Comment Detail

Comment

Practical Real Estate Perspectives (www.prepmich.com) is a single-owner LLC specializing in real estate appraisal and consulting. I am submitting this comment with regard to changes Tech Sprints may consider to appraisal requirements for mortgages, Use of technology to increase efficiency, standardize analysis and improve data collection has unquestioned value. However, the subjective multivariate analysis that produces an opinion of value cannot be fully synthesized into a quantitative exercise. There will be arguments within Tech Sprints to endeavor to minimize an appraisal’s human interaction. This comment opposes such an undertaking.

The writer’s opinions are drawn from years of diverse experience in real estate lending, credit underwriting, policy making and appraising:
1) Commercial/residential real estate lending/credit policy for private institutions pre- and post-FIRREA (from the early 1980’s to early 1990’s)
2) Commercial and residential construction/interim loan workout negotiations for a commercial bank in urban and suburban markets during the S&L crisis of the 1990’s
3) U.S. Senate staff policy analysis and recommendations during the Financial Crisis and Great Recession that followed, serving on personal staff, Banking Committee (post passage of Dodd-Frank), and Joint Economic Committee
4) Operating a private appraisal practice as a Certified General Appraiser since 2019 that specializes in residential assignments in a rural market

These experiences span good and bad markets, providing real-life lessons that property values both rise and fall in response to multiple economic, physical, social and legal factors. Cost and market data provide numbers-based determinants of value, but there is no specified approach or algorithm to assure intelligent and comprehensive application of more subjective components into an overall value reconciliation. Human judgement plays a larger role in changing markets, where past trends may not continue. It also allows for broader diversity of inputs, which would be the optimal way to prevent appraisal analysis from falling into standardized patterns that can be found to exclude certain neighborhoods or bypass key characteristics of buyer group niches.

Tech Sprints faces the challenge of integrating the benefits of new technology with informed and seasoned professional contributions within a format that can be synchronized into a larger automated framework. Do not underestimate the difficulty of success.

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