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» VISIT US ONLINE @ DSNEWS.COM 69 these new assignments do not involve a full site inspection by the appraiser; they are based on an analysis by the appraiser without viewing the property. In these assignments, the appraiser provides a desktop appraisal relying on an inspection provided by a real estate agent or professional property inspector. Inspection data is collected on handheld devices and then passed on to the appraiser for a desktop analysis. e appraiser utilizes "extraordinary assumptions" when using the content provided by the third-party inspector. ese are similar to the extraordinary assumptions that would be applied to a drive-by assignment performed by the appraiser (for instance, assumptions about the interior of the property). Using web portals and mobile technology, the appraiser and the surrogate inspector work in concert to collaborate in the valuation process. Photos and inspection information taken in the field on a mobile device are available to the appraiser nearly instantly after they are collected. Real estate agents, who are familiar with things that influence value, provide appraisers with information regarding the subject's condition, external influences, and other important site-level details. Appraisers can concentrate on what they do best, reconciling this information into a credible opinion of value. Technology facilitates the transfer of information between these two professionals. e combined effort results in a more-efficient process, lower costs, and quicker response times. e end result is a credible valuation report with a different scope of work than a traditional appraisal. A POSSIBLE BPO REPLACEMENT Generally speaking, the marketplace has always preferred real estate appraisals to broker price opinions (BPOs). Intended users of real estate valuations understand that certified appraisers are specialists in valuation. at being said, traditional appraisals are usually not the first choice in the default and servicing sector. In this segment of the industry, valuations are ordered on a large scale and need to be turned as quickly and as inexpensively as possible. BPOs have been sufficient for the task. e new alternative appraisal reports are gaining market share in the default and servicing space. e "shared" valuation process has reduced the cost of these valuation products and allows them to be completed with much shorter-term times. e cost differential between BPOs and these alternative appraisal reports is significantly less than with traditional appraisals. As a result, appraisers are finally getting a foothold in the space, and we will see more and more of these alternative appraisal reports replacing BPOs in the default and servicing realms. e shared economy and recent technological advances are changing the roles of real estate appraisers and real estate agents in the valuation process. ese changes will surely have an economic impact on both appraisers and agents, but they may affect appraisers in particular. Will appraisers face the same challenges as Uber has brought to the taxi industry? e answer is "yes and no," and the final effects will depend on how appraisers embrace this new process and technology. HIGHER-CAPACITY UTILIZATION e most recent studies of Uber and the taxi industry indicate that Uber has created more jobs than it has destroyed. In a paper entitled Drivers of Disruption? Estimating the Uber Effect, the academic authors conclude that Uber drivers exhibit higher hourly rates than their taxi-driving counterparts. e additional efficiencies of the Uber platform allowed for higher-capacity utilization. ose embracing technology make more money while traditional taxi drivers lost money. However, as the hourly earnings for traditional taxi drivers declined, it was offset by the increased wages of Uber drivers. e result was an overall expansion in total employment within cities that embraced Uber. ese economic principles of the sharing economy demonstrated in the paper will most likely hold true for the valuation space as well. Appraisers who embrace novel processes and technology changes in the new scope of work defining these alternative appraisal reports will also experience higher-capacity utilization. Put simply, appraisers can complete more of the alternative appraisal reports per day than they can traditional reports. Measured on an hourly rate, the smaller fees of the alternative reports yield a higher hourly rate than traditional appraisal work. Most of these new appraisal reports will be utilized in place of BPOs, gaining new market share for appraisers embracing innovation. Real estate agents will still be involved in the process and also earn more fees per hour based on the reduced paperwork of completing the valuation portion. At some point in the future, these alternative appraisal reports will begin to replace a segment of traditional appraisals on the origination side. We will see the scope of work of the appraisal report matched to the collateral risk level of the originated loan. But overall, appraisers who leverage the technology and processes of a shared economy in valuation will be the most successful in the future. SHARED ECONOMY EFFICIENCIES Technology is changing everything, including residential valuation. Hopefully, appraisers will embrace the additional efficiencies of a shared economy. ere will always be a need for appraisers in the valuation process. While roles may change and processes improve, the overall result will be more opportunity for appraisers to do business in areas that were previously dominated by BPOs. As these changes make their way to the origination side, they will certainly disrupt the current state of affairs. Appraisers who have based their livelihood on mortgage origination work alone will be most affected. Hopefully, they will not respond in the same manner as the taxi industry: with protest and an attempt to legislate the status quo. It is better to adapt and leverage the new technology and processes than to find yourself left on the curb of the new shared economy.

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