An appraiser’s knowledge of the market he or she determines value in has always been of the utmost importance. Technology can further enhance an appraiser’s understanding of the market and the overall pulse of the economy.

Black Knight executives John Holbrook (vice president, strategy and valuations) and Damien Weldon (vice president, products and analytics) offered their insight.

“Today’s mobile apps aren’t simple digital clipboards,” Holbrook said. “We’re using all the things an app can provide: logic to drive the inspection, GPS to confirm that borrower-submitted photos are timely and coming from the correct property, integration of public record, and verification data to trust-but-verify what’s being collected.”

“Mobile technology that leverages AI (artificial intelligence) can expedite the data collection process and promote appraiser independence,” Weldon said. “Faster delivery of appraiser reports – with less reviews – increases appraiser capacity leading to more assignments and therefore higher revenues.”

Earlier this year, Valuation Review spoke with Clear Capital Vice President of Product Dan McAlister about technology as it relates to the housing market. McAlister noted lenders that quickly adopt inspection-based appraisal waiver solutions can offer consumers an improved experience at a reduced cost, gaining a competitive advantage.

In addition, the agencies and FHFA have made it clear alternatives to traditional appraisals are central to their long-term strategies. After several years of limited pilot programs, lenders can now be confident that appraisal modernization is here to stay. It is no longer a question of “if” a lender should implement inspection-based appraisal waiver solutions, but “when,” McAlister said

Today, appraisers and lenders need market trends and details, and UDC (Universal Data Collection) can provide much-needed assistance, he said.

“UDC focuses on the features of a property at the time of the collection. For appraisers completing hybrid appraisals, UDC helps an appraiser keep their finger on the pulse of property condition and the types of improvements being made by homeowners in the local market,” McAlister told us.

The UDC property data collection solution provides interchangeability and less complexity in management of loans, as well as ease of adoption with the availability of order management integrations, website ordering and API ordering.

“Fannie Mae and Freddie Mac have different data collection requirements. Contrast that with appraisals where the forms used to complete an appraisal for either agency are the exact same. As a result, lenders are accustomed to using a single valuation product and having flexibility to sell the loan to either agency,” McAlister said. “We set out to provide lenders with that same flexibility in a data collection product.

 “It’s natural for lenders to be wary of introducing new complexity to their processes. The term ‘appraisal modernization’ can feel like a substantial technical investment is needed to achieve modernization. With UDC, we’re providing a product that fits within the traditional appraisal workflows lenders are accustomed to while unlocking modern agency offerings to benefit the consumer.”

Candescent Capital Ventures, LLC CEO Mark Linne said appraisers can no longer wait for solutions to be delivered to them.

“They need to look and think outside the box. In other words, they need to look at technology that is being developed across all industries to effectively aggregate and analyze data,” he said. “There are many professions that are similar to the appraisal profession in terms of knowledge work. Those professions are also in need of tool sets that help them to process data. 

“Adopting and adapting those tool sets across knowledge-based professions is the best strategy for appraisers to use to ultimately facilitate better analysis, more efficient appraisal practice and processes and ultimately deliver results to clients that are more accurate and timely,” Linne added.

According to Restb.ai Valuations General Manager Tony Pistilli, online marketplaces such as Realtor.com, Zillow and Redfin are all incorporating artificial intelligence, machine learning and computer vision into their platforms.

“The traditional way of searching for a home begins with defining a handful of binary filters that reduce your search solely to the homes that meet all the criteria,” he said. “However, many users have flexible criteria and are open to making tradeoffs. Many portals are beginning to track the photos that users linger on and are personalizing that user’s search based on the property characteristics implied by their actions, something that has happened for years in e-commerce and social media. 

But how does AI and ML boost functionalities of property management software and IoT (Internet of Things) devices such as security and surveillance systems? 

Pistilli said it is a common practice to take photos whenever tenants move in or out of a property.

“Leveraging computer vision, property management software can now track how the condition of a unit degrades over time or compares to the rest of a portfolio, enabling optimized preventative maintenance. Similarly, the quality of various units can be examined against their rental prices to determine whether particular upgrades (e.g., stainless steel appliances) will be worth their investment,” he said.

Applications based on AI and ML models can accurately predict home values and rent changes, Pistilli said, adding computer vision can be added to make the estimates more accurate.

“The three largest components of an AVMs home price prediction are location, lot size and gross living area. While these are all objective, the next two most relevant data points are a home’s condition and quality,” Pistilli said. “Computer vision allows for these AVM blind spots to be quantified and standardized at a granular level to provide massive reductions in model’s MAE (Mean Absolute Error) and increases to their PPE10.”

“Appraisers can augment their skillsets through the use of AI to make their appraisal processes and outcomes more efficient and potentially more accurate.  They may also be able to be more predictive in their valuation outcomes, i.e., provide futurecasting to their clients,” Linne said. “AI gives us the ability to not only determine market value today but begin the process of predictive valuation, i.e., what will the property be worth tomorrow?  There are a vast number of new opportunities that AI can provide to broaden the types of products that appraisers can offer. 

“An AI-augmented appraiser can offer the interpretation of data, which can be a distinguishing professional characteristic that an appraiser can bring to their practices, enabling new services to clients who will want something greater than just the generalized information that would come from an AI,” he added.

All technology tools, if understood and applied correctly, can be a major tool when addressing the market, in general.

“Appraisers should be the local market experts and be able to document and use price trends in their appraisals.  To do this, the need for data and tools to use the data are extremely important to appraisers,” Pistilli said. “Appraisers should continuously be learning and seeking better ways to perform their profession.  Reading blogs, articles, journals and websites is one way but also through continuing education classes and in speaking with other appraisers about how they are using new technology.

“I’ve always loved this quote, ‘One hour per day of study in your chosen field is all it takes. One hour per day of study will put you at the top of your field within three years. Within five years you’ll be a national authority. In seven years, you can be one of the best people in the world at what you do,’” he added, referencing the quote from Earl Nightingale. “There are tools available to appraisers today that can eliminate an hour of typing or other mundane tasks. Just an hour from each report adds up to an additional report each week or maybe $25,000 per year, for being smarter about how you work.”   

The old real estate adage “location, location, location” can be applied to the market as well. Different tools, based on where they are or what they’re looking for, need to be recognized by the appraiser.

“Some tools used by appraisers are more local or available through their MLSs, but most are available throughout the country and available to all appraisers,” Pistilli said.

“I think appraisers should become as educated and knowledgeable as possible on the new technologies. If they understand how the technology works and feel confident in the results, they will be more able to provide a quality desktop report,” SingleSource Appraisal Modernization and Quality Control Vice President Matt Stepanovich said. “Appraisers can also use the same technology for their own appraisal reports. For most veteran appraisers measuring a house, laying out the rooms, walls, doorways on each level is an easy process. However, the new technology could be helpful to trainees just getting into the business since the sketch/floorplan is one of the most challenging aspects of the inspection for trainees.

“With the new LIDAR/AI technology, a data collector or trainee can walk through the house and gather all the measurements and room layouts easily with just a cell phone camera,” he added. “This can not only reduce time on site, but it can also be used by trainees for additional data collection work. The supervisory appraiser can also learn how to use these new tools and either make the part of their inspection process or better understand how data was created by a third party when doing desktop reports.”