Appraisal modernization: The times they are a-changin' | Clear Capital blog

Appraisal modernization: The times they are a-changin’

By July 28, 2021 No Comments

Change can be hard to accept in any industry, including the real estate appraisal business. But being flexible about inventive approaches and different perspectives can have positive outcomes. Now’s the time for appraisers to get on board with techniques and innovations that can complement their expertise – and ultimately lighten their load. This requires keeping an open mind, being willing to listen to new ideas and not being afraid of learning and adopting new methods and tools.

Some of the technological advancements being implemented in our vocation include digital floor plans/GLAs, greater access to data (including MLS access), improved appraisal software incorporating the redesign of outdated GSE appraisal forms, drone photography, laser measurement devices, and a greater array of high-tech tools and resources that build quality into the input – not just the output. Unfortunately, several myths and misconceptions around appraisal modernization persist, resulting in many within our field being unable to move forward and embrace needed change. 

A primary example of one of these mistaken beliefs is that modernization efforts will diminish an appraiser’s importance. Rest assured that appraisers should not feel unappreciated, overlooked or threatened during this process. By attempting to better understand why many are hesitant to contemporize and by comprehending the benefits of implementing appraisal innovations, we can clear up common fallacies and convince appraisers that suggested changes are in everyone’s best interests.

That starts by first addressing the elephant in the room: the feeling by many appraisers that they are devalued by modernization and less involved in the appraisal process. There may be some truth behind the latter, as future appraisals could involve less hands-on physical involvement at the subject property by an appraisal professional. But, despite technological advances, the fact is that the hybrid appraisal model that has gained so much steam is designed to not only keep human appraisers involved, but to enable them to be more efficient. It’s worth noting that though the hybrid model can be less impactful than fully-automated solutions, the current constraint on appraiser capacity requires change of some sort. This is where appraisers can play a role in defining that change or forcing others to act on their behalf.

Second, it’s worthwhile to explore why many in the industry are resistant to change. Some of this reluctance is due to human nature and the fear of becoming obsolete or disposable. In my experience, those most opposed to modernization are more mature professionals, many of whom fear being replaced by both younger peers and technology. Plenty of these industry veterans abide by an unspoken code of loyalty: to do right by the people who trained them and to preserve the practice as it has been passed down from previous generations until now. This credo accounts for some of the reluctance to adapt, but arguably a bigger reason behind this hesitancy is a desire by many with seniority to preserve the status quo.

Third, it’s constructive to listen to the complaints of appraisers and acknowledge their pain points. For instance, many appraisers take issue with alleged discrimination bias, feeling offended that they are sometimes scrutinized for actions, words or appraisal report content that may be misconstrued as discriminatory when that was not their intention. Professional appraisers are required by law to perform independent and objective appraisals without bias and conform to ethical rules. Truth is, although the vast majority of appraisers are unbiased, there will always be a few experts in any profession, trade, group, etc. who act in prejudiced and unethical ways. New appraisal technologies, tools and methodologies will likely make it easier to identify appraiser bias, where it exists. But this doesn’t mean that industry leaders developing and advancing these modernizations assume the worst about appraisers. It will be essential to monitor this issue going forward to ensure that anti-bias measures are fairly and reasonably incorporated in new processes and technologies without putting undue pressure on appraisers. We at Clear Capital believe the industry needs to focus on gathering accurate data and looking at areas where we may find bias independent from the appraiser, too.

Among the changes being made in the push towards appraisal modernization is the recent introduction of Practical Applications of Real Estate Appraisal (PAREA). This alternative to the current model for obtaining experience enables prospective appraisers to do so in a simulated environment, combining the best elements of methodology and appraisal theory in real-world online models. PAREA is offered as a solution to the traditional supervisor/trainee paradigm, which has come under scrutiny in recent years. That’s because it can be challenging for trainees to find a supervisor; plus, many supervisors don’t feel incentivized to train people under them, feeling that it wastes their time, squanders business opportunities and ultimately results in creating what they perceive to be more competition. Simulated training, by contrast, can involve a more diverse group of people, allows training on a wide variety of types of appraisal assignments and provides an experience that can be replicated – which ultimately creates more well-rounded appraisers. PAREA can be particularly beneficial for those who want to work for Clario, or for those who want to remain independent appraisers while continuing to be partners and those who need the experience but cannot find a supervisor.

French author and Nobel Prize winner André Gide once said: “Man cannot discover new oceans unless he has the courage to lose sight of the shore.” This is a truism that should be taken to heart by real estate appraisers, who needn’t be afraid to try fresh means and the latest tech designed to advance our profession and keep us moving forward.

John Brenan

Author John Brenan

John Brenan is the chief appraiser at Clear Capital.

More posts by John Brenan