The COVID-19 pandemic didn’t create the proptech movement, but it is accelerating the realization that the ideas, technologies, and value it offers are no longer a luxury, but a requirement in real estate. It would be an understatement to say that the current global pandemic has created a unique housing experience. From virtual showings to in-car closings, social distancing has created a near perfect storm for appraisers, originators, and agents when it comes to viewing and valuing properties. As current and potential homeowners continue to move forward with buying, selling, and refinancing properties, it’s important that valuations are done both accurately and safely.
So how do industry pros really feel about appraisals from a distance? A new survey of more than 350 real estate professionals conducted by Radian in April 2020 attempts to shed some light on what professionals think of distance appraisals in the time of COVID-19 and what the future may hold.
Results of the survey confirmed that the crisis may be changing attitudes about remote solutions and spurring more widespread adoption. The biggest concerns about social distance valuations highlighted the validity of the data, timeliness of the data, cost, and Uniform Standards of Professional Appraisal Practice (USPAP) compliance.
When asked if they would be comfortable relying on data and photos supplied by a borrower or third party, a resounding 75% said they would be, especially if the information was independently verified, while only a quarter said “no way” to borrower-supplied data. Similar percentages were generated when asked about borrower-guided or remote assisted video inspections.
For many surveyed professionals, technology has the potential to make their jobs easier. They also believe that there is room for improvement, and welcome new tools to help with the evaluation process. Respondents suggested that verified photos and video from the borrower or real estate agent, consolidated public record data from multiple counties/courthouses, and more data to integrate into appraisal software were just some of the tech tools they would value most.
Unsurprisingly, respondents report that the COVID-19 crisis has impacted their business to a varying degree. Nearly 80% of respondents said they had difficulty executing appraisal orders either because the occupant would not allow access unless the inspectors could prove they had no illness or because occupants were reluctant to grant access under any circumstances during the pandemic.
While social distancing has created new challenges for valuing properties, because real estate is heterogeneous, there are always unique properties that need additional valuation support or validation. Access to properties, whether by distance, disaster, reluctance, or lack of appraisers, has made segments of real estate difficult to appraise in person. Luckily, proptech has enabled providers to fill the gap with data and analytics to augment the traditional appraisal process.
From anywhere, interactive services can be utilized to research homes, surrounding neighborhoods and towns, track market performance and trends, and even inspect photos of all the properties used in the valuation. Overlaying Artificial Intelligence (AI) to review photos and determine room type, property condition, and objects within photos provides crucial validation of both professional and borrower supported photos. AI offers the potential for valuable additional verification for all valuation types and is becoming an integral part of valuation technology.
Because so many steps in the transaction chain have traditionally required face-to-face contact, real estate has been slower to automate than other industries. COVID-19 and social distancing limitation have created an accelerant to the in-market testing of valuable remote services and AI designed to augment and automate the valuation process. Prior means and methods are being challenged daily by this pandemic and the industry will need to adapt to accommodate changes to their current practices.
The crisis has forever changed the market and how we do business and will shape the future of valuation practices. Both practitioners and consumers are engaged in helping to identify what could be a permanent improvement and define a long-term solution, which will be reinforced through web-based services supported by data and analytics. As state orders lift and business returns to a new normal, we look forward to being a part of the valuation industry evolution and offering timely, accurate, and safe solutions to support the real estate market.