Will Tech Replace Humans in CRE Valuations?
Real estate has always been one of the more traditional fields; one that has often been minimally changed by evolving technology and heavily reliant on human interaction. However, in the last 5 years or so, technology has seemed to seep into every profession, including real estate. This has mainly been a positive advancement—allowing brokers to reach more potential clients, be more efficient in closing deals, and allowing paperwork and contracts to be virtually delivered, signed and cataloged.
This all sounds amazing, but many are concerned that technology will eventually replace human jobs. One question asked is if new and expanding technology will ever replace the “human element” in commercial real estate, specifically in the appraisals and valuations area. In short, the answer is no—but let’s see why and how technology can still be a valuable addition to CRE valuations and appraisals.
Why Won’t Tech Phase Out Humans In Valuations?
Valuations are heavily reliant on human knowledge of the specific property they are working on. Though there are many algorithms and technological elements that can be used to aid in the process, it will always come down to the physical person performing the job. In fact, appraisers go through rigorous schooling and exams to be qualified. For example, in Florida Certified General Real Estate Appraisers need to have a high school diploma, a 4-year degree, complete 300 classroom hours of pre-licensing education, have additional experience, and take an exam.
All of this valuable knowledge and experience can never be replaced by technology in any form. However, there are some ways that technology can make the appraiser’s job easier, by allowing them to work smarter rather than harder.
How Can An Appraiser Use Tech to Their Benefit?
Appraisals and valuations have always been a tedious and valuable service, and in CRE, you will need one at one time or another. Though there are different types of appraisals depending on your specific situation, PropTech startups have begun creating tools to assist in the more simple valuation needs.
This can allow appraisers to be more competitive in rates and possibly gain additional business that is quicker and easier than before. One example of a PropTech company is eVest. eVest worked with software engineers and professional appraisers to help provide real-time valuations for a number of buildings throughout the U.S. An algorithm then creates valuations for other properties. This is a free service to customers of eVest’s software. This can help for surface valuations but of course, when you want to start digging deeper into a property’s true value or earning potential, you will likely need to confer with an appraiser in person.
Will We Need a Human Element?
There are a variety of reasons someone might need an appraisal in CRE. Some reasons include finding a market value, assessing costs, finding the insurable or taxable value, or investment value. Additionally, new buildings vs. buildings with significant use and depreciation have a different process entirely.
Because there are so many outlying factors that impact a CRE property’s value, technology can never truly phase out the human element of valuations or appraisals, it can only assist in making some elements quicker and easier.