Are Appraisers Becoming Obsolete?
Like cows, is technology making us functionally obsolete?…
Cows are Obsolete! Pigs and chickens too!
I just ate an “Impossible Burger” for lunch at Burger King. It tasted great! It looked great too. I could not tell the difference between this fake burger and the real thing. Goodbye cows! This morning, like usual, I ate Morning Star Farms breakfast sausage instead of real pork sausage. I love these things! Goodbye pigs! Beyond Meat has grilled chicken strips and Vegan Egg offers their “Plant Based Egg Replacer”. Goodbye chickens!
As all of these “fake foods” grow in popularity, certainly farmers and ranchers, cow pies and cowboys are going to start to disappear too. How am I going to tell my grand kids that there is no longer a moo, moo here or there, or anywhere on Old McDonald’s Farm. No oinks or cluck, clucks either. And ranchers? Instead of “bringing in the herd” they’ll be “bringing in the bushel”!
Consumers are beginning to see value in plant based meats and it has ranchers worried. As high technology plant based meats replace animal meats, cows will suffer greater and greater functional obsolescence.
Understanding Depreciation (the loss in value):
Depreciation – the difference between the cost and the value. More specifically, the loss of utility and hence value. An effect caused by deterioration and/or obsolescence. Examples: wear and tear, decay, rot, cracks, structural defects, dated design, etc.
Three kinds of Depreciation effecting Houses:
Physical Depreciation:
The condition of the exterior of an improvement: roof, gutters, siding, exterior paint, cracked driveways and walkways, cracked windows, etc.
- Curable – The cure must contribute more in value than the cost.
- Incurable – The cure will not contribute more in value than the cost.
Functional Obsolescence:
The condition of the interior of an improvement: carpets, floor coverings, cabinets, countertops, kitchen and bath fixtures, light and plumbing fixtures, interior paint, etc.
- Curable – The cure must contribute more in value than the cost.
- Incurable – The cure will not contribute more in value than the cost.
External Obsolescence:
The condition of off site locational or environmental factors: a purple home across the street, a busy street, the loss of a major employer, barking dogs, neighborhood decay, graffiti, trash, etc.
- Curable – The cure must contribute more in value than the cost.
- Incurable – Usually, external obsolescence is incurable.
Are Realtors and Appraisers becoming obsolete?
Physical Depreciation:
Yes, we all deteriorate physically. Call it normal “wear and tear”. Is this loss of value curable? Are you a “fixer upper”? Would a new hip, a face lift, or losing 20 pounds extend your life and increase your value? It would!
Functional Obsolescence:
Like cows, is technology making us functionally obsolete? Yes, it is! Example: robots are eliminating many jobs performed by humans. Fortunately, we can “cure” this loss in value with additional education and our application of leading edge technology to boost our efficiency, effectiveness, and value. If we don’t keep up, we become less competitive and less valuable. We need to become more valuable than the robot.
External Obsolescence?
Though usually incurable, I have discovered a “cure” for external obsolescence and the perfect way for me to start this new decade! Aloha!
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Hahaha, real hamburgers, bacon, MEAT is not going anywhere. Please look at the calories, salt, fat etc in that “healthy” burger you ate. No thanks. Stick to the real thing.
I tried one of those impossible burgers last week for dinner and you’re right, it smelled, looked and tasted like real meat. But afterwards I felt bloated and was thirsty for hours. I drank a whole gallon of water and I was still thirsty!
The moral of the story: if you want to be completely satisfied, don’t use “fake appraisers”. However, if you like being bloated and dehydrated, go for it.
Impossible burgers are called that because when you eat one it is impossible to stop shitting.
Use a fake appraiser and you could be in for a real shit storm.
In the words of Julie Jones of Class Valuation, here you go.
What’s a new bit of technology in the valuation space that you’re most excited about?
Hands down it’s InsideMaps. I have been blown away by the power of 3D property scanning. Appraisers do not receive formalized education on how to measure a home, so if improper practices are learned early on, they likely carry those habits throughout the rest of their career. And if property characteristics are not captured properly, how reliable is that appraiser’s opinion of value?
Perimeter sketches currently included in appraisal reports don’t paint the full picture of functional utility or mitigate the risk of fraud or negligence. By standardizing the inspection process, 3D scanning virtually eliminates the margin of error while providing more consistent and granular property data.”
Thats right people, in the future we won’t need to measure the home but rather we will just 3D scan it. I’m sure the scanner will know the difference between that enclosed patio, below grade basement, converted garage, and no heater converted attic, etc.
Sorry, I almost forgot, see Class Valuation is an investor of InsideMaps so magically Julie is hands down most excited about a product she and her company are going to try and make money from. By standardizing what she means is her/their company want to monopolize and monetize the process so they can take even more money from the appraiser.
Appraisers are not obsolete, but rather we are low hanging fruit for the many to try and take advantage of.
Seek the truth, and follow the money.
https://www.youtube.com/watch?v=yjNwcfAEL_c
draw your own conclusions……..
Not trying to offend, but I question the functional utility of those eyebrows. Subject to repairs & alterations? Or is it “as is” on the basis of a hypothetical condition that the makeup isle or hair trimmer were not offended.
Its a joke people, George and or Julie should not be offended. Send comments and complaints to thecoach@theappraisercoach.com
Seek the truth.
So in 2003 I was going to a class for realtors and heard the same. How’d that premonition work out? Oh yea that impossible burger is cooked on the same grill as the meat based one that must be why people say it tastes so good. LOL!
Does anyone else define Functional Obsolescence differently than as stated by the Author in this post? He relates it to the condition of the interior, but shouldn’t that be considered Physical Depreciation as well? Maybe my understanding is “Obsolete”.
Appraisers are only a necessary evil to the lending world. Have been and also will be until the people in charge say we are no longer necessary. Which is soon I’m afraid. Many appraisers have their children follow their footsteps. I told mine to head towards a more promising career away from whatever you want to call this field anymore. AMC’s would rather hire fake meat than hire a real meat appraiser who actually wants to be paid a livable wage and understands the market.
Just tell me what they will pay me to sit in my office and make adjustments to houses I have never seen and come up with a market value that will be used for financing? How much will they pay me when I still have the same liability? I need to know what fees will be paid for this? We can debate all we want but it boils down to what will I get paid to assume this much risk for never seeing the property or the current neighborhood and what is going on in that neighborhood?
Fannie Mae, certain partners of REVAA and especially Springhouse LLC have been hosting diversity events in major cities in order to attract more diversity into our profession. I was invited by an appraiser friend of mine to tag along for one of these diversity events. I was excited to see how they were attracting new urban appraisers. I was hoping I could connect with someone that I could bring on as a trainee. After the event a few appraisers decided to go out for dinner and drinks. One of the people with us worked at one of the GSEs. When the topic of bifurcation came up the person from one of the GSEs started to complain about how most appraisers are resisting change and if they do not conform they will be without work very soon. When I said well it’s not so much change that is causing the issues it really comes down to low ball fees and the fact the GSEs are forcing appraisers to accept an unlicensed person working outside the appraiser’s supervision completing the inspection. I said there are ample appraisers in all parts of the county (no shortages anywhere) and the need to bifurcate is 100% unnecessary but if this is the direction please allow the appraisers to manage the inspection process with their own trainees as it would be a natural fit. Well I come to find out there is no interest in that scenario as the amcs have expressed they will not profit from the appraiser’s control of the inspection piece. The person from the GSEs revealed that the main reason for the diversity events is to allow the amcs to bring in people who will accept the new even lower fees that will be offered. The AMCs (mainly Springhouse LLC) will be training these new diverse hires and once competent they will start completing desk appraisals for a fraction of what they are even offering now.
I was absolutely shocked to hear this and so should everyone else! If they can’t get us to conform then just lower the bar and bring on people with very little experience to take over our profession? The GSEs and AMCs are in collusion to defraud the appraisers, general public, borrowers and the entire housing market. While I am all for diversity the way they are going about it undermines everything! They are going to sell this diversity nonsense as though they are doing a great thing for society. However now you are all fully aware of what’s really happening! Over the next few years REVAA will be pushing the AQB to lower standards once again and will continue to push for national licensing. This is all a scam to obtain 100% of the appraisal business and get you out of the profession! The time to act is now.
Springhouse, the Ocwen work around to skirt by those annoying 500m penalties and restriction of business practice in multiple states by AG’s. Those government service guys, they’re self captured, willingly hypnotized by the matrix of support they receive. Unaware of the dire consequences and unaware of whom they truly serve. Audit the fed.
Here is another type of influence for residential housing markets; External economic influence.
aka; a devaluing currency due to runaway federal reserve policies which provides illusionary equitable gain while simultaneously paying the banksters by pilfering the taxpayers pockets. aka; swindling futurity on a grand scale.
Think the past decade has been all about economic gains and a nifty chunk of equity increase in real property? Think again. There is more cash, but there is not more value. In this latest instance the central planners decided ongoing continuation of unsustainable increases in goods and services costs was better than allowing shorts and bankster failure. aka; printing prosperity. What’s new?
The relationship to this article being; These digitized systems will never hold up, not in the way that brings fair and balanced market stability and fairness. These new systems lack essential checks and balances, a cornerstone of our liberties (which includes right to own land and property free of the yolk of debt). True checks and balances can only be achieved by protagonistic contrasting interests, the fair pull of equal powers. These supposedly harmonized synergistic digital systems are merely a new iteration of socialistic central planning. Lacking the fair balance of independent influence, the systems have already shown bold signs of imbalance and clearly self serving practices which causes severe damage to others, before they have even been fully implemented. The realtor, the appraiser, the inspector, and occasionally the non commission based lending broker, they all represent the fair check to balance against the lenders, on behalf of the consumer, the most populist participator is the consumer. It is not a mystery why the central power, the central planners, would want a direct mainline to consumers interests without independents in-between them or in the way. History repeats. Consumers whom don’t understand they’re playing with fire by accepting unnecessary debt are the primary problem. If they understood this risks with whom they were dealing with, they would not accept departures from checks and balances systems. It is not the lenders and powerful people whom demanded the American checks and balances systems, it was the knowledgeable citizens whom demanded the protections being eroded today. Education on the dangers of debt is a key element.
https://www.zerohedge.com/markets/944-trillion-reasons-why-fed-quietly-bailing-out-hedge-funds
Good luck with the plant based imitation meat food. The list of food safety based concerns is very long. If you need vegetables, have a salad or a burrito or something. The reason that burger tastes like a whopper is the whopper is already chalked full of soy, synthetic flavors, chemical additives, and genetically modified organic substances. Remove the 2% of remaining beef fat and viola’ a vegan burger. It’s hardly a mystery or ‘impossible’.
Baggins, Good point on the burgers it will have me smiling the rest of the day. Thanks!
Thanks. I like a whopper same as the next guy. I prefer the double with double cheese, bacon, onion rings, jalapenos, and bbq sauce. Add on the bt corn high fructose with glyphosate drink and the 15 or more lethal chemical fries. When I’m going for gold, I want the full range of msg analog effects. It’s mesmerizing like a drug, because it is a drug.
By eating healthy gmo free and organic the majority of the time, your organs and cleansing systems can handle the chemical bomb now and then. Better to limit that to like once a month or something, preferably even less. When I need a bite on the go I go to Kings, get a half gallon of OJ and a few bagels.
I’ll simply never understand the concept of wanting to be a vegetarian and still wanting your food to appear as something associated with meat. I was a vegetarian for almost a decade when I was younger and there are a lot of great food choices besides things that look like meat with questionable ingredients.
Like eval products, if you don’t mind skipping checks and balances, why even bother with the illusion of them? Just skip the evals, skip all checks and balances, trust your lender completely. That is after all, what evals represent in the end.
Did you know amazon can buy your home, sell your home, provide your agent, provide your loan, furnish your eval, run your closing, and provide you insurance? They’re not the only one. What could go wrong? Muh… Convenience!
Interesting. Wish I could remember where I read it, but recently read an article that the pseudo-meat veggie burgers have the same ingredients as dry dog food.
As a kid I tried dry dog food. Not as fond of it as my brother, but then again he was the one daring me to try it so who knows what he really thought.
I HAVE tried veggie burgers and I’m fine with the taste. IF the cost weren’t higher than actual meat I’d probably be eating them now.
In any case, I don’t think meat is obsolete nor do I believe appraisers are. Try going into court with your zillow or corelamode derived “valuation” against a real appraiser that knows what they are doing.
Internet buying and selling is a fait accompli. Retail stores are adversely affected, but anyone that has ever ordered clothes online or something based on a written description authored in country’s with no truth in advertising laws will usually tell you they’d prefer to see, touch and feel goods before buying them. Definitely trying them on is preferred over guessing & hoping ‘someone’ got “it” right.
The same holds true with real estate. When ‘getting it right’ becomes important again, it won’t be software that solves the problem.
Just ask the Iowa Democratic Party…their software couldn’t even add up to 200,000 votes correctly.
Mike, you’re not just imagining the risk of fraud when it comes to online commerce. The new monopoly kings, the kings of e-commerce, have successfully allowed what is estimated to be a whopping 1/3rd of all imported products to become counterfeit or somehow otherwise defective and non-compliant with existing health and safety standards.
Ponder the relationship that centralized monopolistic e-commerce, which has been well established and growing for roughly 20 years, ponder that against e-valuation companies which are basically only now trying to reach their first long strides.
It’s pretty obvious what types of abuses will be occurring. The independent’s advantage in real estate, unlike commerce was 20 years ago, is we now are very well versed on the methods and mechanisms which technical focused monopolistic minded companies utilize to crush fair competition. 1. Self regulate and raise the entry bar to eliminate new competition. 2. Participate in the captured regulatory system to define new allowances only they have the infrastructure to utilize. 3. Make the crime of defrauding the American public legal. 4. Use additional capital to create a never ending stream of propaganda, convincing the ignorant of the merits of their new advanced systems. 5. Use heavy handed methods to eliminate the remaining competition which managed to hold out. / I think many appraisers are a captured audience, we are after all, the intended primary recipients of the front line e-valuation propaganda.
https://finance.yahoo.com/news/america-apos-online-shoppers-constant-100041587.html
The dumpster fire at the Iowa caucus this week is the perfect example of over-reliance on technology.
Don’t worry about that. They’re switching to ‘the other app’. Learn to code.
Great article to remember all types of depreciation and what they are. The real world examples and non pompous description is easy to understand. Appraisers are not obsolete if you understand the issues and can apply them. Use the tech tools to help you calculate/analyze faster
Functional depreciation is often overlooked or under calculated when it is forced into a different category for adjustment. Think about an outdated floorplan, not current heating system, a deck/pool that is too big, or a 1 car garage where larger is expected.
Functional appraiser depreciation is one that goes slower and doesn’t use tech to their advantage.
External is reflected in the greater use of AVM, hybrids and waivers.