End the Tyranny Of Spreadsheets in Commercial Appraisal

End spreadsheet tyranny! The steps you can take to elevate your commercial appraisal process.
Tyranny of Spreadsheets
Jeff Weiner

Jeff Weiner

CEO & Co-Founder | Transforming Commercial Real Estate Valuation | B2B SaaS Product Innovator | Creating Amazing Software from Zero to Scale | Longevity Enthusiast

Related Resources

Time to End the Tyranny Of Spreadsheets in Commercial Appraisal

The Financial Times published an article recently, “The Tyranny of Spreadsheets” by Tim Harford. It’s about the unexpected problems that can come up when using a spreadsheet application like Excel or Google Sheets. This is a tool that everyone has access to and has become very handy for all kinds of things other than accounting.

Commercial appraisers certainly embrace spreadsheets. When we first started Realquantum, we found that 82% of people with any property valuation job were relying primarily on spreadsheet software. We found that to be the case with small businesses and with global banks as well.

In the beginning, spreadsheets were made for accounting. The vast array of financial calculations performed by appraisers can all be done in spreadsheets other than complex statistics that need a product such as R. So, spreadsheets have served appraisal well for a long time. Of course, it’s certainly better than the paper ledger books that came first!

Excel and Google Sheets are the “Swiss Army Knife” of financial calculations. They do so much.

Competition Pushes Us to Do More

These days though, competition is fierce. As a result, the shortcomings of the Swiss Army Knife have become a problem. For example,

  1. Errors are easy

    researcher referenced in the article did an analysis of the spreadsheets collected during the investigation of the infamous Enron collapse. Of the 10,000 Excel files reviewed, 25% had at least one error such as math, format conversion, or circular references. That is a GIANT number! For all Enron’s issues, it was first a financial company, so they certainly weren’t Excel novices. Sadly, this error rate is probably common.

  2. Errors cascade

    Cell references in formulas usually cascade because the result of one calculation is used for the next and so on. Of the Enron spreadsheets with errors, they didn’t have just one. On average they had 750 errors each!

  3. Spreadsheets are a generalist’s tool

    Returning to appraisal, appraisers must update spreadsheet templates to accommodate all the kinds of commercial property situations they encounter. They need to add or delete rows or copy and paste data. Trouble is, each change is an opportunity to create a problem.

  4. Each document is a new risk opportunity

    Using a spreadsheet template file approach where the formulas are mostly set up prevents the appraiser from starting from scratch. However, each new file an appraiser creates sets up a fresh set of error probabilities. They must edit the file while using it. (Files can be locked, but I’ve not seen that as an acceptable approach for appraisers we talk to.)

The author states, “You wouldn’t fit a kitchen with a Swiss army knife.” I prefer a related metaphor. Could a professional chef prepare a gourmet meal with a Swiss army knife? Yes. Would she want to? Heck no. Shipwrecked on a desert island? A Swiss army knife is perfect. Otherwise, professionalism demands better.


What’s the Alternative?

As the author states about Excel, “It may not be the right tool, but it’s the tool that’s right there.”  That’s why many industries have moved away from Excel for critical functions. Instead, there are products that specialize in the calculations common in those fields. Everyone knows QuickBooks for small business accounting. Other tools include enterprise resource planning (ERP), customer relationship management (CRM), electronic medical billing platforms, and the list goes on. So, why should commercial real estate appraisal be any different? Short answer: it’s not.

It Wasn’t Easy

CRE appraisal is a complex discipline. So, it took a while. A team of CRE valuation experts and software experts created Realquantum. It took years of development and millions of dollars for Realquantum to not use Excel. But like other purpose-built financial tools, it has the tools for CRE appraisers without the shortcomings of spreadsheets. We built the formulas into the software. So, there is no risk of deleting a calculation or inserting a row that breaks a formula range. No problem writing over a formula or putting a parenthesis in the wrong place. Now, that doesn’t mean there will never be a problem. But rigorous testing minimizes those situations. When one is found, Realquantum is fixed quickly, and everyone benefits immediately.

You Are a Chef

Appraiser “chefs” can “cook” a first-quality appraisal report with the right tools. They don’t need to try to make it work with a Swiss army knife.

Ready to see how you can be more successful and efficient?  Realquantum helps commercial real estate appraisers eliminate tedious manual work and increase revenue 50% within 60 days. Sign up for a demo today.


Schedule a Demo Today

See these features in action with a free live demo.