The appraisal profession is on a path.  And its not just appraisers.  I’m talking about the shared interests we all share as appraisers, lenders, collateral risk managers, GSE’s and regulators in making sure the appraisal profession makes the changes that must be made to ensure that we regain our role and are recognized as providing credible valuations to our clients and to the public whose trust is paramount to our continued existence as a profession.

I spoke to two conferences in the two weeks.  I spoke about those challenges and opportunities.  Here is what I identified:

Challenges:
•    Competitive environment
•    Inferior Valuations
•    Fraud
•    Declining economic opportunity

Opportunities
•    Better Tools
•    Supportable, transparent valuations
•    An opportunity for reinvention
•    Taking back a billion-dollar market

I thought the reaction from each conference would be different.  I thought that regulators would see things differently than appraisers.

I was wrong.

Arizona State Appraiser Conference:

Two weeks ago I talked a bit about my message to the Arizona State Appraiser Conference.

My intent was to teach.  I ended up learning myself.

Here is what I learned.

There is a hunger in our industry.  A hunger to find answers to the question:  what is happening to the appraisal profession, and what can I do about it?

I gave three presentations over three days and my message was consistent:  what I think is happening to the profession, what forces are impacting us-some of which we may or may not be fully aware of.

Arizona was great.  There is something magical about a 60 degree day in Phoenix.  The Appraiser State Appraisal Technology Conference was organized by Joanna Condé, and she did a great job.  The conference was focused on technology for appraisers and included some very cool technology from a number of vendors. What was really interesting to me was the make-up of the conference:  veteran appraisers who are surviving in this tough economy.  I’m seeing more and more of the survivalists at the conferences I attend.  I spoke about alternative valuation products, the importance of analytics for appraisers, the need to provide clients with what they want-not always what we think they should be getting.  I also spoke about the Realtor Valuation initiative that looms in the distance and poses a threat to our profession as well.

My rooms were packed and they listened to the message.  It’s clear there is a hunger among a group of appraisers for tools that will help them survive.  This group wanted to survive and their questions clearly indicated that they agreed with the message.

AARO
I was invited to speak to the Association of Appraisal Regulatory Officials earlier this year.  They wanted to learn more about Alternative Valuation Products (AVP), and since AppraisalWorld has its CompCruncher™ product that produces the Collateral Valuation Report-the regulators wanted me to speak generally about AVPs but also specifically about CompCruncher™.

I was surprised at what I saw and who I saw.

Excellent professional representation from professional organizations.  Leslie Sellers, the President of the Appraisal Institute, along with A.I. Washington reps Bill Garber and Scott DiBiasio were both there, taking an active role in discussing the appraisal landscape and the recent model legislation that AI put together on AMC regulation.  Bill Carroll, the International Association of Assessing Officer’s President was there as well, along with Larry Clark, the IAAO Director of Professional Development.  Jim Park, the Executive Director of the Appraisal Subcommittee, and David Bunton, the Executive Vice President of the Appraisal Foundation were also there, and the number of representatives from appraisal companies and AMCs was also quite striking.

What I saw was a broad-based constituency of stakeholders-and that was a surprise.  Bruce Fitzsimons, the President of AARO, explained to me that they had opened attendance in recent meetings to everyone, so that they could discuss problems common to the entire industry.  For some reason, I thought with regulators it was more of an “us against them” type of relationship-I was wrong.

As I put my presentation together the week before, I did research on the problems that regulators face, and I found there were a number of problems that were common across the spectrum of appraisal-no matter who you were.

So I concentrated on the problems I saw and some suggested solutions.

I talked about bad appraisals, about fraud, about difficult economic times.  I spoke at length about the emergence of Alternative Valuation Products, of the prevalence of data and the tools to mine that data.  I spoke about opportunity amidst chaos.  And ultimately, I suggested that the time was now for re-thinking how we perform appraisals.  We need to be open to new ideas, and move away from the 1004 as our only product, as I suggested a couple of weeks back in this blog.

As a profession, we can demonstrate our credibility.  We can show that our market knowledge is superior to alternatives.  We can weed out those who are unable or unwilling to perform appraisals that are honest, ethical, supportable, credible and transparent.

The audience actually clapped when I told them that appraisers needed to be the ones that brought these solutions to the market.

Afterwards, I was stunned by having more than 10 state regulatory officials talk to me about training their investigators, about learning more about Alternative Valuation Products such as the Collateral Valuation Report, and how they could use these types of tools to analyze data more effectively as they review the work of appraisers.  Think of it-everyone on the same page using a similar tool set-that would be something great.

I believe the profession has about an even chance of doing well or doing poorly.  I think that appraisers do not believe that they have the power to change a profession.  I think that they believe their fate is solely in the hands of others and that they are powerless to do anything about it.  I think they are wrong.  I learned that we have a shared fate, and a weakened appraisal profession does no good to the public interest or in those who serve it.

Next week-I go to the Predictive Methods Conference (www.pmc2010.com).  This is one of the big ones.  A conference attended by all those who care about collateral risk and what it means to the market.  Interactive Valuation Tools and Alternative Valuation Products are in vogue.  I will speak about both and provide my vision of what our future can look like if we make the right decisions over the next few years.

As a profession, we can demonstrate our credibility.  We can show that our market knowledge is superior to alternatives.  We can weed out those who are unable or unwilling to perform appraisals that are honest, ethical, supportable, credible and transparent.

So I’m going to PMC.

I’ll tell you what I learn.
I’ll tell you what I see.
I’ll tell you what I say.

The path becomes clearer with each passing day.