Real estate has always been one of the more traditional fields; one that has often
been minimally changed by evolving technology and heavily reliant on human
interaction. However, in the last 5 years or so, technology has seemed to seep
into every profession, including real estate.
This has mainly been a positive
advancement—allowing brokers to reach more potential clients, be more efficient
in closing deals, and allowing paperwork and contracts to be virtually
delivered, signed and cataloged.
This
all sounds amazing, but many are concerned that technology will eventually
replace human jobs. One question asked is if new and expanding technology will
ever replace the “human element” in commercial real estate, specifically in the
appraisals and valuations area.
In short, the answer is no—but let’s see why
and how technology can still be a valuable addition to CRE valuations andappraisals.
Why Won’t Tech Phase Out Humans In
Valuations?
Valuations
are heavily reliant on human knowledge of the specific property they are
working on. Though there are many algorithms and technological elements that
can be used to aid in the process it will always come down to the physical
person performing the job. In fact, appraisers go through rigorous schooling
and exams to be qualified.
For example, in Florida Certified
General Real Estate Appraisers need to have a high school diploma, a 4-year degree,
complete 300 classroom hours of pre-licensing education, have additional
experience and take an exam.
All
of this valuable knowledge and experience can never be replaced by technology
in any form. However, there are some ways that technology can make the
appraiser’s job easier, by allowing them to work smarter rather than harder.
How Can An Appraiser Use Tech to
Their Benefit?
Appraisals
and valuations have always been a tedious and valuable service, and in CRE you
will need one at one time or another. Though there are different types of
appraisals depending on your specific situation, PropTech startups have begun
creating tools to assist in the more simple valuation needs.
This
can allow appraisers to be more competitive in rates and possibly gain
additional business that is quicker and easier than before. One example of a
PropTech company is eVest. eVest worked with software
engineers and professional appraisers to help provide real-time valuations for
a number of buildings throughout the U.S. An algorithm then creates valuations
for other properties.
This is a free service to customers of eVest’s software.
This can help for surface valuations but of course, when you want to start digging deeper into a
property’s true value or earning potential, you will likely need to confer with
an appraiser in person.
Will We Need a Human Element?
There
are a variety of reasons someone might need an appraisal in CRE. Some reasons
include finding a market value, assessing costs, finding the insurable or
taxable value, or investment value. Additionally, new buildings vs. buildings
with significant use and depreciation have a different process entirely.
Because
there are so many outlying factors that impact a CRE property’s value,
technology can never truly phase out the human element of valuations or
appraisals, it can only assist in making some elements quicker and easier.
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