Computer-Aided Appraising How New Technology Will Spur Growth in the Appraisal Industry Jeff Bradford, CEO Bradford 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 ComputerAided Appraising Software Computer-Aided Design Helped architects design structures that were previously not buildable Bradford Technologies, Inc. - The Leader in ComputerAided Appraising Software Computer-Aided Manufacturing Helped 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 Fillers And a lot of manual work! Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software 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 Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Typical Appraisal Process Beginning Data Gathering Manual Process Middle End Inspection & Analysis Report Manual Process Manual Process Manual Process 4- 6 Hours + Inspection = 1 Day Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software 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 Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Appraisal Compliance Issues • • • • • • USPAP UCDP, UAD CFPB Dodd Frank Interagency Guidelines Federal & State Independence Laws Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Result: Credibility Suffers Why are Appraisers in this Position? Why don’t appraisers already have computer-aided appraising technology? Appraising is considered an “Art” Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Appraising is considered an “Art” You would never expect a computer to value the Mona Lisa Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Appraising is considered an “Art” We also don’t expect computers to accurately value our home Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software But Ever Since 1981… These Black Box property valuation systems have been getting better and better every year. But Ever Since 1981… Their usage continues to grow But Ever Since 1981… “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” Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software 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 a “science” Appraising is an “art” How can we compete ? Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Is Mobile Computing the Answer? More Efficient Inspections Automatically loads into the forms Fill Out the URAR on a Tablet See More, Do More - Quicker We Can Make Process More Efficient But the Appraiser Cannot Compete Appraising is a “science” Appraising is an “art” Partner with an AVM? AVMs: Hop on board the train or get left behind? A V M Artificial Intelligence Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Artificial Intelligence Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Artificial vs Augmented Intelligence Computer + VS Computer directed Computer + Human directed Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Artificial vs Augmented Intelligence The Winner VS Computer Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology + Human directed Strategy Computer-Aided Appraising The Winner VS Computer Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology + Appraiser directed Analysis Computer-Aided Appraising Shortens the Entire Process Data Gathering Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Inspection & Analysis Report Get Rid of This Bradford Technologies, Inc. - The Leader in ComputerAided Appraising Software Reduces This Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Computer-Aided Appraising Adds “Science” to the “Art” + Bradford Technologies, Inc. - The Leader in Innovative Valuation Solutions Closed Black Box AVMs AVM Bradford Technologies, Inc. - The Leader in Innovative Valuation Solutions Valuations Providers Zillow Veros Collateral Analytics Corelogic LPS Many more Analytics are open to Appraiser Computer-Aided Appraising opens up the black box and let’s the appraiser drive the process and the analytics Bradford Technologies, Inc. - The Leader in Innovative Valuation Solutions Computer-Aided Appraising Like having Mr. Data help you value a property Work with Entire Market Data Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Market Analysis Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Market Trends & Forecasting Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Analysis Dashboards Statistically Accurate Valuations 140% 120% 100% 1004/SP 80% Reg/SP 60% SCA/SP 40% 20% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Bradford Technologies, Inc. - The Leader in Computer-Aided Appraising Software Computer-Aided Appraising Why 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 Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Frees Appraisers from the 1004 Box Bradford Technologies, Inc. - The Leader in ComputerAided Appraising Software HELOCs are Big Business Its expected to continue for 2, possibly 3 years Bradford Technologies, Inc. - The Leader in Computer-Aided Appraising Software 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 Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Valuation Market Share AVMs and BPOs traditionally used for HELOC collateral valuations AVM 25% $2.5 Billion BPO 20% $2 Billion Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Appraisal 55% $5 Billion Take Back Some Market Share It would be nice to put 1 billion dollars into the pockets of appraisers AVM 25% 2.5 Billion BPO 20% 2 Billion Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology Appraisal 55% 5 Billion 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 It starts with the “brains” of the operation The Appraiser Appraiser with Market Expertise Appraiser Evaluation Process Appraiser with Market Expertise Third Party Inspection Appraiser Evaluation Process - MLS Sales & Listings - Public Records - Aerial Imagery Appraiser with Market Expertise Third Party Inspection Appraiser Evaluation Process - MLS Sales & Listings - Public Records - Aerial Imagery Appraiser with Market Expertise Third Party Inspection Computer-Aided Appraising Technology Appraiser Evaluation Process - MLS Sales & Listings - Public Records - Aerial Imagery Appraiser with Market Expertise Third Party Inspection Evaluation Its really an appraisal ! Industry Needs New Appraisers From Appraisal Institute – Age of Appraisers: MAI SRA Mean Median Mode 62 63 60 61 64 64 Appraiser Trainee Opportunity Performed by a machine Performed by an agent Appraiser Trainee can do these Evaluation-Appraisals with Supervisor guidance Additional Income to firm Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Software Appraiser Trainee Opportunity BPO Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology 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.” Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology What Many Appraisers Think Its nice, but its not for me Its the beginning of the end for appraisers Bradford Technologies, Inc. The Leader in Computer-Aided Appraising Technology It’s the future and I can't wait 2500 appraisers surveyed after “Building Stronger Appraisals Faster “ webinar Thank You AppraisalWorld.com 800-622-8727