An email subscriber’s question:
Sent by Alfred O. How do we make the appraisal profession great again?
We know WHY we do this. Appraisal means something to us. We have something to give.
We’re here because we care about this profession and believe it’s the best answer to what our society needs. Appraisers have the knowledge, the education, and familiarity with the markets. We are “subject-matter” experts.
To answer the question HOW – we look at what has happened for us to lose our professional esteem. We’ve been called a “cottage industry” by at least one judge.
To figure out how to fix the appraisal profession, we must look at what went wrong.
Appraisal was mostly created in the 1930s to fill a need. The primary data source was the deed records at the local county courthouse. From that basic information, the appraiser improved the data by making phone calls, and visiting brokers, buyers, and sellers. We attended chapter meetings to trade information, and help each other understand our market areas.
Then technology happened. First, print MLS, then in the 1970s — electronic MLS! Then in the 1980s we got print commercial data, then later electronic comps. Our hard work gathering sales data got easy. Wonderful. – – Or not?
It also got easy for others who had different expertise. Now they now could get “our” data. AVMs, BPOs, Economists, Accountants and the monolithic data corporations themselves. Some of these people weren’t bound by tradition. A culture, a habit, a market expectation of three comps on a grid, or six comps in a sideways spreadsheet page. They simply use the available competitive data, whether it was 2 sales, 20 sales, or 220 sales. They know that more information is better than less information. How revolutionary.
That’s what happened. That’s what’s going on.
So what is the difference, technical speaking?
The technical difference is the appraiser education, the entire curriculum, our fundamental books, even our journal articles start with one premise, one basic assumption . . . That the appraisal process starts with “pick comps.” Your comps should be similar, competitive, and comparable. Be a good boy or girl — pick your comps carefully. Make sure they’re similar.
But not one word about (technically), what is a good comp? All we hear is that a comp should be competitive. And similar. And able to be compared . . .
Our competitors figured it out. The data is cheap. It is complete. Computers compute. Delivery is cheap, fast, and ‘good enough.’ Appraisers cost more, are slower, and also good enough.
What does the world need now? It needs the power of data science, of modern algorithms, reliability scoring, reproducible work, and oh yeah – our subject-matter expertise. This is what the others don’t have – yet. It’s a race. But where are those darn starting blocks?
I will add more specific thoughts in another blog. Thank you, Alfred O. for the email and the great question.