The 2022 Appraisal Institute Conference in Las Vegas attracted appraisers from all across the country to learn and grow their businesses. One individual, in particular, was Senior Appraiser Jim Pat Mitchell of Texas-based (Austin) Mitchell Valuation.
Mitchell, with over 45 years in the business has seen a lot working as an appraiser, and he shared with us his thoughts on a few subject matters, as well as the future of the industry.
He first addressed particular areas regarding appraisal demand which will be most prominent throughout 2022.
“Refinancing has decreased as interest rates have increased,” Mitchell told Valuation Review. “As green energy and high-tech industries continue to expand along with the manufacturing and distribution sectors, there will continue to be demand for the residential market. Interest rates will cool demand only momentarily. The retail sector is going to catch up with the residential metro expansion seen over the last 7 years by the third quarter of 2023.
“With infrastructure on the forefront of topics and budgets, opportunity to serve the municipal, state and federal agencies will spike the next 18 months,” he added. “Bottom line, small-to-medium sized retail and eminent domain will be the two sectors that demand will be most prominent in 2022.”
The veteran appraiser also pointed out how valuers will assess the climate of the market and assign value to assets and property. New technology tools and data sources/formats are enabling appraisers to quantitatively identify and conclude the significant contributions that each geographic market demands of available inventory. Each sector of the country has its own variables, characteristics, economic significance, or uniqueness, he said.
Valuation of real estate assets, he said, has always been market driven. Some types of property in a market area will be increasing while other types of property will stabilize. The challenge is always identifying what has taken place; what is taking place; and what is most likely going to take place in the foreseeable future.
Many areas, though, will become increasingly competitive, in addition to voids in the market being filled and whether or not younger talent (appraisers) can come along to fill those gaps. He also touched on training.
“Demand for mortgage refinancing has decreased, impacting fees and turn-time expectations. Simple supply and demand. Demand for commercial and eminent domain expansion will continue to grow, Mitchell told us. “The appraisal industry needs to adopt business models and platforms that attracts the younger, diversified talent which is the future of this profession.”
“Training is the easy part of equation. What the young talent wants is a 40-hour week, weekends off, retirement plan, hospitalization plan, [and] a platform and data base to produce the most benefit to user of this platform,” he added. “New technology and new platforms will be a huge contribution to the appraisal turn time and attracting talent moving forward in 2022.”
Regarding how appraisal companies can make big changes to attract and retain talent, Mitchell said appraisal companies that embrace new technology offering platforms and data base access and implementation will attract the best talent. He also suggested that 20 percent reporting time and 80 percent analysis time is what the younger talent demands.
Mitchell also shared specific changes he has seen regarding appraisal work in Texas.
“The expansion of the Apple Campus - Northwest Austin, completion of Tesla -Southeast Travis County and Amazon in Pflugerville, along with the announcement of Samsung Plant(s) in Taylor, have set the market in an upward trend for the general area for the next two years,” Mitchell said.
We also wanted to know his opinion of what has changed the most. Where does he see the profession going in the days, months and years to come?
“The most significant changes in the appraisal industry have occurred in the last three years,” Mitchell acknowledged. “Partly technology and partly because of COVID/pandemic-restrictions. Platforms, data bases, information, analytical tools have improved at a faster pace. This trend will continue. The pandemic basically reset the clock. In practically every industry, what was going to take 5-to-10 years to go through a typical cycle/change ended up taking 12-to-18 months. This most likely is here to stay.”
Mitchell concluded by comparing the industry to a scene in the movie “Castaway.”
“The first scene was taken about 15 miles from where I grew up in the Texas Panhandle at the intersection of a county road and state highway,” he said. “The real estate appraisal industry is at a similar crossroads--it’s going to see the innovative, forward motion of technology, platforms and databases recreate a better service to the general public and the clients they serve. Those who embrace this technology will be training the future and passing on some common sense along the journey.”