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Time is of the Essence
by Blaine Feyen, Head of Community at True Footage
“Houston, we have a problem!”, has become a popular phrase and meme over the years to indicate something hasn’t gone as planned. The phrase stems from the 1970 Apollo 13 mission where the astronauts experienced an onboard explosion that crippled the aircraft. The actual phrase was, “Ok Houston, we’ve had a problem here,” but it’s been co-opted by time to be tighter and more useful as a meme.
If you ever hear the phrase, you know instantly something isn’t right and some kind of course correction is in order. I think of this phrase anytime I see or hear appraisers railing against the changes they’re experiencing in the industry. Whether it’s around data collection, software, hybrids, desktop appraisals, ANSI standards, venture capital, AMCs, or any of the other evolutions and iterations of this industry.
One of the first questions I ask new appraiser coaching clients is, “what makes you different?”, and “why would anyone do business with you?” Can you guess what most of the answers sound like? “I’m the best at what I do!” or “My appraisals are better than my competitors.” “I do more research than most,” and “my opinions are better supported than the others I see.” The answers typically come from a place of pride, if not hubris. Good appraisers are hard-working researchers and analysts. They deliver high quality reports to their clients, and they’re proud of the reputation they have in their markets.
I know this to be true because I’m one of those appraisers. For 20+ years I’ve been developing opinions of value on residential real estate in my market and I used to say the same things when asked those questions. However, something changed in 2008-09′ when things changed for everyone. One of my own business coaches asked me that same question: “Blaine, why would I do business with you?” I proceeded to give one of the programmed responses noted above. His quick one-word response shocked me out of my sleepy state: “BS!”
The business coach I’m referring to also happened to be one of my top lending clients at the time and one of the most successful lenders in the country (still our top client today). What he said to me was, “What you’re really selling is your processes and systems, your customer and client service, your communication, your ability to leverage technology, your production line, the efficiencies you’ve built into your business that allow you to complete the appraisal in considerably less time than all the other appraisers, and with more accuracy, better data, and a more well supported opinion of value.”
Those of you who still think you’re being engaged by clients because you’re just such a good appraiser, think again. That may be one of the reasons, but it’s just one of many. The big problem I see with the appraisers we talk with every day is that they all tend to think they’re the best appraiser in their market based on how intelligent they believe themselves to be and how many orders they’re turning down daily. The ones who think super highly of themselves tend to also be the slowest, the most backed up, the ones booked out a month, and the ones patting themselves on the back for doing so. This is a huge problem in the appraisal industry right now and the vast majority of appraisers think this is somehow a good thing. It’s simply one more piece of evidence of just how out of touch some industries can be from understanding their markets, their clients and customers, and their ability to read the writing on the wall.
Let me start with a brief analogy of what I see happening right now in the appraisal industry. Imagine for a moment a local gas station convenience store patting itself on the back for always being out of bread, or cigarettes, or worse yet, gas! You drive up wanting to fill up your tank and pick up some bread for the kids’ lunches only to find signs on the gas pumps saying, “Sorry folks, we’re so popular and in demand that everybody bought up all our gas! Come back in 2 weeks and maybe we can serve you, and maybe for .25 cents more per gallon!” You think to yourself, ‘well that sucks, I need gas now!’, but you’re there anyway so you amble into the store to at least get some bread only to find the shelves bare. You ask the attendant what’s up and she says, “that’s just how popular we are! People want to buy bread from us so badly that we just keep running out. Come back in a few weeks and maybe we’ll have some bread for you.”
You’re not a hero for not being able to provide your product and service when people want it, and more importantly, need it! You need gas when you need it! You need bread when you need it! You don’t appreciate the gas station taking such a self-congratulatory approach to not having what you need when you want it and need it. In fact, you get a bit resentful and you vow to look for another place to give your money to. Over time, that gas station convenience store that was so convenient for you slowly starts to lose its most precious commodity. No, its customers aren’t necessarily its most precious commodity; it’s their trust and loyalty.
Without that, the gas station only has a commoditized product or service that their customers will happily go somewhere else just to save a dime. Not only that, but drivers of gas-powered vehicles start to look for ways to mitigate that issue from happening in the future. What do they do over time? They start to buy electric vehicles. Over time, they start to think about the bread issue and find ways to mitigate that situation from limiting them in the future. What do they do? They have several options available to them: they can eat less bread, they can buy a bread maker, they can go somewhere else for their bread, or they can become their own distributor of bread to be better than the gas station.
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Appraisers are in high demand at the moment and that’s a great thing. We can raise our fees, book out weeks in advance, and finally start being paid what we’ve always felt we were worth and have probably been complaining about on social media forums for years without ever changing anything internally. Now, because of the current market conditions, you don’t have to change anything and you can finally do what you’ve been hoping to do forever. You can stick it to those pesky lenders who give you so much hassle, those annoying Realtors who bug you at all hours of the day and night, those aggravating attorneys throwing money at you to handle that divorce or estate deal they’re working on.
You’ve probably heard it before and from others, this won’t last. Every market including the real estate market, the real estate industry, mortgage industry, and the appraisal industries are going through changes. Some of those changes are being driven by the current market conditions, some of the changes are simply due. Some of it is being driven by advancing technology, artificial intelligence capabilities, better data collection techniques, and some of it is being driven at the highest levels we may not agree with or even understand. But the bottom line is that it’s happening whether we like it or not.
One of the first lessons you learn in real estate is the phrase: time is of the essence. This means that some obligation needs to be fulfilled within a specific time frame or the contract becomes null and void, or one party must comply with something in the contract and execute the agreement. Time is important in the real estate, the mortgage, and the appraisal industries because there are a lot of moving parts. There are interest rate locks that cost the lender and borrower money and will expire, there are inspection deadlines written into contracts, there are deadlines for the actual contract, and there are trillions of dollars being transacted throughout the world in the real estate markets. Time is of the essence!
Anything that threatens those timelines and deadlines, or holds up the money being transacted, is being scrutinized more deeply and is ripe for disruption. Adam Contos, the CEO of ReMax said that, “disruption is really just the market telling you that you haven’t been taking care of business or your customers.” There is massive disruption globally in many industries and without the pressures of faster turn time demands and lower fees being paid to appraisers, many of us probably wouldn’t have looked for ways to be more efficient, faster, and more profitable within the demands that system required. Without the pressures placed on the system as a whole, appraisers would have no reason to grow and change how they go to market.
Time is of the essence and if your model doesn’t allow you to produce and deliver your product or service in the time frame needed by those you serve, no amount of kicking, screaming, hand wringing, or proclaiming you’re the best will save you from the python of progress. You will either figure out how to produce high quality appraisals in considerably less time than you are now, or you will slowly be squeezed out of the market. This won’t necessarily happen overnight, but it’s happening already, and in every industry connected with real estate, lending, title, and appraisal.
If you’re still the person accepting orders, researching those orders, entering those orders into your system, starting the file, inspecting the property, picking the comps, entering the data, writing the narrative, and doing all aspects of the report, you may want to consider revising your processes a bit at some point. I won’t preach doom and gloom and call you a dinosaur; the market is already doing that. I’m just telling you there is a way for you to remain relevant in a rapidly evolving industry and a rapidly evolving world. It really just requires a mindset and paradigm shift in how you were taught to do things, and, subsequently, how you’ve likely been doing them for as long as you have.
Guy Kawasaki is one of the early Apple employees responsible for the first Macintosh computers. He’s a successful venture capitalist, an author, and the Chief Evangelist for Canva. He speaks about progress with an example of how ice was first harvested from frozen lakes in the 1800s. He called it Ice 1.0. Ice 2.0 was the advent of ice factories that began popping up to serve the growing customer base of people who wanted to keep their food and houses cool. Ice 3.0 was the advent of the refrigerator and portable freezer to bring ice making inside the homes of the customer and change the experience of the end user.
The interesting point of the story is that the original lake ice harvesters never became the ice manufacturing businesses, and the ice manufacturers never became the refrigerator factories. The harvesters went extinct, along with the ice manufacturing facilities, when something new and better came along. More importantly, the curve of extinction tells the story. That curve followed a very predictable path and that was in the direction of a better and more convenient end user experience. We tend to judge the experience and needs of our customers and clients based on the way we know how to do things.
We define ourselves by what we already do instead of how they could be done. The process used by the vast majority of appraisers could be something we might call valuation 2.0. We’re certainly beyond 1.0, but maybe not quite to 3.0 yet, but it’s screaming at us from every corner. You WILL speed up or you won’t. By the way, for those who think that I am advocating speed over quality, I’m not in any way suggesting that. In fact, Fannie Mae and Freddie Mac are going to be requiring even more support for adjustments, more clear commentary, and overall superior data support than most have in reports now.
Time is of the essence! If you find yourself being overly self-congratulatory because you’re booked out 3 or 4 weeks, or worse, 6–8 weeks, enjoy this time—it won’t last forever.
About the Author
Blaine Feyen has been appraising for 20+ years, has built several appraisal companies, is a sought-after appraisal business coach, host of two of the industry’s top podcasts, and is the Chief Evangelist for national appraisal and data analytics company, True Footage. Learn more about Blaine at www.RealValueCoach.com, contact Blaine at Blaine.Feyen@TrueFootage.tech or www.TrueFootage.tech.
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