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Big data and cloud computing’s big push
There are changes in store for the appraisal profession, and they’re coming from all profession stakeholders. With regulators holding banks to higher standards, banks are holding appraisers to higher requirements. Appraisal profession-centric technology platforms see more opportunities for innovation that will help bring about an increase in data analytics accuracy and appraiser productivity.
The appraisal profession is underserved when it comes to technology, underlined by the profession still relying on the form as its primary output, a result of GSE’s and others defining the rules and boundaries. Appraisers must recognize that technology solutions tied into the residential appraisal form will not help the appraiser to remain competitive.
There are four big trends impacting the appraisal profession as in other areas of society, these trends lead to a better understanding of what has an impact on valuations.
At a time when laptops and desktop usage has declined a lot in the past two years, appraiser technology is still mostly driven by desktop applications. Computing technology continues to go lighter, simpler and mobile. Mobile is where technology is headed and, with more robust analytics capabilities, combined with the empowering influence of cloud computing, will continue mobile’s trajectory as the obvious technology choice.
The awareness of and increasing utilization of data has exploded. Analyzing these large data sets will become a key component of readiness and competition in the valuations profession. The amount of information and detail culled by businesses and the analytics to understand it all, social media, augmented reality, and machine learning are terms and trends that will be big world-changers for valuation professionals.
With the implementation of Fannie Mae and Freddie Mac’s Uniform Appraisal Dataset (UAD), big data and its collection came to the valuations profession in a big way. UAD would enhance the ability of the GSEs to analyze a database which could grow to more than 100 million properties in 10 years.
With valuations professionals now being exposed to increasing amounts of data, new tools must be developed such as a turnkey set of analytics tools that augment an appraiser’s market knowledge. Although regression analysis has been an effective analytics technique for more than 100 years, it’s only been embraced by the appraisal profession within the last 10 years. Other analytical methods such as non-linear modeling, geographically weighted regression and Monte Carlo analysis, hold big promise in looking deeper into data as a means of gaining more insight into markets.
Cloud computing is the solution for storing, processing and analyzing data if big data’s promise is to be fulfilled. Cloud computing’s importance goes beyond storing and accessing data and programs over the internet versus individual local hard drives. It allows the ability to leverage virtual servers that can be linked to efficiently process and analyze data. Appraisers must harness the analytic possibilities that are possible in the cloud.
What should the profession do?
Traditional valuation professionals should not be dismissed, instead the best of both worlds should be combined: traditional experience and more rigorous statistical analysis. Appraisers who are comfortable with their experiential knowledge and the outcomes of the new analytics, would eclipse the typical valuations professional. This new way to “be smart”, establishes professional acuity and underlines the reality that appraisers must maintain their position as the smartest person in the area of real estate valuations.
Appraisal Buzz. Valuation 3.0 Defining a Future Without limits