20 Minute AI Appraisals Are Coming

[timd354]

If a drone and robot collection of data at an inspection does what a person can do, then why not just let the person do the job?

The drone/robot will no doubt be able to do it cheaper, faster and more efficiently than humans, Also, the drone/robot won't complain, call in sick, or go on strike. I hope that I am wrong about this, but unfortunately I don't think that I am.

 

[RCA]

Interesting blog, worth the time to read.

https://appraisalhouseusa.com/20-minute-AI-appraisals-are-coming

Link to the company mentioned, minimum $1,500 a month to set up and run. I'm sure they are the first of many, and word on the street is at least one AMC runs its staff side with similar software.

https://www.vervus.agency/

Be cautious, they are in London. I would look at terms and conditions very carefully. Other question: if you want your money back and they disagree based on some conditions in their "terms and conditions" - how expensive will it be to get your money back. Remember - there is no "free trial" - and, well, what's the difference between 30-days money back and a 30-day trial?

It's sucker bait. They do need money upfront. Lots of money. They are going to be ruthless. Expect that.

You should also know, unless they have an inspection of the exterior and interior of the property, including accurate measurements, - their estimates of market value are going to have limited accuracy. Where they will really fail, is in explaining why similar comps have different market values from the subject.

I am guessing that they are going to expect you to deliver photographs of the subject and other information - or they are going to have to pay some service for the information.

But, yes, this is coming. It is just a question of quality and getting the kinks out of the system - and time. They will be able to provide a certain degree of accuracy and compliance. It's going to be a question of service level and price.

The last point, is that if the homebuyer or owner sues, who is going to take care of representation in court and where is the expert testimony for the defense to come from. London?

 

[Vermonter]

That's the key phrase, AI does not have enough information except for the most cookie cutter track homes in areas with lots of reliable public data and comps.

That's what Retrieval-Augmented Generation (RAG) and Cache-Augmented Generation (CAG) is for. You can feed AI the same information available to any appraiser and teach it what to do with it.

Just because no one has put together an AI stack to perform an appraisal start to finish, doesn't mean it can't be done. The tech is already there. Especially with hybrids. Someone just needs the time and money to put it all together.

I think the bigger concern is whether or not AI will change the lending model in some other way and remove the need for the appraisal all together. Or at least an accurate valuation. If the relative risk is lower in other areas of the loan qualification process, will a ballpark AVM be good enough?

 

[Non Sequitur]

You should also know, unless they have an inspection of the exterior and interior of the property, including accurate measurements, - their estimates of market value are going to have limited accuracy. Where they will really fail, is in explaining why similar comps have different market values from the subject.

The way I understand it, they don't offer an opinion of value. They train the AI agent with your reports and narrative, you download the subject data (photos, sketch, etc,) and MLS file data then it will choose the comps, calculate adjustments, write comments/narrative based on your past reports, you will review and make edits as needed. Honestly, take the AI agent out of the picture, this is basically what most firms do now but with overseas assistants.

I have no doubt that what they are building will be standard practice soon enough. This all reminds me of the first iPhones, it was basically ****, funny photo, and game apps. But the potential was there, it just took a little time to develop real world business apps. Now you would be hard pressed to practice as a residential appraiser without a smart phone. We're not there with AI agents but anyone who thinks we aren't heading there fast is already behind. And FWIW I would consider paying $1,500 for a set up, but not $1,500 a month for its use.

 

[NC Appraising]

They know something we don't, or at least we know it and are failing to realize it.

The below firm has purchased multiple AMCs. IFA a are dead in the water.

Hybrids for the next five years will be the go to. With all of this new tech coming, they can probably knock out 8 appraisals a day.

Unfortunately for the GSEs that wanted the appraiser to become more of an analyst, it will become just a rubber stamp appraisal that a few large AMCs will control and dominate.


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[J Grant]

The way I understand it, they don't offer an opinion of value. They train the AI agent with your reports and narrative, you download the subject data (photos, sketch, etc,) and MLS file data then it will choose the comps, calculate adjustments, write comments/narrative based on your past reports, you will review and make edits as needed. Honestly, take the AI agent out of the picture, this is basically what most firms do now but with overseas assistants.

I have no doubt that what they are building will be standard practice soon enough. This all reminds me of the first iPhones, it was basically ****, funny photo, and game apps. But the potential was there, it just took a little time to develop real world business apps. Now you would be hard pressed to practice as a residential appraiser without a smart phone. We're not there with AI agents but anyone who thinks we aren't heading there fast is already behind. And FWIW I would consider paying $1,500 for a set up, but not $1,500 a month for its use.

If you allow IT ( the AI agent ) to choose the comps, then YOU have not done the appraisal.

Only an appraiser can develop the appraisal, whether they use a live human assistant, an AI "assistant" (which sounds a lot like SPark and existing programs) or no assistant.

Knock yourselves out, folks. Go pay $ to order training for an AI "assistant" that sounds like it auto-populates the report in part, just like existing tech programs do now.
The tech guys who put up these overnight companies must be laughing all the way to the bank.

 

[J Grant]

If AI truly can "do" an appraisal in the future, it is not an appraisal if a human does not develop the opinion. It is some alternate form of valuation. Wich may indeed become accepted for original lonas -idk. But if AI takes a large portion of jobs away or reduces people to low-paid positions, then who is going to be left to afford to buy homes using the loans all this "efficiency" has made easier to use, supposedly? Who will be able to afford the rents on properties bought by investors?

The geniuses never answer that - they just say people will "adapt"- whatever that means.

 

[ucbruin]

"Yes, according to the legend, John Henry won the contest against the steam-powered drill by drilling more rock than the machine. However, he died shortly after the victory due to exhaustion."

 

[Non Sequitur]

If you allow IT ( the AI agent ) to choose the comps, then YOU have not done the appraisal.

Only an appraiser can develop the appraisal, whether they use a live human assistant, an AI "assistant" (which sounds a lot like SPark and existing programs) or no assistant.

Knock yourselves out, folks. Go pay $ to order training for an AI "assistant" that sounds like it auto-populates the report in part, just like existing tech programs do now.
The tech guys who put up these overnight companies must be laughing all the way to the bank.

Poor choice of words on my part. The AI agent will grid X number of comps based on your parameters from the prior reports and guidelines it was trained with.

 

[BRCJR]

The future of residential appraising, for certain, will be determined by the level of risk a regulatory body will allow a lender to take. Simple as that.
The value of the collateral is only one piece of the equation.
The 5 c's to the loan process.

Character
Capacity
Collateral
Capital
Conditions

Up until about 2-3 years ago the Evaluation threshold was $250,000 for ALL loans. Now it is 400,000 for consumer and 500,000 for commercial lending.

So, a few years ago the regulatory entities started easing the appraisal requirements. Keep in mind I am not talking the FNMA/Freddie participants, only in-house.

That has reduced the number of appraisals requested, overall. The decline in Appraiser numbers will expedite the use of alternate valuation methods.

Is it a dying profession, no, but it is one of declining demand that will not return short of a total economic collapse like the Great Depression.

Guess where I stayed last night, yep you got it, The Holiday Inn.