Paul Doman is president and CEO of Accurate Group
( accurategroup.com), a nationwide appraisal-management
and compliance company whose mission is to help real
estate finance professionals deliver business growth. Reach
him at email@example.com or (216) 672-3601.
Valuation Goes Digital
Technology-enhanced appraisals are becoming the new normal
By Paul Doman
All around us, technology has become inte- gral to our lives. We shop online, pay bills from our computer, make restaurant res- ervations without talking to anyone and
hail car rides with the push of a button. We can even
control our thermostats, lights and appliances via
Wi-Fi. And it’s no different in many workplaces, where
e-mail, file-sharing platforms and business-process
automation have become the norm.
In the mortgage industry, however, the rate of technology adoption has been much slower. Although
loan origination systems have been in place for some
time, other aspects of the mortgage loan process are
One area of particular frustration for mortgage originators, lenders, appraisers and borrowers alike is the
appraisal-management process. So why not streamline and automate it?
The property appraisal is a critical component of any
home loan — whether it be for purchase, refinance
or home equity — so it seems like a logical process to
automate. Instead, appraisal turn-times are actually
getting longer in some markets, and appraisal management remains a complex area that many lenders
are hesitant to change.
There are several factors that make appraisal management difficult to automate:
■ ■ Appraisal regulations are complex and vary by
■ ■ Appraisals are human-centric, requiring the
expertise of a qualified appraiser and the cooperation of the borrower;
■ ■ Appraisal and compliance processes vary by
■ ■ Government-sponsored enterprises (GSEs) have
their own set of standards.
Overall, the perception in the industry is that any
change in the appraisal process or deviation from
traditionalappraisal methods poses a big risk to the
business. Consequently, most large lenders stick to the
Signs of change
Disruption in appraisal management may be on the
horizon. There are three things happening in parallel
that could come together to prompt both lenders and
appraisers to lower their resistance to change:
The secondary market may be open to alternatives.
The GSEs and other secondary market players, including
the U.S. departments of Housing and Urban Develop-
ment (HUD) and Veterans Affairs (VA), are loosening
up requirements on real estate appraisals. Fannie Mae
change to its mortgage process that would replace
traditional appraisals with a no-cost alternative val-
uation system. And VA recently held hearings on the
adoption of desktop appraisals to streamline operations.
Market forces also are increasing the pressure.
There is a growing shortage of appraisers in some real
estate markets. The appraiser shortage results from a
combination of factors, including an aging appraiser
population, higher barriers to entry (education and
apprenticeship) and pricing issues.
Those factors are prompting many appraisers to
leave the business. This appraiser shortage is leading
to higher appraisal costs and longer turn-times —
both of which negatively impact lender profitability
and borrower satisfaction. When everyone in the process is frustrated, it’s a true sign that change is needed.
Technology innovation is accelerating as well. The
cloud-based, software-as-a-service (SaaS) delivery
model is finally taking hold in appraisal management.
The top appraisal-management companies (AMCs)
have developed technology to automate process
workflows, implement lender-specific business rules,
crowdsource resources for property inspections, and
auto check appraisals for accuracy and compliance.
In addition, platforms such as Mercury Network and
AppraisalWorks are increasingly being adopted by
lenders who manage their appraisal-management
function in-house. Desktop-appraisal software also is
finally making its move into the mainstream.
In 2015, the leading desktop-appraisal technology
platform, ValueNet, incorporated an interior-inspection
option that was certified to be compliant for all loan
sizes and could replace a traditional appraisal for
home equity and portfolio mortgage loans. This
was a huge evolution in the desktop arena, and,
as the GSEs and VA explore alternatives, desktop-appraisal technology is likely to emerge as the wave of
The business benefits of moving to technology-enabled appraisals are significant, including fostering
a better borrower experience. Appraisal-management
technology and alternative-valuation solutions such as
desktop appraisals allow mortgage originators, lenders
and appraisers to provide faster and better service to
borrowers, while also ensuring an accurate, compliant appraisal. Borrowers will appreciate the increased
transparency and smooth, efficient process — making
them more likely to remain long-term customers.
Investing in modern technology to streamline
appraisals and improve transparency is one of the
best ways to improve operational efficiency and lower
operating costs. In the past, upgrading software
technology required large capital investments, but
that is no longer the case. Software-as-a-service and
cloud-based applications have become the new standard in technology and, in most cases, require no
Through automation and better visibility, the right
appraisal-management technology can accelerate
processes, reduce errors and enforce compliance
checks while also improving productivity and lowering costs, thus having a direct impact on profitability.
The best appraisal-management technology platforms
also enable all constituents to collaborate more effectively and give everyone visibility into appraisal status
Desktop-appraisal technology applications require
minimal upfront investment as well, but they offer a big
payoff in productivity, enabling appraisers to handle
more volume at a lower cost with less administrative
effort. The best desktop-appraisal solutions offer mobile
capabilities that allow local property inspectors to
upload property specs and photos that can be reviewed
immediately by licensed or certified appraisers.
In addition, compliance regulations in the appraisal
field are complex and involve both federal and state
considerations. With the GSEs, VA and HUD all evaluating changes to appraisal guidelines and the future of
the Consumer Financial Protection Bureau in question,
it is likely that appraisal-compliance regulations will
become more dynamic. Having cloud-based and SaaS
technology in place that is automatically maintained
and enhanced by an expert third party will help to
ensure that your appraisal-management business processes, rules and forms are all updated on a continual
basis and that you maintain ongoing compliance with
changing regulations. Stronger compliance means
lower risk for your business.
The appraisal-management process is ripe for change
and technology adoption is likely to be a key component of this change. Technology has the power to
deliver process automation, compliance enforcement,
improved collaboration and on-demand transparency — all of which will improve the appraisal experience for originators, lenders, appraisers and borrowers.
Market forces are already underway, and the
technology-enabled appraisal will soon be the new
normal. It’s time to get on board. The earliest adopters
will gain the biggest benefits and become the new
market leaders. ■