This week’s post, “Faster! Faster! Have You Noticed?” is written by my good friend and data analyst, Bruce Hahn, MAI, SRA, ASA. Bruce is the owner of Landmark Valuation and a past president of the Northern California Chapter of the Appraisal Institute. Find him on Linkedin or at www.LandmarkValuation.com.
The world is changing faster! Technology marches forward. Data is collected about anything and everything. Big Data. Real data. Real estate data! Have you noticed – appraisers mostly do what we’ve always done? Does this make sense??
Marketing professionals analyze data of what is bought and sold to effectively trend consumer patterns and improve market products. Medicine analyzes the data of health and disease to advance treatments. Insurance analyzes the data of casualty loss to better measure risk. Business and other industries use Data Science to analyze available data and make predictive models based on the analysis. Yet real estate once again is late to the technology party. Real Estate Appraisal in particular does not embrace Data Science to analyze the voluminous amounts of data readily available about real estate transactions. Have you noticed that we are not providing the best quality appraisal product with this outdated set of practices and procedures?? (Our competitors have noticed.)
Undoubtedly you have noticed that data is much easier to come by (in large amounts) than it was just 10-15 years ago. Yet appraisers continue to provide services based on methods built some 60 years ago. What controlled was data availability, which was far more limited than even just 15 years ago. Appraisal products do not address “all available data”, nor do they provide other information that would be meaningful to clients – and relatively easy to analyze and communicate.
Would it not be more desirable to build and utilize reproducible (and reusable!) models to measure and report market trends that would help a user to understand a more objectively supported market value conclusion. An appraisal report that utilizes Data Science to fully analyze the entire Competitive Market Segment, instead of just a handful of sales, will be far more useful to clients. These tools are readily available in open source software (that means free software!). And learning to use these tools effectively is really not that difficult.
Real Estate Appraisers have the expertise and knowledge about what drives real estate value. But we could provide a more meaningful set of services if we expanded our set of skills to include Data Science techniques. This would be even more valuable!
I learned a great deal from speaking with premier Data Scientists from all over the world in San Diego while attending the RStudio Conference 2018. It was interesting to hear many of them talk about how Data Science is upending and changing many different careers. The message was clear. Embrace data and the technology to interpret it or go the way of the Dinosaur! Appraisers are no exception to this trend!!
Faster, faster – have you noticed that Real Estate Appraisers really need to update their methodologies and skill sets to remain relevant in the near future? It is not too late to start learning about Data Science. In fact it’s a great time to do it! Have you noticed that by increasing your valuation skills to include Data Science, you will increase your expertise…and most likely your income as well?!
I have noticed.