Appraisers need to use interactive valuation products in order to provide transformative quality, Mark Linné, MAI, SRA, told attendees at the Predictive Methods Conference held May 17-19 in Laguna Niguel, Calif. Several keynote speakers and other presenters examined the role of analytics in providing critical information to clients in the financial services sector at the conference.
Linné, executive vice president of education and analytics for AppraisalWorld, spoke extensively on the need for appraisers to utilize interactive valuation products in his presentation “Implementing Interactive Analytics in Appraisal.”
“It’s not about faster forms or shorter forms” Linné said, “it is about providing appraisals that are credible, transparent and consistent, redefining what the appraisal process should be.”
Linné expressed his conviction that the new class of alternative valuation products (AVP) could provide new opportunities for appraisers. “We can offer more than a 1004, and we need to make our clients aware of that fact,” he said.
He also sounded a cautionary note on the partnership between the National Association of Realtors and LPS, a data provider. “The stated goal is to make brokers the gold standard in valuation. When you take AVMs – analytics without people – and BPOs – people without analytics – and blend them with a database of unprecedented power-you have the potential for a huge and unregulated competitor for appraisers,” he said. Linné closed by stating that appraisers were at a crossroads, saying that the industry needs to evolve to provide valuations services that meet client needs.
In the session “Knowing the Score: Automated Qualitative Assessments in Appraisals, BPOs and Other Valuations,” panelists re-affirmed that the future of property valuation is going to be based in analytics and that business will go to the groups that provide the valuation services that the clients need and are seeking. Brian Quinlan, senior vice president of Capital One Bank, noted that BPOs have increased from a 15 percent market share just a few years ago to a current market share of 50 percent of all valuations.
In the session “Re-Engineering the Valuation Process for New-Era Interactivity and Analytics,” Sue Potteiger, National Appraisal Manager for MetLife, spoke on the importance of data and data standards and how Fannie Mae and Freddie Mac would utilize standardized electronic data. Noting that the appraisal and financial services industries were facing a “systemic process change,” Potteiger noted that the government-sponsored enterprises and Department of Housing and Urban Development will be requiring electronic data delivery by 2011. “(They) have become very interested in what data means and how they can ensure that it is usable in their analytics,” she said.
In the session “E-Renaissance of Appraisal Delivery,” participant Liz Green, principal in rel-e-vant, a consulting services firm, and also the chair of the MISMO Property & Valuation Services Workgroups, spoke extensively on data standards. She noted that data standards transcends simply keying data into forms and is now being used to communicate data-centric, professional appraisal analysis and opinion. One key focal point of Green’s presentation focused on the difference between a “format” and a “reference model.” Green explained that a format describes “what it is,” while a reference model explains “what it means.” The difference is the spark that will create innovation and the opportunity to create efficiencies in the real estate and appraisal markets, she said.
Green also explained the benefit of being about to make better decisions when more robust, accurate data is available. She also emphasized the future economic cost savings and productivity benefits that all appraisers, appraisal management companies, data vendors and their clients will enjoy by having to deal with one “open” standard data format as opposed to the multiple proprietary standards that currently exist.
In the session titled “The Renaissance of Risk from an Agency Perspective,” panelist Deborah Slade-Horsey, vice president of Single Family Risk Policy for Fannie Mae, noted that the current economic environment was nurturing a focus on analytics. “This is a renaissance of judgment and decision making. People can make good decisions from good information,” she concluded.
For more information on the 2010 conference, visit www.pmc2010.com/about/.