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Technology Can Aid, Not Replace, Appraisers

February 17, 2022 by Appraisal Institute Staff

This post was written by Appraisal Institute President Jody Bishop, MAI, SRA, AI-GRS

New and exciting technology is all around us: we can speak to our cars, use robots to clean our floors, and control our heating from an app on our phones. Big data and artificial intelligence have changed how integrated our lives are with tech. At the Appraisal Institute, we’re hardly tech phobic, in fact, appraisers use technology frequently in their daily work. The typical software packages used by appraisers leverage an assortment of technologies and resources that help appraisers analyze local markets, including practical applications of “big data.”

We’ve seen several companies, however, developing software intended to mimic or supplant human appraisal, with Zillow being the most prominent example. Through their “Zestimate” platform, the company argued it could make real estate investment decisions based on their automated valuation model. When it comes to the biggest purchases in our lives – our homes – an expert who sees, walks, and touches a home to understand its individual value on the market will almost always generate a more credible, reliable opinion of value than what a tech model can offer. At the Appraisal Institute, we say that an appraisal should mirror the market, not speculate on it. When it comes to AVMs, we shouldn’t guess, either.

For so many of us, the COVID-19 pandemic has accelerated the use of technology to ensure safe access to the goods and services we need. In the appraisal profession, this has also been the case, especially in the residential market. To ensure safety of all involved, it makes sense that appraisers would take advantage of the benefits that technology and, in some cases, an off-site appraisal can provide.

Appraisers can rely on hardware such as drones, or applications such as FaceTime or Zoom, to see the exteriors or interiors of a property if it is unsafe to visit a home in person. Appraisers should carefully examine these technologies, however, to assess fraud or data flaw risks and potential liabilities before relying on them.

Ultimately, there are fundamental differences between an AVM and an appraisal. Our Designated Members bring a high level of quality and control that outvalues an AVM, and even in the pandemic, appraisers can use technology to help keep them safe, without technology cutting out all the benefit an appraiser brings to a valuation.

An AVM’s primary assets are relatively low cost and a comparatively quick turnaround time. But you get what you pay for. Think of an AVM as a piece of information about a property, which is based on various public records or multiple listing service data, and little else. Often, both sources have incorrect, outdated, and unconfirmed data that reduces the reliability of the information. AVMs are completely unable to inspect a property to determine quality and condition. They also cannot evaluate complex issues, such as whether a property faces any economic or physical obsolescence that might dramatically impact the salability and value of that home.

A home purchase is a serious undertaking and deserves accuracy and detail that only an expert appraiser can bring. Appraisers use their experience and education to determine which comparable sales to use and what adjustments, if any, to make. They are trained to apply the most applicable methodology when generating an opinion of value, and that training helps ensure a property’s value isn’t above – or below – what it should be. Appraisers dedicate themselves to being lifelong learners – and are constantly learning about the new trends and policies in appraisals through required courses and volunteer trainings.

Appraisal Institute professionals with the MAI, SRA, AI-GRS or AI-RRS designations provide demonstrated knowledge well beyond the minimum that licensing, or certification implies. Tools can be helpful, but secondary, to a well-trained appraiser’s education, experience and ethics.

Buying or selling a home is most people’s largest financial transaction – and knowing the true value of a property is crucial in setting prices or making offers that credibly reflect the specifics of a single home within the market. AVMs such as the “Zestimate” perform most accurately on homes with few updates or upgrades, such as floor plans and in communities where there are many houses of the same style. Yet, what they miss are the details – details that expert human appraisal will identify and which can be the reason why a home’s value is higher, or lower, than its neighbors. The closer you zoom in, from a city to a community, to a block, to your home – the less reliable an AVM model gets.

Even in the pandemic, we continue to believe that a traditional appraisal with a full inspection by our highly-trained Designated Members is the gold standard of security for all parties involved in a real estate transaction. At the Appraisal Institute, we stand by our appraisers, and the significant value they provide to lenders and consumers.

Filed Under: technology and valuation, The Appraisal Institute Tagged With: appraisal technology, appraisals, Appraisers, AVM, big data, data flaw risks, designated appraiser, home purchase, home value, opinion of value, property inspection, real estate, salability, technology, value

How Google Glass Can Improve Appraisal Processes

December 4, 2013 by Appraisal Institute Staff

guest-blogger-header

The following is a guest blog post by Sharon Lynn, vice president, client relations, Valuation Management Group, LLC.

google_glassA new technology, Google Glass, is on the testing market as a new breakthrough from Google. Google Glass allows “wearers” to use a computer anywhere, hands free. Google Glass is worn as glasses, but there are no lenses … only a small computer device with an optical head-mounted display.

What exactly does Google Glass do?

Google Glass communicates with the Internet through voice commands. Tell it to take a picture, and it will take a picture of whatever the wearer is viewing. Simply put it on like a pair of glasses, record and stream what you’re seeing live. Share it online right then and there, or save for later viewing. Google Glass can also answer questions, translate languages and provide directions. [Read more…]

Filed Under: Appraisal Institute Tagged With: appraisal technology, Google Glass, Guest Blogger

Appraising Real Estate in the Digital Age

January 4, 2013 by Appraisal Institute Staff

The past few decades have introduced countless new technologies designed to make life easier. A surplus of mobile apps offers users everything from social calendars and bank accounts to local weather forecasts and GPS navigation … right at their fingertips.

Appraisers also have discovered a number of tools designed to help them become more efficient, and those prepared to adopt technology can maintain a competitive edge while making their work life easier.

blog_image_3_1_12 (1)Because many real estate appraisers spend so much time away from their desks, new innovations in mobile technology enable appraisers to remain constantly connected to online data and tools and to make analyses on-site. New apps are emerging that make this data readily available, such as CoStar GO, which provides comprehensive property information, demographics and analytics, as well as contact information for key people involved in the transaction. [Read more…]

Filed Under: Appraisal Institute Tagged With: Appraisal Issues, appraisal technology, appraiser technology, comparable sales, technology

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