They’re still hurting from the housing bust and face a threat from automation
Twenty-five years ago, Brian Weaver was told at a seminar that the real estate appraisal profession would be killed off by technology in five years. It didn’t happen. But he now thinks the forecast wasn’t exactly wrong—just early.
Weaver today works at the appraisal licensing board in Illinois. Appraisers size up the value of a home before a lender gives the buyer a mortgage. He says a reckoning has arrived for the industry, which employs about 73,000 mostly college-educated people in the U.S. “The future for appraisers specializing in residential mortgage work is coming to an end,” he wrote in a recent newsletter for peers. “No bang. Not even a whimper.”
That’s because the breakthroughs predicted at that seminar a quarter-century ago are finally happening. Advances in big data and computing are helping automation creep into knowledge-based professions, threatening to knock off jobs in much the same way robots have been doing at factories for decades.
In the real estate business, Zillow Group Inc. says its algorithms are learning to capture not only the crude facts about values in the surrounding neighborhood but also more sophisticated price indicators, such as whether the living room has hardwood floors or the kitchen has granite countertops. Although Zillow’s software isn’t used in appraisals—its numbers are available on its website for free—lenders have long used internal and third party computer models to help value homes.
And now mortgage financers such as Freddie Mac are starting to get comfortable with trans actions that don’t involve a human appraiser.
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July 17 - July 23 2017