As we wind down from another celebration of our country’s independence and the history of the United States this fourth of July, we here at Class Appraisal thought it was a good time to reflect on another history; that of the Real Estate Appraiser. In a 2003 article from the Appraisal Journal titled, The academic roots and evolution of real estate appraisal, the author takes an in depth look into the history of this important profession, and today we’ll be exploring this article and speculate what the past may tell us about the future.
The first milestone the author posits is what they label, the “Three Approaches Period”, this began roughly in 1900 and is marked by the creation of the three approaches to value concept that many may be familiar with (p.173). Academic programs and organizations surrounding the profession first began popping up around this time, giving credence to these early appraisers. The next era, which lasted from 1950 to 1960, saw electric calculators and other technological advancements that aided in refining techniques used by appraisers, and these advancements continued in the next era (1960’s to early 1980’s), which was also characterized by “…promotion of discounted cash flow techniques for estimating investment values…” (p.173).
The era following, called the Real-Time Data period by the author, perhaps saw the biggest advancements. Not surprisingly, as it coincided with the growth and popularity of computers and the internet. AVMs were also developed for the first time in this era, thanks to more data being available to the public than ever.
This brings us to the present, where technology has advanced even further, becoming both an essential tool and shadowy threat to the appraiser profession. The data amassed over the years is crucial to determining an opinion of value, but the human touch and speculative mind of an appraiser cannot be replicated. We are at the beginning of a new era of appraisals, and its hard to deny the changes that are already happening, but what will this change be?
If history has taught us anything it is that appraisers, and appraisals will adapt. It is my belief that whatever technology is discovered and brought into the mainstream, appraisers will do what they have always done and apply it to their work, making it better, more consistent and more reliable. Ask any appraiser, realtor, broker or borrower and they’ll tell you; the process can be improved, and it will be. The marriage of objective data and technology, with the abstract and logical thought process often required of appraisers will be an exciting one to watch unfold, and Class Appraisal will have a front row seat.