THE RISE OF VALUATION TECHNOLOGY

I have been thinking a lot lately about the dilemma facing residential mortgage lenders in evaluating valuation technology.  Many are looking for faster, cost-effective alternatives to traditional appraisal products or to augment underwriting analysis, quality assurance or loss mitigation. Most established technology-based products, such as commercially available AVMs, rely solely on statistical analysis and are void of the professional judgment a qualified professional appraiser adds to the analysis. 

New valuation technology-based products and services are emerging that do provide a role for the appraiser.  These are often referred to as "assisted AVMs" or AAVMs.  Additionally, new tools for appraisers to incorporate tools that provide them computing power in statistical analysis are continuing to develop, improve and make their way to market.  Unfortunately, many appraisers are not yet convinced that incorporating technology-based econometric techniques into their daily practice is necessary.  In part, I think this is due to an overall lack of education on the topic and cost-benefit awareness as it relates to these tools.

The market demands of today are desperately in need of property valuation processes that include the objective benefits and scientific rationale that statistical techniques and tools provide.  Further, such techniques provide a common understanding of the underlying business case supporting the opinion of value offered by the professional appraiser from which safer, more comprehensive lending decisions can be made.

It is my firm belief that the appraisal profession must develop a stronger base of professional individuals competent in both appraisal theory and practice that is intrinsically fused with technology to increase the depth of data analysis and expand the reach of reporting the appraisal results.  Mathematical pictures are worth a thousand words.