Are Robots Replacing Appraisers?

3D Render of a Robot searching for a house

As I have worked with appraisers, I have noticed a common fear that computers and algorithms will eventually replace appraisers altogether. I can understand the fear especially as technology is becoming more and more advanced. To some extent, big data has already replaced appraiser roles, but I believe appraisers are, on some level, ultimately irreplaceable.

Computers can only use algorithms to predict price. However, they cannot distinguish between price and value. Appraisers look at value in a way that cannot be determined by a machine. For example, big data cannot tell if the house is trashed or if there was something wrong with the financing. Additionally, a computer will likely be unable to evaluate houses  that are unique, at least in any credible way.

However, technology and algorithms are changing the appraisal world, and that can be understandably scary. Rather than becoming paralyzed with fear, it is important that we use it to inspire positive change in our own businesses.

Big data is not the future, it is already here. For example, if you are using an MLS system, then you are already incorporating big data into your appraisal process. Algorithms can help you be more accurate in interpreting this data. Embracing technology and marketing yourself as an irreplaceable element of the appraisal process with help insure that you are successful as technology use increases. I believe that the appraisers who will ultimately thrive in the future will be those who are able to adapt to change and incorporate big data into their appraisal businesses.  

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 258 Big Data and Asparagus

8 thoughts on “Are Robots Replacing Appraisers?”

  1. The GSE’s are starting to see the issues with BIG data and how its not as good as they thought. It can predict change is reliant on data that’s contributed. Helpful if you have a person driving the computer.

  2. Dustin is exactly right in the future there will be a need for appraisers but not in the role we play today. The way it is going human appraising will only be used for complex and high risk properites (the hard ones). I am already seeing it in my workflow and I know alot of other appraiers in my area and they all say the something most of what they are doing is complex assignments. We all joke and say I thought it was just me but I am finding out it is most appraisers that do high volume. Most of the easy ones are getting appraisal waviers based on the borrowers credit worthiness. My wife had 4 transactions in December and 3 of the 4 got waviers (all the easy ones). There will be human appraisers but the volume will be way down and the properties will complex and rural. You combine that with record numbers of people trying to enter the field it appears it will be much harder to make a good living as a real estate appraisers in the future. The best and brightest will always thrive it is the middle that seems to get pushed out. My advice to anyone in the field or looking to enter is become a skilled professional with the education to back it up and you will always be in high demand no matter what the goverment or computers or robots do.

  3. If overnight every appraiser started churning out 4 to 9 appraisals a day like Dustin, forget about the robots replacing appraisers, as appraisers will replace appraisers. What could possibly go wrong if 80,000 appraisers were cut to say 10,000? Cut that 10,000 in half with “Machine Learning”, over the next few years, and the appraiser speed bump will become a mole hill.

    On a side note Dustin, would you recommend a traditional No. 2 pencil, or a mechanical pencil? Do you have a laser disc I could buy covering this topic?

    Seek the truth.

  4. I believe that if you have really good data, a computer can do a better job at appraising than most people. The problem is that data sets are not complete and are full of errors. Yes, Fannie knows there is a view, but they do not know if that view is from the bathroom upstairs, panoramic from the main floor dining room, includes both the river and mountain, is protected from trees or buildings being able to block it, etc..? Once data is that good for most factors that influences marketability (including condition), the appraiser will be inferior. Do you think appraisers are needed to gather better data or can machines or lower paid data collectors do it? That is yet to be seen.

    1. Good data ages very quickly Gary like day one when the new owner starts putting in landscaping, hardscape, solar, pools, etc. Fannie does not know if a property has a view, meaning they only know what a collection of appraisers are telling them, and if you work in a big city and use A la mode (peer sharing), then you often see the same comp used 20+ times with all 3 descriptions often being used (Neutral,Beneficial,Adverse). Fannie does not manually read every appraisal report (description of view characteristics), but simply compares your representation/opinion to a panel of your peers. They don’t care if 10 other appraisers churn out reports all while ignoring the truth (Adverse), but like to flag and penalize those who don’t follow the crowd in the name of appraisal market share and the pursuit of money/speed.

      This has nothing to do with big data, technology, computers, improving of the mouse trap, etc., but all about control, and money.

      Seek the truth.

  5. I agree with your insight Dustin. My personal belief is that regardless of what the computer and its software can do, ultimately there needs to be trust in the output. That trust isn’t the result offered by the computer software; its the affirmation of the appraiser who knows that market, understands the complexity of the assignment and recognizes that absolute answers are never the “final answer”, in all cases. Our business has been quickly changing since certification. Our oversight is almost unrelenting and certainly at times, unreasonable. One of the reasons I’ve always liked about the business is the fact that its never the same; the principle of change is the one certainty. Yes, now our challenges are the complex assignments. Those that require a substantial amount of reasoning. They have become our new normal. These are the ones where appraisers outside of our markets won’t drive to or try to compete with lower fees. Days of form-filling and canned boilerplate statements are long gone. Today, is about learning how to work with “Big Data”, recognizing when its wrong and the ability to explain why or why not.

  6. Daniel J Childress

    I hear these arguments from people who want to believe their jobs are safe, I hear things like “well it cant do this or it cant do that”. I think there is a fundamental naivety that plagues people with regard to Artificial intelligence. The Chinese woke to this fact when their best “Go” player was beaten by Alpha-Go which they thought would not be possible as the game relies heavily on intuition. This was a pivotal moment as it was the first time humans saw a machine demonstrate higher cognition. Elon Musk who is involved at the highest level of these technologies says it terrifies him. Yes Appraisers will be replaced, Loan financing will evolve, as will the taxation systems. I believe this to be inevitable and approaching much faster than we are prepared for.

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