Setting The Stage

TheMReport — News and strategies for the evolving mortgage marketplace.

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Th e M Rep o RT | 27 Feature J ordan Petkovski considers himself a pragmatic kind of guy. So when you ask him about the future of the appraisal industry, the new chairman of the National Appraisal Congress doesn't give you the "rah-rah, we don't need to change" spiel. Nope, Petkovski, ever the pragmatist, says the industry has two options: Sit back, do noth- ing, and have the industry's jobs usurped by the Automated Value Model (AVM); or become a more dynamic, flexible industry that adapts to new techniques and new technology. It's that simple. "There needs to be an evolu- tion," said Petkovski, VP and chief appraiser for Detroit's TSI Appraisal. "We're essentially doing today exactly what my mentor did 40 years ago. If we do nothing, I think there is a pretty strong possibility that it does go the way of the Dodo bird in the coming generations. I don't see it surviv- ing if we don't figure out how to insure our own survival. The only way to do that is to adapt." Critical Crossroads R eports of the death of the appraisal industry, to bor- row liberally from Mark Twain, "are greatly exaggerated." That does not mean, however, that the profession isn't in trouble. In fact, many believe the appraisal industry is sitting at a critical crossroad with its future hang- ing in the balance. To avoid becoming yet an- other industry unceremoniously dumped by technology, appraisers must make peace with technol- ogy and accept that high tech is their new reality. They will also have to rethink the way they conduct business. It will be a case of out with the old, tried and true clipboard and in with new, sleek iPad and smart phone. Appraisers and appraisal man- agement companies also have to end their debate and develop a new list of standards. If they can't bury their differences, outside entities—banks and other lenders—will create the new rules and set the playing field. "My biggest concern is that if we continue to not work together, then somebody else will solve the problem for us," said Erik Richard, CEO of Landmark Network, Inc., in North Hollywood, California. "It's time for the people who care deeply about this industry to take control of its branding and speak about the opportuni- ties they have together." Finally, the industry is graying rapidly—the average age of an appraiser is hovering around 55— and its ranks are thinning. The profession needs an infusion of bright, young, tech-savvy talent and a new way to train them. If the appraisal industry does all of those things, the future actually looks pretty darn good. But if the industry doesn't adapt to the changing times and technology, appraisers will be left behind, reduced to glorified box checkers. So the question remains: Which fork in the road will the industry take? "Appraisers should act as subject matter experts," Petkovski said. "But we have to understand that the nature of mortgage lend- ing and nature of the collateral evaluation piece of the process is changing. Time is of the essence right now for us to figure out how to survive." Survival of the Fittest A lmost every profession has undergone some form of metamorphosis over the past sev- eral decades. Industries adjusted to the changing world of technol- ogy in order to survive. "Back in the 1970s and 1980s computers came in and started transforming industry," said Jeff Bradford, CEO of Bradford Technologies in San Jose, California. "All of a sudden there were computer-aided engineers and computer-aided design- ers and manufacturers. It just permeated every industry, and people have taken advantage of what a computer can do." But appraisers didn't catch a ride on that wave of technology. Even now with new laws and an avalanche of data and analytics recasting the mortgage industry, appraisers continue to do their job the way it has always been done. "The forms and the way in which we communicate our findings haven't changed very much," Petkovski said. So why is the appraisal pro- fession so resistant to change, especially when it comes to technology? It's a matter of art versus science. Since its inception, many people have considered apprais- ing a form of art. Inspectors visit a property, ask a variety of questions, and take photos of the house inside and out. Then they go back to their office and, relying on their training and exhaustive hours of experience, write a report that supports the value they have settled on. "So the idea that kind of per- meated the industry was that you would never ask a computer to value the Mona Lisa, so how are you going to get a computer to value your home," Bradford said. "So the appraisal industry has kind of gone down that road." "Appraisers sometimes hide behind 'appraising is more of an Life Support Some may argue appraisers are going the way of the dinosaur, but there's evidence that new training and updated practices may breathe new life into the dying field. By Bob Calandra

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