I have been fixated on the future for most of my career. At some point the quotation "The best way to predict the future is to invent it" became a core belief of mine. It's funny how many people I come across have a similar perspective.
People with ideas will drive the future of our industry. There are many with ideas. But frankly, ideas are easy. What is more of a challenge is bringing an idea to fruition. Mainstreaming innovation is even harder.
I've always considered myself a futurist-one concerned about and considers the impact of changes occurring that move us forward as an industry.
When I started in the appraisal profession, I began in the assessment side. I shall be forever grateful that I began there. I learned about data. I learned about statistical analysis. I learned how to look at broader markets and more than three comps when examining valuation.
In 1992, I wrote my first article for the International Association of Assessing Officers in their publication Assessment Digest. I talked about opportunities in a time of chaos.
Four years later, I wrote an article for the Appraisal Institute that examined the use of statistics in real estate valuation. I thought it would happen within a few years. I was wrong. The status quo is a tough opponent. The cost of doing nothing is often lower than doing anything, even if the "anything" is demonstrably better. That has always frustrated me.
All of this is relevant as we look towards 2013 and beyond.
I remember demonstrating an analytics product to the Chief Appraiser of one of the biggest lenders in the nation in 2008. He sent me an email the next day and told me that he had been unable to sleep the night before because of his excitement over a product that melded data, analytics and the experience of an appraiser. That institution is gone; the future deferred. I have had five years to think about the reasons why. I suppose I'm an older and wiser futurist.
The truth of the matter is that the champions for change are a critical ingredient in the process of implementing change. As appraisers, Chief Appraisers, and Collateral Valuation managers-we have limited influence on the broader financial infrastructure. The excitement of new analytics, and a broader mandate for change, only gets appraisers so far up the organizational ladder. The same organization impediments continue to stifle change-no matter how attractive-no matter how well intended.
How do solutions emerge within this environment and gain traction within an industry?
The Two Great Trends
Several years ago, the CEO of a large title insurance company noted that "those who control the data will rule". He was absolutely right. But I would go one further-it's not just the data-it is the ability to analyze the data and derive insight into markets and property values. I call it mining and refining data.
For residential and commercial appraisers-there simply has been no process improvement in workflow or analysis in a decade or more. I eliminate from this statement the continuing fine-tuning of appraisal software, which is nothing more than figuring out how to fill out a form more efficiently. Filling out a form faster is NOT what this industry needs. What it needed simply stated-is more standardized data and the ability to analyze that data.
In order for innovation to find success-we as an industry must embrace it. We must, in fact insist on it. I have been involved in product development for more than a decade. What has always been difficult to understand is the dichotomy in between those who "get it" and those who oppose change under any circumstance and are satisfied with the status quo.
The latter can be vocal, and are unaware of the damage they cause to the overall pace of change in the industry.
What needs to change is the appetite and acceptance of new data availability and the analytics would drive greater insight into the nature of markets that ultimately we are changed with analyzing.
Appraisers are the local market experts. Data is ever more readily available. Tools are being developed and will continue to be exposed to the market over the next several years.
What should appraisers do? They should be open to the tools; they need to be open to new ways of thinking about values. They must step out of the form prison that they have been inhabiting for the last decade, and think about the value first-the form second.
Historically, appraisers have thought more about the form, and less about the process of valuation. That is about to change. The concept of interactive valuation models, a concept which was first discussed in the 2010 Appraisal Institute text "Visual Valuation", proposes a more sophisticated interaction between the appraiser, data and analytical tools. No such tools existed until 2009. In 2013, the industry will see the introduction of a half dozen or more.
The future is being imagined, designed and implemented today. Our responsibility as a profession is to step out of our comfort zone and be open to and support efforts to bring true innovation into an industry that has for too long accepted mediocrity instead of meaningful innovation. Faster form filling is not innovation. Once everyone realizes this-our opportunities will increase exponentially.
What will the future bring? will it bring a pool of ever-increasing data, a plethora of tools and new ways of analyzing data? Futurists are already talking about Big Data-data about data. Appraisers have always been at the forefront of using multiple data sources to explain other data about property. That process is about to go into high gear with the greater availability of data, UAD and the transference of analytic techniques from other financial services sectors.
Solutions are being crafted that will dramatically impact our profession. In order to have any chance of success, we must be open to solutions that will enable transformative impact. Working together, all of the relevant stakeholders can achieve meaningful change.
The future is filled with opportunity. Our responsibility as a profession is to be open to, and encourage the innovation that will result in the fulfillment of the promise that is on the horizon.