Michael Wojcik: Appraisers Concerned About Growing Use Of Data And Analytics

PERSON OF THE WEEK: Michael Wojcik is CEO of Appraiser Dashboard, a cloud-based software application for simple and quick appraisal management on the go. MortgageOrb recently interviewed Wojcik to get his views on the reported decrease in the number of appraisers and how technology stands to completely reshape the valuations industry.

Q: There’s been a lot of talk about the declining number of appraisers in the industry. Is that the mortgage industry’s biggest issue when it comes to the valuation segment?

Wojcik: I think that depends on who you’re asking. It’s a concern for appraisal management companies (AMCs) because a lack of qualified appraisers will directly impact their businesses. They’re already seeing this in certain areas in the U.S. where the need for appraisals is greater than the number of qualified appraisers. I’d say that if AMCs aren’t concerned about the shrinking number of appraisers, they probably should be because there are things they can do to prepare and position themselves so that lack doesn’t affect them as much as their fellow AMCs.

When it comes to lenders, I would not say that they don’t care about the decline, but I do think they’re much more concerned with issues such as turn times, service and quality because those factors have an immediate impact on their businesses, whereas the number of qualified appraisers is still off in the relative future.

The appraiser community is different, though. Appraisers who are approaching retirement, naturally, aren’t too concerned about the declining numbers. And of course, the ones who are remaining in the industry for a while know that increased demand usually leads to price spikes, which, of course, no appraiser will complain about. In that respect, I don’t think it’s a pressing issue for them. Appraisers are more concerned about the technology movement, such as the use of big data and analytics, and how that might impact their careers in the future.

Q: What would you say are appraisers’ main concerns with regard to the use of big data and analytics?

Wojcik: I think appraisers are wondering – and worrying – about how the adoption of big data and analytical technologies will affect the future of the appraisal business. There have always been questions about whether technology will one day replace appraisers, and most experts have always said “no.” Personally, I agree. It’s hard to imagine that technology could replace an appraiser’s expert knowledge and analysis. Appraisers are regional experts who have a strong understanding of a specific geographic area, from the big picture down to the subtle nuances. I can’t imagine a technology analyzing all of the factors that go into an appraisal, let alone weighing each factor’s value according to what’s important in a specific geographic area.

That said, many of us never thought we’d see things such as self-driving cars, virtual reality and all sorts of other advancements that are on the radar, if not in our homes. What used to be science fiction has now become our reality. The truth is, we don’t know how artificial intelligence will evolve. I think appraisers are unsure of how big of a role big data and analytics will play in valuations going forward. This is not a small concern. It’s weighing heavily on appraisers’ minds.

Q: Let’s face it – there’s tension among lenders, AMCs and appraisers these days. Do you think appraisers’ concerns about big data and analytics are partly a cause of that tension?

Wojcik: No, I don’t think that’s a big contributor. I feel that Collateral Underwriter and other analytic models have created an “us versus them” type of mentality when it comes to appraisers and the rest of the industry, and that is a contributor to the tension among lenders, AMCs and appraisers. When lenders, AMCs and appraisers think in “us” and “them” terms, it’s hard to truly collaborate and work together. It’s a shame because if the three could just figure out how to support each other, I believe the appraisal process would go a lot quicker and smoother.

That’s one of the reasons we created Appraiser Dashboard. I worked on the AMC side for many years. I experienced the mounting frustration – on both sides – that came from a total disconnect in communication and respect for each other’s processes. When AMCs and appraisers have that level of frustration, that’s going to spill over into the AMC-lender relationship. I wanted to create a technology specifically for appraisers, one that would help them collaborate better and bring them more into the fold, rather than leaving them disconnected and, literally and figuratively, all alone out in the field.

Q: What should the industry do to solve the issues in the valuation segment?

Wojcik: First, the industry needs to lower the barriers to entry for the appraisal profession. Right now, it can take years – and this is after the appraiser has already spent four years getting an undergraduate degree – before someone can become a full-fledged appraiser.

Although it’s true that the number of qualified appraisers has been declining over the past several years, in some areas in the country, we actually have a large pool of licensed appraisers who are considered to be qualified to complete an appraisal on a single-family residence but are not eligible to receive orders from many lenders. This needs to be changed.

Back in 2011, when the Federal Housing Administration required that all appraisals were to be completed by a certified residential appraiser – or an appraiser with more advanced certifications – many lenders and servicers followed suit and implemented the same minimum. This simple change left a good portion of licensed professionals with the inability to complete work for many clients. Fannie Mae did a great service to the industry by clarifying its stance on the issue that licensed appraisers, even those who are not certified residential appraisers, are fully capable and competent to fulfill Fannie Mae’s request.

Our industry also needs to figure out a way to attract new appraisers, starting now. If new recruits started coming into the industry now, they’d have the ability to learn from mentors who have decades of experience and have been through all of the different market conditions. I remember when the real estate market began to crash back in 2007, you had a whole new generation of appraisers who did not even know what an REO addendum was. We must ensure the transfer of knowledge to the next generation to ensure the relevance of the profession as a whole.

And finally, it’s incumbent upon technology providers to start making technologies that bridge the gap among appraisers, AMCs and lenders. There are currently a lot of technologies for AMCs and a lot for lenders, but that’s not the case for appraisers. Appraisers have been forced to adapt to technologies that focus on the AMCs’ or lenders’ needs, rather than on software that addresses their specific needs. That’s one of the reasons that there’s so much time and energy wasted on back-and-forth activities. Our technology addresses this issue. Companies that produce technology for lenders and AMCs should take a step back and figure out how to adjust their software so it also addresses the specific needs of appraisers.

Integrations are the future of the industry. The mortgage process will become much more efficient and transparent if we could collaborate and function as a cohesive unit, rather than as a number of disparate parts.


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