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Digital disruption is what happens when new data technology and new business models crash into the old goods-and-services ways of doing things.

But of course, this cannot possibly affect appraisal.  After all, appraisal is about judgment, sharpened by years of experience, education and training.  But it’s worth a look.  Is it possible?

Several causes of data disruption include:

  1. Sparse data becomes data overwhelm.
  2. Delivery goes from paper to internet.
  3. Algorithms displace judgment.
  4. Data collection becomes instantaneous.
  5. Old habits and beliefs obstruct change.
  6. Bureaucracies frustrate innovation.
  7. Standards and regulations restrict new procedures.
  8. Competing products and services emerge.
  9. Custom services become commodities.
  10. Products become unbundled.
  11. Adjacent and new services or products attach.

Upcoming editions of The Asset Analyst Report (TAAR) and The Collateral Investor Report (CIAR) will investigate how each of these affect individual appraisers, as well as lenders and investors in real assets.

For now, we will take a “checklist” look at each of these to see if they apply to the world of traditional appraisal.  Here are my personal experiences with each of these disruptions effects.

  1. When I became an appraiser, the challenge was to scratch together 4 or 5 ‘comps.’
  2. Hard report copies became pdfs or data streams.
  3. “Supported” adjustments replaced adjustment cheat sheets.
  4. Comp collection was tedious, now takes just seconds.
  5. Judgment-based habits and beliefs trump Evidence-Based Appraisal©.
  6. All related agencies and organizations protect and promote old ways.
  7. Standards enforce believability, not useful reliability.
  8. AVMs, BPOs, CMAs, evaluations, and unlicensed ‘valuers’ take market share.
  9. Personal services have detached, and become a form fill or spreadsheet tangle.
  10. Hybrids, home inspections, risk assessment, and economic forecasting are separated.
  11. AVMs have FSDs (forecast standard deviations), AMCs attach to the transactions.

These are things I have personally witnessed in my time as an appraiser.  To me it looks like eleven out of eleven.  Worth a further look!