English
Appraisal Profession Evolution: From Manual Assessment to Modern Technology.
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Early Appraiser Era (1980s): Appraisers used clipboards with the Uniform Residential Appraisal Report (URAR), pencils, measuring tapes, and cameras (Polaroid for S&Ls, 35mm for independents). S&L appraisers did one appraisal per day; independents received requests by phone. The process involved property visits, measurements, sketching, interior inspection, noting details, questioning owners, searching “Comp Books,” visiting comparable properties, and recording notes. Day two included film processing, transferring informationโ to URAR, inking sketches, report typing by secretaries, reviews, photo pasting, report assembly, archiving, and delivery to clients within a week to ten days. No appraisal licenses were required, education was limited, and experienceโ (6 months to 2 years of apprenticeship) was key. Lenders ranked appraisers (Class I-IV). A residential appraisal cost $230-$250, with the appraiser earning around $130.
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Garn/St. Germaine Act Impact: The Garn/St. Germaine Act, signed by President Reagan, deregulated the S&L industry. It allowed S&Ls to sell “Junk Bonds,” offer unsecured loans, and invest in commercial real estate. S&L executives lacked expertise outside residential real estate, leading to the industry’s collapseโ by 1986. The bailout cost taxpayers $500 billion and led to lender regulation and appraisal licensing under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Title 11 U.S. Code. This also created The appraisal foundationโ to write appraisal standards (USPAP).
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Technology Improvements: Pagers, bulky cell phones, answering machines, and fax machines emerged. personal computersโ revolutionized work. In 1990, a typical desktop had 90 kilobytes of memory and could connect to daisywheel printers. Digital cameras appeared, initially black and white; color photos were possible by 1995.
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Job Losses: The S&L collapse eliminated about three-quarters of these institutions. Licensing requirements and the 1991-1993 recessionโ led to a loss of about 50% of appraisers who were working in 1985. Computer technology caused job losses for secretaries and typists.
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Appraisal Opportunities: Remaining S&Ls became “Thrifts.” mortgage companiesโ emerged. Banks entered the market after the Glass-Steagall Act repeal. Due to the recession and appraiser losses, there was a shortage of qualified appraisers. By 2005, fees rose to $550.00 for a single-family home appraisal. The new generation of appraisers was more educated and tech-savvy.
Chapter Summary
The chapter discusses the evolution of the real estate appraisal profession from manual methods to modern technology, focusing on the period from the 1980s to the present digital age, encompassing regulatory and economicโ changes.
Key points include:
- Manual Appraisal (1980s): Appraisal practices relied on manual tools like clipboards, pens, measuring tapes, Polaroid or 35mm cameras, and comparable reference books. Appraisers visited properties, photographed them, measured, drew detailed plans manually, gathered informationโ, and wrote reports manually. An independent appraiser completed 3-5 appraisals daily.
- Garn/St. Germaine Act: The Act had a destructive effect on the savings and loan sector, causing the collapse of financial institutions and losses to citizens. Many appraisers lost their jobs due to closures or downsizing.
- FIRREA: Following the savings and loan crisis, this law introduced new regulations to lending and appraisal. It established the appraisal foundationโ to set USPAP standards, professionalizing the profession and increasing licensing and education requirements.
- Technological Advancements: Mobile phones, answering machines, fax machines, and personal computersโ changed how appraisers worked. These tools facilitated communication, information gathering, and report writing, increasing productivity and reducing reliance on administrative staff. Digital cameras improved image quality and speed.
- Impact of Technological Development: Technological advancements reduced the number of jobs in the appraisal sector, as appraisers could perform tasks previously done by specialists. Simultaneously, demand increased for qualified, educated, and tech-savvy appraisers, creating opportunities for the next generation.
Conclusions:
- The appraisal profession has undergone a significant transformation driven by regulatory, economic, and technological changes.
- Technology increased efficiency and productivity in the appraisal process but also caused job losses.
- Appraisers must keep up with technological and regulatory developments to succeed in this evolving profession.
Implications:
- Educational and trainingโ institutions should update their curricula to include the latest technologies and methods in appraisal.
- Appraisers should invest in developing their technological skills and stay informed about the latest developments.
- Regulatory bodies should set clear standards for the use of technology in the appraisal process to ensure transparency and reliability.
- New appraisers should focus on education and technical skills to compete in the labor market.
