If you’ve been involved in the appraisal industry for any significant length of time, you’ve probably recognized that the only thing about the profession that remains the same year-after-year is change. Whether that change comes in the form of new standards, new technologies, or new assignment requirements, change is inevitable.
So, as we proceed forward in time, with an expectation of ongoing changes, what will appraising look like in a decade? Although I’m no soothsayer, I believe we can successfully extrapolate a rough idea of what changes the appraiser of the future will encounter.
Let’s start with standards of practice. Although USPAP has been crafted in a way that affords an appraiser the ability to move through every foreseeable appraisal scenario with sufficient guidance and direction to ensure their compliance, these standards have continued to evolve from iteration to iteration. In 2031, it wouldn’t be a surprise to find that USPAP has included additional Advisory Opinions, or even Standards, that address sophisticated technologies or algorithmic tools used by appraisers in support of their report development process.
What kind of new technologies should we expect to see and utilize in this future state? First and foremost, we can expect an appraiser in 2031 to rely more on data modeling and algorithms that present the appraiser with greater insights into larger datasets that the appraiser would have historically struggled to source and make sense of. What’s the primary value-driver in this subject’s market? What impact does a differing school district have on market sales activity? What is likely to transpire within the subject’s market over time, post the appraisal’s effective date? What’s the psychographic makeup of the market, including delineation between buyer and seller cohorts? All of these questions will be more easily answered when the typical appraiser in 2031 has the same (if not better) data analytics tools as the Wall Street trader.
Beyond data analytics tools, the appraiser in 2031 will also have access to more data in general. It may come in the form of 3D renderings of each subject and comparable property. They may have drone footage giving them an exterior walkaround in VR, along with a bird’s eye perspective of the property and its surroundings in real time. For those of us that remember the advent of digital cameras and how game changing they were for appraiser practitioners in that era, imagine what revolutionary hardware and software will be made available to appraisers in the proceeding ten years!
In some low risk scenarios, the appraiser may rely on information obtained by a homeowner in the context of a consumer assisted valuation (powered by Mueller@Home). For transactions that represent slightly higher risks, the appraiser may benefit from subject property data that’s been provided to them by a qualified third-party, similar to today’s bifurcated process. Finally, the appraiser may be engaged to perform the inspection for transactions that exhibit greater risk and complexity, but they will no longer be using a measuring tape or clipboard to capture the subject property data. Instead, they’ll use their smart phone to produce the homes 3D rendering and to capture their video workfile for the assignment, while their device populates most of the appraisal’s objective data elements regarding the improvement by way of AI driven Cognitive OCR.
From the lender’s standpoint, what are they likely to ask appraisers to provide in 2031 as part of their assignment conditions? It wouldn’t be surprising to see requests for more granular data that exposes underlying market risks. In 2031, most if not all data services will be fully integrated into all appraisal production software platforms, allowing the appraiser to expose aspects of the market with greater ease and confidence than ever before. The lenders of the future will ask for more data, and the appraiser’s in that era will have the ability to provide it without adding additional time to their report development process.
At Mueller, we continue to work towards realizing these future goals by remaining at the forefront of our industry. We can’t say exactly what will become of appraising in 2031, but we know that as an organization, we will play an instrumental role in the changes that will lead to the profession’s evolution between now and then.
Author: Jordan Petkovski, CVO