Day in the life of a... Veteran Appraiser Contemplating His Industrys Rebirth
Mark Linne of Appraisal World feels the appraising profession he embraced 27 years ago is at a crossroads.
He compares it with how travel agents may have felt when virtual travel agents like Expedia or Travelocity started operating their Internet-only businesses.
"In the course of just a few brief years the whole profession changed." For appraisers it is a mix of challenges that include technology, changing regulation, a very severe economic downturn, even loss of credibility from banking clients.
"Honestly I don't know an appraiser who would say I want my child to be an appraiser. And that is because they just do not see the prospect for appraising as being very strong in the current environment," he said.
Why should the appraising profession be preserved? In his view, one undeniable reason is that appraisers offer what nobody else can match: experience in local markets.
Back when he started working for a small private firm the profession was all about doing the work diligently and analyzing market data. Later when he started working for a lender "there was not the same rigorous analysis on a property that exists today."
Traditionally the basics were in comparing three similar property type sales in an appraisal. Over the years every other day he would get up at around 5:00 a.m. to prepare the files for scheduled field inspections. After the morning inspection of anywhere from one to three properties and a minimum of two to three hours of driving time per day, he would write up the appraisal report details.
The toughest challenge was preparation, he recalls, the need to access so many data sources to get ready for the upcoming day. "Everything was not in one place, and the preparation was critical."
That routine belongs to the past. He last worked in the field in 2008.
In the present and for the future Linne is dedicated to promoting the industry's survival beyond the current crisis. Demand for accurate and affordable property valuation, which many consider "the cornerstone of the mortgage market," is here to stay. And so is the need for appraisals, he says, despite the current confusion about the industry's future.
Nowadays he is drawing on his 25-year experience to run his company, write about his profession, appear as a guest speaker at various conferences and industry forums, or contribute to the Appraisal Foundation's appraisal practices board.
"I just came back from a luncheon meeting with a veteran appraiser who was worried about the multitude of issues appraisers now face and the confusion about what direction the industry needs to take," he says.
"We have the people who have completely panicked and those who have their head in the sand. There is no guidance for our profession as to what we should do."
The Appraisal Foundation is tasked with determining what the educational requirements for appraisers are and how appraisals should be performed through the Uniform Standards of the Appraisal Practices. Issues that have emerged over the past few years suggest many possible directions the industry may take. "They felt so strongly about this that after about 25 years the foundation decided to create this new board to identify issues that need to be dealt with and work within the structure of the appraisal industry to try to figure out how appraisers can deal with some of these issues."
Instead of comparing the three similar property types that were the basis of the traditional appraisal, the new inclination is to use the hundreds of valuations that are available out there. Soon he realized it was not how appraisers continued to do things.
That realization has pushed him to inquire. "I have been thinking about how to bridge this gap" between appraisers in the public sector who use a great deal of data and appraisers on the private side who do not have the same type of techniques and technology. Over time the gap expanded, he says, now "there's some kind of convergence."
First the appraisers resisted using all these tools that the public sector had. Automated valuation models were developed because the crisis increased demand for appraisals to unprecedented levels they were not prepared to meet. Further, new technology made data available.
"Many appraisers hated AVMs. But I have to say that in the early 1990s I thought I could just take my experience and the technology to create a product that the market wanted." AVMs made it clear to the appraisal industry that "others" could perform valuations and develop needed tools.
In the past decade he has been thinking about what the industry should change to improve itself so it can successfully survive in the future. "How we answer that fundamental question is more important than any other question that we face right now," he says.
"Everything I'm doing today revolves around: What do our clients want? And they want to know what's happening in the market."
He recalls how at a predictive methods conference in California some participants were forecasting that "appraisals are over" because nobody wants them to be professionally done anymore, if they can have AVMs and broker price opinions. To Linne, "It is the renaissance of valuations."
Who will be proven right?
Since its first board meeting in June, the Appraisal Foundation expects to spend about three years or less to implement needed changes, he says. "I think it's our choice. Either we figure it out as a profession and come up with the right tools, or we become obsolete and irrelevant."
To Linne the industry has all the information and technology it needs, plus new Fannie and Freddie requirements on e-data transferring in the MISMO format and use of analytics. All these powerful tools are available, even though many appraisers are not using them. And "the profession cannot survive if it is paper based" in times when the whole mortgage industry is aiming to go paperless.