From Freddie Mac and Fannie Mae waiving selected appraisals to advanced technology possibly eliminating appraisers from physically inspecting properties in the future, appraisers have been, understandably, concerned about what lies ahead regarding the profession.

If appraisers feel pressure in one single area of evaluating property, it definitely comes under the category of proving your results. Given that, the notion of reliability and validity is bound to surface when a machine is spitting out value numbers left and right.

Trust becomes a key factor in terms of the client’s willingness to accept these machine-driven statistics or not.

“The numbers for the most part are derived from two primary sources – public records and Multiple Listing Services. Generally, these are the same sources that appraisers use today,” LRES Chief Strategy Officer Mark Johnson told Valuation Review. “The calculations for the machines will often have been inserted by appraisers and mathematicians who understand the process intimately. The source of the data and the underlying calculations will not be the primary issue. The concern regarding the data should fall under these categories:

• Has the data been mapped properly;
• Does the data account for the micro-market in which the property exists; and
• Are there other extenuating circumstances that may not be picked up by the existing data records – e.g., is there a unique element that might otherwise impact the value such as telephone lines or environmental problems in close proximity that might be viewed by an appraiser but not caught within a dataset? These are genuine concerns and are in addition to those stated earlier regarding the quality and condition of the house that are not easily discernible through data alone.”

Johnson elaborated on AVMs and advanced technology helping or hindering the appraiser, and whether or not automation is an enhancement for the appraiser.

“The use of AVMs and appraisers should not be considered mutually exclusive,” he said. “I fully support appraisers leveraging the AVM and more importantly, the data that resides within the AVM as a primary tool in assigning a final value. The appraiser can identify attributes in the AVM and make appropriate transactional adjustments. If administered properly, an appraiser can substantially increase his/her own productivity.

“You might flip the hypothetical conclusion. Computers are being leveraged to manage the volume of available data as well as the standard and sometimes mundane math concepts while appraisers are elevated to focus on those key discrepancies and challenges that are not able to be done by computers. Appraisers will spend more time analyzing data and validating calculations and less time driving,” Johnson added.

That can certainly be an enticement for appraisers. Many get tired of seemingly spending more time in their cars, than they do actually inspecting properties and doing what they were actually trained to do.

It becomes incumbent upon the appraisal profession to do all it can to keep appraisers in the profession, and to draw new individuals into the industry.

Johnson sums up what advanced automation will do for appraisers.

“Technology is changing all of our lives. In many cases, it has migrated beyond enhancing what we do to fundamentally changing how we do things,” he said. “Appraisers wanting to stay in the business should read and listen carefully to the market dynamics, the associated technology advancements and adjust their approach accordingly. There are companies today offering an immense amount of data and technology to the appraisers that are not yet being embraced by appraisers. 

“There will be a need for appraisers in the future and that need should serve as the incentive. What an appraiser does today and how the appraisal is performed and completed will be subject to change. The appraiser must remain a relevant part of that change,” Johnson added. “We have migrated from pencil and pad to sketching applications, from Polaroids to digital photos and from yellow pads to desktop software. All of us must appraise ourselves periodically to determine if we are remaining relevant in the business environment in which we operate.”