If you are disrupted, you can plant your feet in fear, and not change.  If you are disruptor, it’s wise to know the game and play your best position.

So what do we need to understand about “data disruption”?  Several things:

I have seen a list of nine such general principles.  So lets see each of these, and see which may or may not apply to appraisal, collateral evaluation, or portfolio/investment decisions:

• • Data scarcity becomes data overwhelm.

Yes, when I became an appraiser, the job was mostly to collect a few good comps.  Today, there may be dozens or more competitive sales, available instantly.

• • Product delivery shifts from paper to electronic

Yes, MLS books and listing books.  CompData colored sheets for non-residential data.

• • Algorithms tend to replace human judgment

Yes, AVMs, DCFs, regressions, and “advanced” (but questionable) quantitative methods.

• • Data gathering goes from laborious to electronically instant

Yes, it was the big part of my job, the typist and boilerplate narratives did the most work.  Residential reports were short, simple, even back of the napkin “analysis.”

• • Old cultural/organizational habits and values slow adoption

Yes, our professional organizations, and “trust me” believability standards are the core of inertia toward clearly superior possible outcomes.

• • Regulations, standards, and law lag and impede new methods

Yes, administrative law, built to uphold traditional standards, is based on the appraiser’s objectivity and worthiness/believability – not objective data selection and analytics.

• • New services and products can become available

Yes, new services and products are available:  AVMs, evaluations, BPOs, CMAs, and other non-appraiser valuations.  The asset- valuation analyst community is working toward, reliability scores, risk analytics, fundamental (sustainable) value, forecasting, price validation, and revaluation products and services.

• • Greater commoditization

Yes, and licensing of appraisers has codified the appraisal product.  An opinion is an opinion, no matter where or whom it comes from.

• • Unbundling of products

Yes, what used to be an appraisal front-to-end, continues unbundling.  From the data collection appraisers used to do, to the forms and narrative software, to the ‘hybrid’ products (which separate property inspection, data entry, and even the regression formula and data structuring – all parts of separating appraisal into pieces and parts.

It looks like we got nine out of nine.  Now what?

But there is a countermovement.  Stay tuned as we look at how the individual analyst can be a disruptor and reverse the advantage of technology – data science – to provide a fully integrated product which optimizes the human competency with the algorithmic/computative advantage. The trained asset analyst can exploit technology and lead the future!

Are you in?

Check out my classes and The Asset Analyst Report^(c) at www.valuemetrics.info