Sell your appraisal judgment
As a commercial fee appraiser or chief appraiser in a bank, what’s the answer to the question, “What value do appraisals provide? Some might answer, “Because we have to order them.” But there’s a reason “you have to.” Usually the reasons include words like “real estate bubble”, “foreclosures” or the catch-all phrase, “financial crisis.” It’s a lot of legal heartache when real estate loans go sideways. It’s a lot of money. What we do from a risk management function is a big deal.
Judgment vs. Accuracy
I’ve been hearing about commercial automated valuation models (AVMs) for about 20+ years. As technology gets better and closes in on delivering pragmatic solutions, many appraisers are afraid. The fear that their livelihood will be eliminated by an algorithm.
As a commercial appraiser, I get it. We hate:
- To have our judgment questioned.
- If someone limits our discretion.
- When asked to provide excessive support documentation.
Move from fear to process
So, what’s the answer? A mindset shift. Don’t view technology such as algorithms or automation as threats. Start with tools for commercial fee appraisers such as, DataComp (comp database), Edge (report writing) and Manager (workflow). On the bank side, you deserve to have customized appraisal and environmental workflow that works the way you do – YouConnect.
“Leverage software to automate the mundane, increasing the time you spend on judgment.”
A great example when appraisers get stuck is when their bank client asks for evaluations. The immediate appraiser response is to think it’s not profitable and that they’re giving away their valuation judgment too cheaply. Asked differently, how many pages does it take for you to sell your judgment? Is your value self-evident with 10 pages, 80 pages or 200 pages?
Client focused mindset
A more productive mindset would be to listen to your client’s need and provide it. Backfill the hourly profit margin with well-implemented software and processes. It’s interesting that many commercial appraisers lament about low bank fees, but don’t truly know what their brothers and sisters inside the banks have to deal with. Overwhelmed appraisal volume, late reports, problematic reviews and lender pushback. There’s little time for vacations.
Increase appraiser self-esteem
If appraisers think that their value is only worth $2,000 for an appraisal. Then it’s worth $2,000. Not a penny more (in their mind). David Sandler, the sales guru, says it best. “You’re selling your product today for exactly what you think it’s worth.”
Your value doesn’t come from comps
Bank reviewers struggle with 150 page reports of varying formats. If the entire commercial industry went to the same format, would your judgment be weakened? If you had a poor format to begin with, would it be improved? If the banks leveraged your market data, would the value of your judgment be diminished?
Is your value solely tied to confirming sales and leases comps? If the largest comp data player actually confirmed data like appraisers, would we all be out of a job? I don’t think so. Not by a long shot.
Sell your appraisal judgement, leverage the benefits of automation. You be the judge.