From the inspiring keynote by Allison Massari to the awards ceremony at lunch on Wednesday, the 2019 Appraisal Institute conference in Denver was a great investment in time. There are several themes that stood out as valuable. Here’s a short annual 2019 Appraisal Institute conference overview by a curious outsider to the profession.
This garnered outsized attention at the 2019 AI annual. Most people in the U.S. either live either in a state that has already allowed some form of cannabis sales or one that is actively considering it. At the same time, the U.S. government still considers possession and sales to be a crime. As a result, banks usually refuse to serve cannabis property and business owners, making many transactions cash only. The industry is new, the regulations evolving, the zoning and marketplace are chaotic. Altogether, it’s a crazy and fascinating topic. Cannabis property appraisal issues garnered both a general session and a breakout session on Tuesday. The discussion continued in coffee breaks and cocktail receptions before and after. Never has pot generated so much air time among this reserved group of professionals.
Advertisers know that FUD (fear, uncertainty and doubt) gets attention. This topic in some form has been at every conference for years. The National Credit Union Association just quadrupled the minimum threshold for commercial appraisals. It now stands at $1 million. The Appraisal Institute went so far as to call it “irresponsible,” “dangerous,” and “outlandish.” Alternative forms of collateral monitoring, other than a narrative appraisal, are emerging such as an evaluation and the “validation stress test.” Automated valuation models and artificial intelligence are also getting lots of new investment. Lots of change.
Clients from banks to asset managers are choosing new forms of valuation that are something less than a full narrative appraisal. For example, Doug Potts of Commerce Bank in St. Louis led a session on Validation Stress Testing. This is where the asset manager or lender follows a process to identify changing conditions that generate the need for a new valuation. This concept could significantly reduce the need for full appraisals. But, it also opens an opportunity for appraisers to provide consulting services to support the function. It is similar to his session about Evals. We wrote a blog about it in 2017 here.
AVMs (automated valuation models) and AI were addressed by Mark Linne on Wednesday. The topic gets headlines on a regular basis. So, Mark compressed his normal 4-hour class into 90 minutes for attendees in Denver. While AVMs and AI are “fundamental gamechangers in the industry”, the session not only covered the risk but also the opportunities for appraisers who can adapt to the changing industry.
Each one of these topics is discussed in terms of how appraisers can adapt to the changing marketplace and not only survive but thrive.
After the sessions on various appraisal technical subjects, the most extensive topic covered was how to run a better business. Many appraisers are solo practitioners or small offices and as such have the constant challenge to balance the work of appraising from the work of efficiently running a business. The message I took away is that this is a critical set of topics that needs as much attention as possible. Fortunately, there were several sessions addressing several helpful topics. Any one of them could have been 2 days by themselves. A big takeaway is that small appraisal shops need help with marketing and client outreach.
Realquantum’s own Mark Davis presented a session on cyber security. His first major point was that small businesses must take action because they are at greater risk that many assume. Second, though, there are several actions to make a business much safer and they cost very little to implement. Mark had a long line of people asking questions and he stayed long after the session ended to address them.
This is a topic near and dear to the realquantum blog. A session described as “applying the valuation process and highest and best us analysis to the life of an appraiser.” Joshua Walitt and Siska Hutapea covered delegation of duties, staffing, outsourcing and technology (we wrote about the subject here.) They also dove deep into the question of why someone is in business, identifying their strengths and what they find most rewarding. It reminded me of our blog, The E-Myth Appraiser.
On Tuesday afternoon, John Rossi presented a session on sales and marketing for appraisers that drew on his extensive knowledge teaching the subject at his local university. He covered some high-level marketing and sales concepts and then dove deep with the attendees on how they differentiate themselves in a crowded marketplace. A theme that emerged from the session is that all appraisers list professionalism, expertise and trust as reasons to choose them. Those are important traits for an appraiser, but everyone says that. (And, everyone knows the appraisers in their markets that aren’t this way.) So, to stand out, there needs to be something more. John suggested focusing on unique property types, specific market experience and diverse services. The discussion made clear that before investing money into marketing, it’s important for appraisers to first understand and define the unique value proposition they offer.
The subject of most of realquantum’s Highest and Best Use blogs is technology. So, it was perfectly logical when we heard several presenters discuss how critical it is for appraisers to understand and leverage the best new tools to maximize their competitive edge. Furthermore, one had to just look across the list of expo hall booths to see most of them were technology companies (realquantum included!) The comments from visitors to our booth impressed us. In years past, there were lots of, “Don’t need it, don’t want it,” with respect to new tech. This year, we heard so many people asking how realquantum works and how it could help them be more efficient. We heard other stories of really creative ways people are leveraging mobile apps, tech-enabled freelancing services, mapping and office technology to reduce costs, boost revenue, and just rid of some monotonous tasks.
So, this 2019 Appraisal Institute Conference review summary is that it was a well-executed and valuable event. The demand for appraisers’ services appears to be evolving, and appraisers need to evolve along with it or get left behind. The many attendees clearly gained a lot from both the content and the networking. As a passionate member of the real estate tech industry (but not an appraiser), I learned a ton and continue to grow in my respect and admiration for the people in the profession.
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