Opinions of Value

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A Look Inside AI Education: Desktop Appraisals (Bifurcated, Hybrid) and Evaluations Seminar Preview

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As developers and reviewers of the upcoming “Desktop Appraisals (Bifurcated, Hybrid) and Evaluations” education seminar, Appraisal Institute Vice President Sandra K. Adomatis, SRA, and AI Past President Alan Hummel, SRA, provide an overview of what attendees can expect to take away in this seminar preview. The pair also dive into the value and relevancy of desktop appraisals to residential and commercial appraisers right now.

Check out the video discussion below!

Sandra K. Adomatis, SRA (SA): Hello everyone, thank you for joining us today as we explore some of the upcoming Appraisal Institute educational offerings that you may be interested in. As you may know, my name is Sandy Adomatis, SRA, and vice president of the Appraisal Institute. I must admit, I’m very excited to bring this information to you today because I’m the developer of the seminar!

For anyone who’s ever taken Appraisal Institute educational offerings, you know that the offerings are rigorously researched, developed and reviewed by practicing appraisers using real-world experience in the residential and commercial space. Today I am joined by Alan Hummel, SRA, and one of our past presidents of the Appraisal Institute, to discuss the Desktop (Bifurcated, Hybrid) and Evaluation seminar. Alan was one of the reviewers for the seminar, and I am so excited that he’s here today. Before I turn it over to Alan, I’d like to give you a little overview of the seminar.

According to a recent news release from Fannie Mae, desktop appraisals are going to be growing in the numbers requested. It’s not going away, so residential appraisers need to have all the information they can to develop a credible report. Desktops are also valuable on the commercial side as well. Appraisers have many questions about them that are addressed in this seminar to provide more information and clarity about this business service…The seminar gives the pros and cons that were voiced by appraisers we interviewed before developing the seminar.

At the end, you’ll have all the information you need to make a good business decision. We’ll review the expectations of alternative appraisal services, their potential uses of appraisal standards as they apply scopes of work and liability concerns that we hear from many appraisers around the country on the residential and the commercial side.

Alan helped significantly in the development of the seminar, so let’s hear from him. Alan, could you share your views on the relevancy of desktop appraisals and evaluations as it applies to appraisers today?

Alan Hummel, SRA (AH): Absolutely. Thank you so much, Sandy. The principle of change is a concept that we as appraisers deal with on a daily basis. We’re providing our services, and as the world changes, so do the process of methods used by so many businesses, including our own appraisal profession.

This seminar is designed for both residential and commercial appraisers to understand…  the relevant assignment characteristics. What do they have to do in order to make that decision? You indicated to participate in desktop appraisals and or evaluations — it’s interesting because part of what we have to understand are those significant federal and state laws that govern the desktops and evaluations used by our clients and all kinds of lending decisions.

SA: That’s great information, but how did how does it become valuable to the everyday appraiser?

AH: First, it helps the appraiser understand the “how” and “why” lenders use these types of assignments within their lending processes for us to better understand what the lender is trying to accomplish. We can make certain that we are providing our services in a manner that’s beneficial to them.

Secondly, learning to identify the appraisal standards, the banking guidelines, the lender requirements, the state requirements… in order to develop a report that meets our USPAP in Appraisal Institute standards for development and reporting. It helps to differentiate between traditional appraisals from evaluations and desktop valuation services.

SA: That’s great information. You’ve touched on some excellent points here, Alan. I’d like to… tell you a couple things that I’m excited about when I was developing this seminar and when I’ve taught the seminar. What I’ve learned from this is that the seminar provides information that is necessary for an appraiser to make that informed decision like you’ve talked about and be able to produce a credible report with confidence that we’ve done the job right. I think this seminar offers that informed information. For us, it’s a big takeaway I see when offering this class as an instructor.

Secondly, the questions and the feedback that you’ll receive from other appraisers in the classroom that are already offering these services that can add valuable information to the text material in the seminar. I’d highly recommend this seminar to appraisers on [both] the residential and the commercial side.

I’m curious — what excites you about this class?

AH: Very similar to what you’ve mentioned, Sandy. The seminar does not advocate for or dissuade appraisers from doing these types of services. It provides examples. It provides the acknowledgement of the rules and regulations that, if an appraiser decides to provide these types of services, they can make a professional and business decision… and maybe, what times they wish to provide these services for what type of clients. But especially, it helps them gain the knowledge necessary to keep them safe and to mitigate liability when providing these types of services.

SA: Wow, what an important point to leave this video on. Yes, that is our goal. We’re not advocating for, or against. We’re just giving you the facts and letting you make the decision that’s best for you.

More about AI education offerings:

See seminar details and registration offerings here.

Learn about other education offerings from the Appraisal Institute here.

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Technology Can Aid, Not Replace, Appraisers

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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.