Technology Companies Selling You a Pet Rock
Technology companies flaunting their real estate valuation products show us lots of pretty color charts and graphs and sell us on their products. But what would happen if someone were to ask a simple question of these technology companies… How did you determine that value?
Just imagine for a moment you are testifying in court and counsel asks you how you determined your opinion of value. The appraiser could answer that question without hesitation. Simply, you know what you did. Even follow up questions could be answered without hesitation.
Now if the same question was presented to a technology company, there would be lots of hesitation. The first thing the technology company would have to determine is who could answer the question; the CEO, the clerk who pushed a button, or the programmer who wrote the actual code. Would the answer be specific to the market in which the subject would compete? Would there be consideration of property nuances? Would the response of the technology company trigger more questions? Would they be able to answer them?
Now I am not going to get into the specifics of the statistical analysis of any automated program, but pose a simply question. Are technology companies simply selling a modern day version of a Pet Rock?
Gary Dahl, the creator of the Pet Rock sold millions of these ordinary rocks to consumers, complete with a “how to care for your pet rock” instruction manual. How are automated valuations any different? The pet rock and automated valuations both have created millions of dollars using nothing more than consumer marketing of a questionable product. Well at least the pet rock only stuck you for $3.95 and provided a bit of humor. An incorrect automated value could cost you tens of thousands of dollars… just saying.
Jonathan Miller in his Housing Note publication provided a link to an AMS VeroForecast of the aftermath of the Coronavirus. He rightfully so, points out this forecast is based on nothing more than speculation as there is no data to support it. It is described as a marketing stunt. He even provides a quote from Clearbox CEO Joan Trice:
“This will prove to be the dumbest statement of this crisis. Is this based on data or the magic eight ball on the corner of his desk?”
Just another example of a technology company without a legitimate product to sell.
Many appraisers are staying at home during this pandemic. What better time to create your own business marketing plans? There may be some appraisers who like working for amcs, but most do not. Now is the time to reevaluate who you are doing business with and take the steps to eliminate those companies that sell their own pet rocks in competition to your professional services.
Know the value of your education, license and experience and market yourself accordingly.
By By Milton P, Certified Residential Appraiser