Over a four-year period, the volume of multifamily transactions spiked 74 percent, while the number of appraisers decreased by over 10 percent. Demand for appraisals is now outstripping supply.
As a result, appraisers are under pressure to work faster, while continuing to provide objectivity and quality. Despite a clear need for modernization, much of the work involved in creating an appraisal hasn’t changed in decades. Keeping up has meant longer work hours for appraisers, including nights and weekends, and more supervision of junior analysts. But hiring even more analysts is not a viable long-term solution.
Data difficulties are at the heart of the problem. Appraisers must quickly obtain the right data, for the right properties, at the right time to arrive at an objective valuation. But identifying and analyzing comparable properties involves a consortium of disparate data sources that are often incomplete and difficult to analyze. The result is a slow and potentially subjective process.
In other industries, digital innovation has helped deliver greater insight, faster. As cloud computing and AI streamline and accelerate processes in financial industries, a new wave of property technology is also sweeping into the commercial real estate sector. What happens when appraisers are given unparalleled access to data and therefore receive unparalleled support for assumptions and market conclusions? Appraisers could provide valuations substantiated by richer data in a fraction of the time. With that extra time, appraisers are more available to consult with clients and analyze the asset’s risk position in the market, while focusing less on verifying analysts’ work.
If you’re a property owner, operator, or investor, this means you can get more advice while also making critical decisions about buying, selling and refinancing more quickly. If you’re a lender, you’ll get more visibility into the market while also accelerating underwriting, terms, and the decision to lend in the first place, keeping your borrowers happy and your business moving.
Apprise, a new company by Walker & Dunlop and GeoPhy, is moving multifamily appraisals into the future. Through empowering expert appraisers with innovative technology, Apprise is able to streamline and strengthen the process, delivering more objective, consistent, transparent multifamily appraisals in as little as five days. Quicker turns used to mean a lower-quality appraisal, but with Apprise, this is no longer the case.
A property appraisal is a requirement for any real estate deal, determining the viability of a sale, the interest of buyers, and the likelihood and terms for financing. The appraisal is the linchpin of every transaction. It has to be objective and empirically supported, the faster a quality appraisal is delivered, the faster a deal moves. And in commercial real estate, time is money.
APPRISE DELIVERS HIGHER QUALITY APPRAISAL REPORTS, IN LESS TIME
Digital innovations such as big data, AI, machine learning, and, eventually, automated valuation models – combined with improved workflow – hold the potential to make multifamily appraisals faster and better. This is the concept behind Apprise, which combines expert local appraisal professionals, Walker & Dunlop’s deep knowledge of the commercial real estate space, and GeoPhy’s data science and analytics technology.
Through Apprise’s modernized approach, appraisers are equipped with the most comprehensive dataset in the marketplace, powerful onboard analytics, and standardized, automated reporting capabilities—all via a single log-in. Apprise significantly increases appraisers’ productivity and efficiency while bolstering support for their value conclusions and risk analysis.
“Within five years, experts predict that 50% of our interactions will involve AI, unlocking an entirely new workflow for the appraisal profession and a new set of capabilities that will drive the back office to the forefront of business strategy.” – The Appraisal Institute // Atlanta Chapter
Here’s a comparison, across steps, of Apprise to “appraisal 1.0”— the cumbersome, time-consuming process behind a traditional appraisal
MARKET RESEARCH INVOLVES TIME-CONSUMING DETECTIVE WORK
The appraisal process begins with the arduous and time-intensive identification of comparable valuations for the property. To understand the local market, an appraiser must sift through expense, sales, and rent data dispersed across multiple sources. Compiling and analyzing involves combing through dozens of industry standard resources, often with separate accounts and logins. When researching expense, sales, and rent comps, appraisers tend to run into the following issues:
Oftentimes, the appraiser must rely on the expense comps they already have pulled, because they simply don’t have the time to search for the freshest data. Additionally, pulling tax information is a pain, requiring digging through various GIS systems.
To pull the necessary sales comps, appraisers need to file through industry resources with various logins for a lead unit mix, and then must verify the rents and occupancy with management/leasing professionals.
To collect sales comps, appraisers need to track down leads using multiple industry resources with multiple logins and maintain relationships with market participants to confirm the relevant transaction data. In the traditional process, appraisers are bogged down with report assembling/writing and analysts are tasked with comp research.
This means appraisers must train and manage someone with little experience to confirm valuable data points. But that’s not all. Beyond expense, sales, and rent figures, there are potentially millions of points of market and contextual data that can add valuable context to a multifamily valuation: local demographic figures, crime rates, “walk scores,” neighborhood jobs information, and more. However, this information often comes from proprietary or unpublished sources and can be difficult to obtain and compile.
The traditional way of doing things sacrifices both time and insight. It’s the primary speedbump in the appraisal process. When appraisers rely on disjointed data due to an archaic research process, owners, operators, and lenders wait weeks to receive what might end up being a partially informed view of an asset value and its risk profile. And it can take weeks for them to get an initial report.
FASTER ACCESS TO RICHER TROVES OF DATA
Only Apprise has the technology to instantly aggregate and analyze millions of units, delivering higher quality expense, sales, and rent data. By utilizing data feeds to pull information from public records, property sites, industry resources, and proprietary sources into one, central cloud-based system, Apprise has built the most comprehensive national property database in the market.
For appraisers, this system provides unprecedented access to information, transforming the arduous process of gathering market information and data for comparable properties.
Apprise’s expert appraisers begin a property analysis and valuation with all available information and data points, from industry-standard resources, at their fingertips. That includes:
The system presents expenses line-by-line for properties, with information surrounding utilities, taxes, payroll, administrative, management, advertising, replacement reserves, property insurance, tax data and more.
Our system pulls lead information from multiple sources into the database, and can compare these sources directly to map discrepancies and anomalies.
The system consolidates sale leads from public records and industry standard resources for sale dates and prices. Appraisers are alerted when new sales information is made available and can then begin the validation and confirmation process for the sale comparable.
INITIAL REPORTS ARE CUMBERSOME TO COMPILE AND INCONSISTENT
With the traditional appraisal process, compiling data is just the beginning. Then an appraiser must copy, cut, and paste data from one document to another to turn their findings into a report. The process involves creating, consolidating, and reconciling multiple Excel spreadsheets. It’s an onerous manual labor that can take up valuable time and inadvertently introduce errors. Often this is delegated to junior analysts. Furthermore, these initial reports can be hundreds of pages in length, with little consistency across appraisers. Reports for one state may look very different from another state, even those distributed by the same company.
Apprise replaces the cumbersome Word and Excel process with the ease of computer-generated, standardized report creation.
Data points, fields, and more are standardized to minimize manual data entry and arm appraisers with accurate and consistent information. Processes are optimized for speed and accuracy and controlled for consistency to reduce the risk of data inconsistencies, typos in formulas, or erratic analyses.
Built-in analytics provide even more digital assistance. AI-empowered “data tips” help appraisers identify trends and insights otherwise invisible to the human appraiser. Moreover, Apprise’s technology “learns” from appraiser behaviors, becoming faster and smarter with every analysis.
As a result, Apprise’s expert appraisers are able to deliver more consistent, accurate, informed appraisals in less time. Additionally, because our platform is national, Apprise provides the same standard report regardless of where the property is located. Owners, operators, investors, and lenders can then save time because reports are consistent across appraisers, geographies, deals, and properties.
In both the traditional and Apprise appraisal process, an initial report is followed by an in-person assessment of the property and surrounding neighborhood. Apprise uses a credentialled appraiser, just like any other traditional appraisal. But that appraiser comes in with richer data and insights of both the property and surrounding location to help inform the inspection, be it in-person or virtual.
DELIVERING THE REPORT
In the final step, the report is delivered. With a traditional appraisal process, the format of these reports can vary from appraiser to appraiser, as can the content, based on the experience level of the appraiser and their access to data.
With Apprise’s modern approach, reports follow a standardized format, with all decisions supported by objective, transparent data from a multitude of sources. Owners, operators, investors, and lenders can expect consistency and comprehensiveness. The data used in the process comes from a richer well of sources, as discussed in step one, and is analyzed by some of the best appraisers in the business.
People will always play a role in this new type of multifamily appraisal. Even the most sophisticated algorithms are only as good as the assumptions used in their programming and the data used in their training. Verification, interpretation, and certification require a human touch, even as the “science” part of Apprise—the algorithms and data science—make research and reporting easier and faster.
Algorithms only assist with the assembly of comparable properties; appraisers interpret the data and make the final selection. Technology can bring accuracy, but appraisers bring credibility, precision, and expertise. Apprise puts objective, transparent statistics at their fingertips to support their value opinions.
Appraisals powered by technology and orchestrated by expert appraisers maximize the power of both. They bring the best of digital transformation and professional expertise together for the benefit of all parties. In an industry where knowledge is power and time is money, the accelerated insight of an Apprise appraisal is setting a whole new benchmark within the industry.
Meet our expert appraisal team and learn more at apprise.us
Read the full Multifamily Outlook!