Thursday , 3 December 2020

Frank or Bob: who do you want to be?

The average appraiser is now in their mid-50s. As a result, many of us remember the era when we could change the oil, air filters or spark plugs on our own cars. For bigger jobs, we’d take our cars to a service shop, which in my memory were often staffed by greasy-handed, cigar-smoking mechanics wearing old, crusty overalls. For the sake of this article, let’s call our old-school mechanic ‘Frank’.

Cars of today are very different. They’re far more reliant on computer technology, meaning it is very difficult, if not impossible, to make some of the repairs we might once have been able to ourselves. A modern auto shop is a clean, high-tech center that is more likely to employ a ‘technician’ sporting white gloves and wielding numerous computer analysis devices than an unreformed character like Frank. Let’s call this modern technician ‘Bob’.

Bob might also remember the pre-computer era. But when the change began to occur, he adapted to new technology, learned to use new equipment and worked to understand the operating systems of newer cars. As a result, he’s flourished in his profession. However, the ‘Franks’ of this world are now few and far between. For those who continue refusal of adapting, their futures do not look very bright.

Many industries have undergone a similar transformation. For example, accountants have had to adapt to the use of tax preparation software. Newspapers are feeling pressure as a result of online news. Publishers are still trying to assess the long-term impact of electronic books. And jobs in some industries are being almost entirely eliminated. When’s the last time you called a travel agent to arrange a vacation or visited a photo shop to develop your pictures?

The appraisal industry has also experienced some change. 20 years ago we still had rub off arrows, Polaroid, 35mm film cameras, fax machines, dot matrix printers, and typewriters. We’d mail or even hand deliver completed appraisals. Nevertheless, the extent of these changes has been nowhere near as extensive as other professions. Appraisal software, digital cameras, and email may have reduced costs and increased efficiency slightly, but we’re essentially still doing our jobs the way we have always done them. As a result, there have been no real improvements in productivity – in fact, on average appraisals are taking while our fees have not been able to increase. So how can we expect our profession evolve?

In January last year, Fannie Mae announced significant changes to its selling guide. For the first time, it now allows “unlicensed or uncertified appraiser or an appraiser trainee to complete the property inspection”. In May, National Mortgage News reported that Fannie Mae was running pilots to assess whether appraisers can accurately determine the value of a property without actually visiting. In August, Timothy Mayopoulous, Fannie Mae’s CEO, told HousingWire that “appraisers should be at their desks”, not in the field with a measuring tape, making phone calls to track down homeowners.

These developments will significantly change the way we go about our jobs. At present, most of us are still driving comparables, measuring houses, typing appraisals and responding to revision requests ourselves. Instead, we should be analyzing sales data, identifying market trends, providing local market expertise and communicating the results, leaving visits to trainees or other support staff. Other professions have had a similar split for a long time: think about dentists and hygienists, attorneys and paralegals or doctors and nurses. It’s time for us to catch up.

I have heard questions about whether this ‘bifurcation’ or splitting of responsibilities within the industry will prevent us from meeting our professional standards. How do we complete an appraisal without even driving by the property? Should we really rely on information provided by others? Shouldn’t we have to validate the accuracy of the info ourselves? However, the Uniform Standards of Professional Appraisal Practice (USPAP) act as a tremendous resource on these issues by providing useful guidance on how to perform such assignments. 

Scope of Work RuleAllows broad flexibility in determining the appropriate scope of work for an appraisal assignment
Extraordinary Assumptions            Outlines their potential use within a specific portion of the appraisal process
Advisory Opinion 2    Relates to inspecting the property and gathering adequate information to perform the appraisal
Advisory Opinion 18  Discusses automated valuation modes (AVMs) and sets out the need for appraisers to understand them and use them appropriately
Advisory Opinion 23  Covers the collection of relevant characteristics of the subject property
Advisory Opinion 28  Relates to identifying the appropriate Scope of Work to deliver credible assignment results
Advisory Opinion 31  Provides guidance on assignments involving more than one appraiser
Advisory Opinion 37  Examines the area of computer-assisted valuation tools

Ultimately, whatever the broad professional benefits of this new approach to the job may be, appraisers need to make business decisions, and it’s the bottom line that best determines how professional’s go about making their living.

I believe the prospective income also provides the most persuasive argument. By changing approach and offering additional services, appraisers can go from perhaps earning $400 per assignment to $100 per hour, potentially doubling their earnings in the process. Most importantly, in the longer term, they will stay relevant in a constantly evolving and changing world. A challenge that virtually every profession is facing, but not all are meeting.

Put simply, appraisers have to make a conscious decision to be “Frank” or to be “Bob”. So ask yourself the question, who do you want to be?

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About Tony Pistilli

Tony Pistilli
Tony Pistilli is the SVP, General Manager of Valuation Services and Chief Appraiser for Computershare Valuation Services, LLC. Tony oversees the valuation business, including Traditional Appraisal, BPO, Inspections, Data and Analytics and Hybrid Appraisal. He is also tasked with introducing innovative and compliant valuation products and industry leading solutions to the marketplace. Tony has over 25 years of real estate appraising and lending experience with national banks, mortgage companies, a federal agency in addition to being self-employed as a fee appraiser. Tony is a member of several appraisal industry organizations and is a subject matter expert for the Appraisal Foundation in the area of declining markets and previously served as vice-chair of the Minnesota Real Estate Appraiser Board. Tony is an AQB certified USPAP instructor and holds a certified residential appraisers license.

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