have held several presentations lately regarding the profession of the appraiser. I have talked about AVMs, software in the valuation industry, valuations for the purpose of secured lending, the market approach in valuation, etc. The underlying topic in all of these presentations has been “the appraiser at the crossroads”. No matter what I talked about or lectured on, there was always a comment, sometimes even more, about the appraiser and how she/he was at a crossroads, at some point in history, where the profession, as a whole, must decide in which direction it will go.
At a crossroads we are, how long we stay there depends on each appraiser, and we have been at these crossroads for way too long of a time. So, it depends on the appraiser, it is up to her/him to finally make the decision in which way they go. The more appraisers that go in one direction, the profession will follow. It is time to decide.
By the way, I have made my decision. What are you waiting for?
To get back to the topic of this blog. But before we do that, let me start off with a stupid joke:
Q: What is an appraiser?
A: She/he takes your wrist watch, charges you a fee, tells you what time it is and then gives back the watch.
I know it’s a stupid joke and definitely not true, but that is the way people, clients, see us. Not all of the time, but a surprisingly lot of time they do. It’s up to us to change that perception, but that perception exists and is very important in our attempt to explain the role of the appraiser today. We can’t talk about our role if we don’t mention how people perceive us.
Our profession is not useless and the service that we produce is not something that is not needed or something that anybody else can do. It’s a serious profession.
The other day a young, new colleague, she just began working in the company, asked me: “How long will it be before I can do a report, completely, from start until the end, and do it by myself, with no help from anybody?” In all honesty, I wasn’t really sure what to say. I kind of gave a vague answer of something in line with: “We will see as you go along, there is no fixed timetable” or something like that, but in the back of my mind I had something to the count of, let’s say, two years. I never think in terms of schedule for gaining experience, some go faster, some go slower, but two years seemed to be a nice, realistic number. What that number really meant to me was that it takes time to learn this profession, it’s not something you pick up along the way. It’s a profession and a serious one at that.
Don’t forget, real estate is an important industry, one of the most important, it may be the most important investment many of us make in our lifetime. Yes, appraisers are a profession.
A few days after that, I asked a colleague, with a little bit more experience, what he thought it would take for him to gain the experience and knowledge to do a valuation from scratch, by himself. His answer was 2 years, that’s what his goal is. The number, again, is not what is important, it’s the fact that he realizes that this is not something that you can learn in one sitting or a little more than that. He knows that it is a science and it takes hard work to learn this unique profession that truly is multidimensional.
This brings us back to the stupid joke. It’s serious work, so why don’t we show and prove this to our client? It’s our responsibility to do this, for ourselves and, more importantly, for those who follow in our footsteps. Nobody doubts a doctor, a lawyer, an architect, an engineer, but everybody doubts the appraiser.
Don’t expect an answer from me here, all that I am saying is what the perception of the appraiser is. It is the moral obligation of each and every one of us to do something to change that perception.
In today’s age of massive and fast transition into a digital age, our role is changing, but not all appraisers are in line with this. What appraisers are still doing, not all, but many, is grasping on to the old role and neglecting all advances in technology that can help us. They are doing everything that they can to prove that this is the way it should be done. Instead of that, we should be grasping the technology that we have, helping develop the technology that we need. All of this for the simple purpose of providing a better service.
I am not talking about the demise of a profession, all that I am saying is that we have to change, we have to grasp technology and, most importantly, we have to provide a better service. We do that with technology. It’s the only way.
Very often, within the profession, the question of AVMs arises, will they take away our job. I am one of those who says this is totally ridiculous. It’s not going to happen. It’s not going to happen under one condition, and that is that we accept our new role, start using technology and change our profession. If we do that, then AVMs will not take away our jobs, instead, we will be able to grow our profession, but in a better and more sustainable way, so that nobody will ever again question the existence of this profession. Nobody will think of us as somebody who takes their watch and tells them what time it is.
There is no need to worry about where we are going as a profession, it’s up to us to define that path, instead of it being defined for us.
On several occasions, I have stated that it is the technology that gives us the where of real estate and it is us, the appraisers, who give us the why.
What does this mean, specifically?
AVMs are here to stay, like it or not. But somebody has to operate those AVMs, and that is not a job for just one person. Somebody else may have to verify the data, also a job for several people. What about collecting the data so that it is useable, somebody has to do that to. Who should be doing that? The appraiser, if you ask me. Nobody else can do a better job. And who develops the ATMs? Programmers, yes, but who creates the entire system? The appraiser.
There will be jobs for us out there, just a little bit different, but they still will be there.
Besides the AVMs, what about the Big Data? What is going to happen with that? Who is going to analyze that? The appraiser.
The jobs will be there, but only if we, the appraisers, realize that change is already here. Data, technology, all that is out there, is only as good as the appraiser is. All of these tools are there to help us and not replace us.
My old boss once told me that a valuation report is not finished until you sit back in your chair, grab a cup of coffee and look at the screen, from a distance, and ask yourself a few simple questions:
- Did I take everything into account?
- Would I pay that much for that property?
When you do that, that is when your report is finished. What he was really trying to say was that you have to take the time to think about your report. We are being paid to think and sometime that is what we do the least of. We read through all the documents. Look at the property planning. Do our own market research. We go through the number crunching. Write up a report, but do we really spend enough time on the report, just thinking about it. Sometimes we just go through the routines. That is not enough. It’s time to think. If we use the technology wisely, it will give us the data to think about and the time to think.
We really should be trying as much as possible to use all of this new technology that is available to us, instead of trying to downplay its importance. The only reason to do this is that it will give us the time to think and the data to think about. I can’t stress strong enough how important this is. Once we do that, I see no problem, what so ever, in changing the perception of us, the perception of the watch and the time.
With the knowledge that appraisers do have, along with the use of technologies, the appraisers can be a driving force within the real estate industry, I see no reason why not. This is what rounds out the what and why of the real estate industry.
Just maybe, this is the key, for this profession, to be able to clearly represent itself and the job that it does, so that nobody else will doubt them.
I have had several young people working in my office who want to become appraisers. These are collage educated people, usually without and any experience or with limited experience. The less the better I say. I really do. The education, that they have at times has no similarities with real estate, let alone valuations, but they want to get into the business, for various reasons, none of which is important at this point. They start out. Some advance, some become great appraisers, others quit after a period of time. The ones who, let’s say make it, or, better said, the ones who want to continue, have two things in common. One is that they realize that this is a profession and, if you want to be good at it, you have to go through training, continual education and to gain experience. In some ways it’s like finishing another collage. There is that much to it. The sooner the appraiser realizes this, the better for them.
The other thing that they all have in common, which is something that I have been giving a lot of thought to lately, is that they all have a wide range of knowledge and, more importantly, a wide range of interests.
If we think of somebody with an engineering background, they usually have a poor economics background and if somebody has a good economics background, it’s followed by a poor engineering background. I take these two backgrounds as examples since they may be two of the most likely to be involved in the appraisal business.
Let’s say that this is true, which I believe it is. You have a profession, that requires a wide range of knowledge and interests. A profession, that if you want to be good at, you more or less need two degrees, one official and one gained through work, education, experience, etc. How many professions have these types of requirements? And yet, how is this profession perceived? Go back to the story, the stupid joke about the watch. Does it really have to be so? Not really, but this is just another one of those crossroads that we have talked about. A little self-promotion doesn’t hurt and in this case is much needed.
And in the end, where to with the profession? What next?
We don’t have a great standing in society, at least not where it should be. People don’t understand what we do, thus they don’t respect it. That is more or less, our fault. We have to improve that standing and we have to do that immediately. We have to show what we do, how we do it and why we do it. And we also have to do all of that accordingly to what is happening in our society. In other words, use technology.
One more thing. It’s not just the value, the value is a by-product of our hard work. There is much more to our work than just the value and only a few people seem to know that.
We need some self-promotion. If we don’t do it, nobody else will.
Plain and simple, no other way of putting it, we have to change. The profession has to change. The appraiser has to change. The way we do business has to change. The way we write our report has to change. Everything has to change. It can only change if we use technology. Use what is available and help develop what isn’t.
Can it be said any plainer?
I see the appraiser today as a consultant. Not just a number cruncher, not someone who comes up with the value, but someone who understands real estate, who knows the what of real estate and, more importantly, the why. The appraiser can do this because, besides the knowledge that she/he has, they understand today’s technology and they know how to use it.
Even more, a step further, I see the appraiser not only as a consultant, but also as a counselor. What is the difference between a consultant and a counselor? A consultant tells you what they think, a counselor tells you what to do.
To repeat myself, once again:
Technology gives us the what of real estate, the appraiser gives us the why.
But the lesson here is, there is no why without a what.