computer-aided appraising how new technology will spur growth in the appraisal industry

Computer-Aided AppraisingHow New Technology Will Spur

Growth in the Appraisal Industry

Jeff Bradford, CEOBradford technologies, Inc.

Computer–Aided Appraising

What is it?And why do we need it?

Computer-Aided Engineering

Helped engineers solve problems that were previously unsolvable

Bradford Technologies, Inc. - The Leader in Computer-Aided Appraising

Software

Computer-Aided Design

Helped architects design structures that were previously not buildable


Software

Computer-Aided ManufacturingHelped manufacturers produce products that

were previously not possible

Computer-Aided Golf Course Design

Bradford Technologies, Inc. - The Leader in Computer-Aided Appraising Software

Computer-Aided Appraising

What is it?

It is the concept of harnessing the power of computers and technology to assist and

empower the appraiser with capabilities that allow them to produce highly credible valuations

Today…

Appraisers have Powerful Form FillersAnd a lot of manual work!


Time to Complete an Appraisal

• I typically spend 4 to 5 hours on a report not including field work with research and analysis taking up most of the time

• 4-6 hours once I get started• The clerical, research and analysis phases,

plus the actual time spent writing the report usually totals up to about 4 hours


Typical Appraisal Process


Beginning Middle End

Data Gathering Inspection & Analysis Report

4- 6 Hours + Inspection = 1 Day

Manual Process Manual Process Manual Process Manual Process

Appraisal Quality Suffers

Office of the Comptroller of the Currency• 17.6 % of appraisals contained

contradictory information• 35% of repurchased loans are due to

faulty appraisals


Appraisal Compliance Issues

• USPAP• UCDP, UAD• CFPB• Dodd Frank• Interagency Guidelines • Federal & State Independence Laws


Result: Credibility Suffers

Why are Appraisers in this Position?Why don’t appraisers already have

computer-aided appraising technology?

Appraising is considered an “Art”




You would never expect a computer to value the Mona Lisa



We also don’t expect computers to accurately value our home

But Ever Since 1981…

AVM

These Black Box property valuation systems have been getting better and better every year.


Their usage continues to grow

AVM


AVM

“Each month, we provide more than one billion AVM values to lenders, brokers, government agencies, marketing firms, consumers and insurance companies”.

Today Valuation is BIG Business

Property Valuation has become a Science• Team of more than 50 PhDs, economists, and

modelers• Combined with nation’s largest property and

ownership database covering 98 percent of the U.S. population

• Equals “Good Enough” property valuations

Appraising has to be more than “art”


The “art of appraising” has to be augmented by the “science of appraising”

Big Data-AVM Review Systems

Appraisers are being reviewed & scored by systems that utilize massive amounts of data

• Data from AVM indicates the appraised value may be in excess of the neighborhood

• Requests to reconsider comp selection• Requests for additional influence explanation• Requests for comp adjustment support• etc.

Big Data-AVM Review Systems

These review systems have access to more property data and can process it much, much faster than the appraiser.

Appraiser is at unfair disadvantage

Appraising is an “art”Appraising is a “science”


How can we compete ?

Is Mobile Computing the Answer?

More Efficient Inspections

Automatically loadsinto the forms

Fill Out the URAR on a Tablet

See More, Do More - Quicker

We Can Make Process More EfficientBut the Appraiser Cannot Compete

Appraising is an “art”Appraising is a “science”

AVM

Partner with an AVM?

AVMs: Hop on board the train or get left behind?

A V M

Bradford Technologies, Inc. - The Leader in Computer-Aided Appraising Technology

Artificial Intelligence

AVM


Artificial Intelligence


Artificial vs Augmented Intelligence

VS+

Computer

Computer

+

Computer directed

Human directed


VS +

Computer Human directed Strategy

The Winner

Artificial vs Augmented Intelligence


VS +

Computer Appraiser directed Analysis

The Winner




Inspection & Analysis ReportData Gathering

Shortens the Entire Process

Get Rid of This


Software

Reduces This


Bradford Technologies, Inc. - The Leader in Innovative Valuation

Solutions

+

Adds “Science” to the “Art”



Solutions

Closed Black Box AVMs

AVM

Valuations Providers Zillow Veros Collateral Analytics Corelogic LPSMany more


Solutions

Analytics are open to Appraiser

Computer-Aided Appraising opens up the black box and let’s the appraiser drive the process and the analytics


Like having Mr. Data help you value a property

Work with Entire Market Data


Market Analysis


Market Trends & Forecasting


Analysis Dashboards

Statistically Accurate Valuations

0%

20%

40%

60%

80%

100%

120%

140%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

1004/SP

Reg/SP

SCA/SP


Computer-Aided AppraisingWhy do we need it?

Computer-Aided Appraising transforms the appraisal process by letting computers do the

tedious, manual processes and by empowering appraisers with analysis capabilities that were

never previously available. Appraiser are now able to provide valuation

services to the entire valuation market.

Opportunities


Frees Appraisers from the 1004 Box


Software

HELOCs are Big Business

Its expected to continuefor 2, possibly 3 years


New Evaluation Guidelines 1. Must provide reliable estimate of market value 2. Must address property’s actual physical condition 3. Must address market factors that affect value

BPO’s are not sufficient because it does not provide a market value

CMA - Competitive market analysis is not sufficient because it does not provide a market value

AVM alone is not sufficient because it does not include an inspection of the property


Valuation Market Share


AVM25%

$2.5 Billion

BPO20%

$2 Billion

Appraisal55%

$5 Billion

AVMs and BPOs traditionally used for HELOC collateral valuations

Take Back Some Market Share


AVM25%

2.5 Billion

BPO20%

2 Billion

Appraisal55%

5 Billion

It would be nice to put1 billion dollars into thepockets of appraisers

Take Back Some Market Share

50% of BPO’s is 7.5 million valuations- these include drive-by inspections

If 62,000 appraisers divided these jobs evenly, each must do 120 more valuations/year

These jobs pay $125 - $150; Each appraiser could add up to $18,000 to their bottom line.

Appraiser Evaluation Process

Appraiser with Market Expertise

It starts with the “brains” of the operationThe Appraiser


Third Party Inspection




- MLS Sales & Listings- Public Records- Aerial Imagery






Computer-AidedAppraising Technology




EvaluationIts really an appraisal !


Industry Needs New Appraisers

From Appraisal Institute – Age of Appraisers:

Mean Median Mode

MAI 62 60 64SRA 63 61 64

Appraiser Trainee Opportunity


Performed by a machine

Performed by an agent

Appraiser Trainee can do these Evaluation-Appraisalswith Supervisor guidanceAdditional Income to firm

Appraiser Trainee Opportunity


BPO vs Appraiser Trainee Supervisor signature Full Market Analysis Property Inspection

Are Appraisers Ready for the Future?

What One Appraiser Thinks

“Once you learn regression (really learn it) it makes your life as an appraiser so much easier. So much so that you really don’t need that silly manual grid to come up with a credible value

opinion.”


What Many Appraisers Think


It’s the futureand I can't wait

Its nice, but its not for me

Its the beginningof the end for appraisers 2500 appraisers surveyed

after “Building Stronger Appraisals Faster “ webinar

Thank You

AppraisalWorld.com800-622-8727

computer-aided appraising how new technology will spur growth in the appraisal industry

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