Bifurcation continues to be a contentious topic in our industry. Often, appraisers worry about the quality of inspections when using a third-party, but I often remind them that we already rely on the inspections of others. We rely on information from appraisers we do not know more often than we think; we receive information from desk or field reviews as well as MLS listings from real estate agents we have never met.
The reality is that technology can be a great equalizer, offering new opportunities and solutions to allow bifurcation without indigestion. Tactical processes, such as home inspections, can be moved to contracted individuals, including other appraisers and appraiser trainees. With this emerging technology, appraisers can focus solely on a role of market analysis and as trusted advisors, where their expertise and certification will be valued. This new model offers appraisers an opportunity to increase productivity and revenue: put simply, for every hour that they work, appraisers who can successfully adopt the technology will be able to get more done and make more money. Just think – Would you think it was odd if the dentist cleaned your teeth?
Three specific technologies — 3-D modeling, Artificial intelligence (AI), and cloud computing — have the capability to transform our industry — and resolve many of the concerns that appraisers have over the role of bifurcation.
A picture is worth a thousand words, but what about a 3-D model?
In a matter of minutes, home inspectors can create precise, 3-D models of an entire home’s interior with a video camera and tripod. Unlike photographs, the 3-D renderings show ‘the good, the bad, and the ugly’ and allow the appraiser to view the property much like Google Earth allows us to view the exteriors. An appraiser can no longer decide to avoid taking a photo of damaged walls or the part where the floor is water-stained. The result is truly independent, unbiased inspection data.
Like a pilot using a flight simulator, an appraiser uses the 360-degree replication of the home as part of the inspection “observation” process. The appraiser doesn’t need to be present in the house, because the 3-D rendered model is an exact replication. As a result of this emerging technology, there will be a day when it doesn’t matter who does the inspection.
AI is not just two letters in the word appraisal
AI is becoming ubiquitous, it has been used to route USPS mail for decades, detect cancer, and catch criminals through facial recognition. It shouldn’t come as a surprise, therefore, that other industries are increasingly waking up to the uses of AI.
Appliances, in-home products and materials, are identified and classified by make, model, and age with a single photo to aid an appraiser in assessing the condition of the property. Used universally, a consistent assessment of property condition would lead to more accurate appraisals.
With a simple photo or video, an AI app could provide an accurate cost estimate for:
- In-home appliances, by identifying the manufacturer, year, features, cost, and current value
- Building materials, such as marble counters, hardwood flooring, or a cedar fence
- Repair costs of peeling paint, damaged walls, and cabinetry
This would take the guess work out of repair estimates and condition ratings
Combined with the power of GPS, AI can also:
- Confirm point-in-time residential photos avoiding the use of incorrect images or older images of the house
- Prevent taking photos of the wrong house during the inspection process
AI augments and enlightens the appraisal process. The objective AI identification removes any questions about the inspection process. In other words, a less desirable Q4 rating cannot be substituted for a Q2 rating based on an inspector’s subjective or mistaken viewpoint of a home’s features.
Moving from Desktop to the Cloud
More than a decade ago, the industry digitized itself with the use of XML, which can be saved on a computer, emailed around, uploaded, and analyzed. Although this was more efficient than previous ways of working, it still allowed for reactive revisions to appraisals. With cloud computing, the entire appraisal form can be fully automated, accessible, and impartial. A rules-based system could be used to ensure the proper completion with only one submission. Imagine if revisions were totally eliminated.
Information provided to the appraiser could include:
- A comparison of similar properties in a visually efficient manner for appraisers
- Heat maps based on square footage, sales price and age
- Electronic property photos, images, maps and floor plans available at a single glance
- Instant calculation of regression analysis for accurate, market-based adjustments
- Local community information all at the appraiser’s fingertips
With all of this information available valuations can be done in a fraction of the time.
The More Things Change, The More Things Remain the Same
In the past, an appraiser might make $500 for an appraisal on a 1004 form a day. With bifurcation, an appraiser only spends time performing the analysis, not the measuring, driving and other less complex, but time-consuming functions. An appraiser earns more doing the analysis only rather than the entire appraisal.
When you go to the dentist, it’s the dental hygienist who actively does the upfront work – initial inspection, cleaning, and X-rays. You’re with the hygienist for at least 30 minutes. The dentist views all the information collected, does a quick inspection, and delivers a prognosis. This takes all of 15 minutes. Based on this model, the dentist is the trusted advisor whose professional advice you seek, but will spend the least amount of time with you. The dentist can also see multiple patients within an hour, increasing their profitability. Like the dentist, appraisers should be in the trusted advisor role, taking care to protect their valuable time and be happy to have a ‘hygienist’ who will do the time and labor-intensive home inspections.
What we do won’t change, but how we do it will. Just like other industries, the way that appraisals work will change as the result of emerging technology. It’s time for appraisers to begin looking at themselves as the local market experts, experienced market analysts, and the trusted advisors in the appraisal process.
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