Shake It Off and Step Up! - David A. Braun, MAI, SRA
I have a 2010 New Year’s Resolution for the appraisal profession: “Shake it off and step up!”. I have seen a lot in my 32 years as an appraiser. Take for example this tidbit from the last issue of the Tennessee Association of Realtor’s Newsletter: “A licensed real estate agent can by Tennessee law testify to the value of property for court purposes.” I watched for 10 years as lenders relied on millions of AVMs and Tax cards which did not meet the minimum federal lending regulations. I often feel like I have fallen down the same hole as Alice, and am now in Wonderland. I agree that things are more than a little skewed in the world of the appraiser. However, I continue to say that the little guy (or gal, just a figure of speech) should only worry about what they can change, and not worry about what they cannot change.
I wrote and presented a white paper at the Appraisal Institute National Summer Conference that took place in Washington DC. This paper addressed the shift in lender use from comprehensive appraisals to less costly and quicker collateral assessment products. Here is a small portion of that paper which addresses the appraisal industry’s inability to produce a competitive low cost appraisal product:
"The appraisal industry must never be inept again. Whatever the cost, we must be able to serve our market. If we are to achieve this goal, four objectives must be reached by each appraisal company over the next three years: (1 our work product must improve, (2 the dollar cost per appraisal must be reduced, (3 our turn-around time must be shortened, and (4 we must be able to handle more volume."
This seems quite timely, don’t you think? Did I mention that this conference took place in 1997- over a dozen years ago? It would take a major world recession that started with a housing crash to change the system- No wait that did happen two years ago and lenders are still using BPOs.
Premise Number 1: Our political system is so inefficient that the illogical structure that appraisers work in is not likely to fix itself any time soon. So, if change is to occur it will have to be from within the profession not from without. Appraisers will have to simply shake it off and step up.
My suggestion is for each and every appraiser is to embrace and improve on the proven categories of appraisal best practices:
- Strong Moral & Business Ethics
- Good Judgment
- Hard Work Ethics
- Knowledge & Training, and
The AQB has made a great start for the profession by increasing both the qualifying and continuing education requirements. Each of us can improve on most of the best practices listed above. The good news is that a career is like a long journey, it is not judged by the first few miles. While each of these best practices is important, I feel that the automation of the valuation process and the related knowledge and training continues to be the weakest link in the appraisal profession today. This is not to be confused with modern form filling which has become very efficient over the past decade. It appears the profession is beginning to move in this direction as many appraisers are beginning to learn how to use a spreadsheet.
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I attended an Appraisal Institute conference in Las Vegas in 2000. My company Automated Valuation Technologies, Inc. was a vendor. I brought a CD full of useful Excel templates to sell and I demonstrated an expert system valuation application that I had programmed into Excel. Things did not go well as 98% of the appraisers first question was; “What is an Excel Spreadsheet?” The use of the word “Automated Valuation” in my company name and the expert system were misconstrued to be an AVM that a lender would use resulting in this comment; “You’re an appraiser why would you invent an AVM to put us all out of business?” To add injury to insult my pocket was picked on that trip as well. My wife and I spent the first night trying to get the hotel to let us have our room and closing all of our credit card accounts. My $700.00 gambling money was gone! But, I am pretty sure that was not coming back with me anyway.
I now find that most appraisers have evolved from that ignorant, obstinate state of mind I faced in 2000 into proponents for advances in the automation of valuation process. This is good for me because I have never stopped working on the needed (low end) USPAP compliant collateral product. In fact, I have recently made a commitment to complete the last 10% of what I have dubbed the Millennium Project due to the encouragement of Richard Frank and Carol Rockman of the National Valuation Service. This project basically combines (fuses) the appraiser’s knowledge, experience, and market savvy with regression analysis to produce a low-end USPAP compliant appraisal. The final product is called “Fusion” for obvious reasons.
You can read about the Millennium Project and see other automated valuation tools at http://www.automatedvaluationtools.com .
Premise Number 2: The appraisal industry’s needed changes will first have to come from within.
I would like to close with the following story:
A FARMER’S PARABLE - Author Unknown
A parable is told of a farmer who owned an old mule. The mule fell into the farmer’s well. After carefully assessing the situation the farmer sympathized with the mule but decided that neither the mule nor the well was worth saving. Instead he called his neighbors together and told them what had happened. He enlisted their help to haul dirt into the well and to bury the old mule to put him out of his misery.
Initially, the old mule was hysterical. But, as the farmer and his neighbors continued shoveling dirt on his back, a thought hit him: Every time a shovel load of dirt landed on his back, he would shake it off and step up. He did this blow after blow. “Shake it off and step up...shake it off and step up...shake it off and step up,” he repeated to encourage himself. No matter how painful the blows or distressing the situation seemed, the old mule fought off panic and kept right on shaking it off and stepping up. It wasn’t long before the old mule, battered and exhausted, stepped over the wall of the well.
Although it seemed as if the dirt would bury him, it actually served as his way out of this dilemma- all because of the way he handled his adversity.
As it is with life: if we face our problems and respond to them positively, and refuse to give into panic, bitterness or self-pity, the adversities that come along to bury us have the potential to benefit us instead.