measuring device.”
The Disto is Verrett’s go-to gadget, at least for now. “It is definitely a must-have. I will be adding an Ipad to that list in a month or so and I can’t wait to rid myself of paper in the field and having the sketch completed while I am at the house.”
Forsythe says the laptop computer is key right now. “But in the near future, I can see the tablet taking over. It offers a highly powerful combination of computing, software, sketching features, photos, data and connectivity all in a small, lightweight, easily transportable package.”
Hummel agrees. “The tablet is definitely the next big thing in terms of hardware for appraisers. The main limitation on it right now is connectivity and download and upload speeds. If you could be on a WiFi network at all times, then there would be no problem. But obviously that’s not the case out in the field. So that also brings cost into the equation. If you have to have 4G, that adds monthly cost to the tablet solution as well. But I have no doubt that as high-speed connectivity becomes more prevalent and cheaper, the tablet will become the field hardware of choice for most appraisers.”
And is technology making appraisers faster, more efficient professionals or having the opposite effect? Our panel disagreed.
“Technology has definitely streamlined some of the processes that appraisers use to produce their reports,” Forsythe said. “But that gain in speed and efficiency has more than been offset by the substantial increase in the depth of information and analysis that is now expected to be presented in each report. So in a way, even though technology now allows for access to an almost endless universe of data, that enormity of data has actually had a negative impact on appraiser efficiency.”
He added that technology has made it easy for lenders to set up their own rule sets. “So you see each lender having a little different set of expectations for QC review on their reports. Oftentimes the things that their review technology catches and holds the report up from being complete are extremely minor, non-value-related items. All of this leads to addendum requests and reduces appraiser efficiency and productivity.”
But Verrett and Opelka see it differently. “Every piece of technology I’ve introduce to appraisers has been resisted in the beginning,” Verrett said. “The natural reaction, especially for appraisers, is that why change what is working. But once that technology is embraced, I can’t ever find an appraiser that would be willing to go back to the way it used to be. I have taken an appraisal class or two on technology advances. I have found them a bit overkill and unnecessary. While I must admit I am modestly interested in technology and have an aptitude for it, I find that reading appraisal forums available gives me most of the insight I’d need. Any minimal time that keeping up with the trends takes is more than made up for with incorporating that technology in my business.”
“Today, appraisers are taking advantage of far more than just their experience with a neighborhood and a couple of comps with access to databases and models where appropriate," Opelka said. "Perhaps most importantly, they have become faster and more efficient, creating detailed reports that provide exactly the kinds of information lenders and investors need to mitigate their risk in the mortgage transaction. It’s a fantastic time to be working in the mortgage lending industry and I think it’s a great time to be a professional appraiser, partly because things are moving fast and partly because the new tools that are just over the horizon are going to be more powerful than ever,” he said.