A Survey of the Technology Astuteness of the Appraisal Industry.
The increase in the use of computer technology in the appraisal industry has been driven by increased competitiveness in the mortgage lending industry due to razor-thin profits on mortgages; the most efficient organizations generate loans in high volume and are therefore the most profitable. Technology has contributed greatly in reducing loan-processing costs while expediting the application and approval process. Since appraising property is the most time-consuming step in the mortgage loan process, the application of technology has been a means of accelerating the mortgage lending process.
Appraisers use spreadsheet software for mathematical calculations in adjusting comparables on the sales comparison approach, word processors for typing accompanying memos, and databases for storing and tracking client information as well as property appraisal data. Communication software and hardware make it possible for appraisers to communicate with clients, data suppliers, and financial institutions in addition to having the capability to access and transfer data files. The extent to which appraisers implement technology in their daily routines is obviously at their discretion. Thus, the purpose of this paper is to examine to what extent appraisers are up-to-date with technology and how they use popular business software and the Internet.
Collection of Data
Eight hundred residential members of the Appraisal Institute were randomly selected and mailed surveys to ascertain their level of expertise and application of technology. The survey received a response rate of over 50%, collecting 406 responses in all 50 states and the District of Columbia. The number of responses varied by state, ranging from only 1 response in 8 states and the District of Columbia to a high of 38 responses for the state of California. The data was also segmented by regions as defined by the Appraisal Institute, ranging from a low of 18 responses received from region 10 to a high of 66 responses from region 5. Twenty-four incomplete surveys were eliminated from the original 406 that were returned. All analyses were calculated based on the responses from the remaining 382 surveys.
Technology and the Appraiser
The study strongly suggests that the appraisal industry is embracing technology in today's dynamic business environment. Only one survey respondent indicated not using a computer in business while the remaining surveyed appraisers reported that they use a personal computer in their daily job functions. This statistic alone shows the importance that appraisers place on technology. They show a dominant preference for DOS/Windows operating systems (97.3%) as compared with Macintosh systems (2.3%). It appears that residential appraisers recognize the importance of staying abreast of technology as evidenced by their ownership of the most current processors (82% have Pentium processors) and the latest in operating systems (84% have Windows 95 or NT). Table 1 shows that residential appraisers plan to keep up with today's rapidly changing technology; 27% responded that they are very likely to update their computer systems within the next two years. In fact, over 60% of appraisers responded that there is an above aver age chance that they would upgrade their systems within the next 24 months (Figure 1). Nonetheless, 21% of appraisers have little or no intention of updating their computer systems within the next two years. Across the 10 regions, appraisers in region 9 are about 50% more likely to upgrade their system than those in region 4 (Table 1).
Although there is some variation in the self-assessed level of computer skills across regions (Table 2), there is no statistical difference in average computer skills. Interestingly enough, 144 (37%) of the 382 responding appraisers believed they had average computer skills (Table 2). In fact, this response was the most common in 8 of the 10 regions. Over 78% of the respondents consider themselves to have average computer skills or better. Only 1% of the respondents ranked themselves as having poor computer skills, while 3% considered their skills to be excellent.
The Internet offers numerous benefits to the appraisal industry. Appraisers and their firms can use it as an effective means of advertising and promotion. Furthermore, the Internet provides an efficient means of communicating with clients and fellow appraisers as well as providing a proficient transport mechanism for receiving appraisal requests and sending appraisal reports. It can also provide access to such useful information as census data, online maps, and a variety of other valuable data. Despite these applications, results indicate that the industry may not be taking full advantage of all the Internet has to offer. Nationwide, only 18% of appraisal firms have an Internet account. There is a statistical difference among appraisal firms with Internet accounts ranging from a low of no firms with an account in region 1 to a high of 38% of firms with accounts in region 4. This notwithstanding, it is apparent that individual appraisers place great importance on the use of the Internet, as 65% of appraisers have personal Internet accounts (Table 1). Though a large percentage of appraisers have Internet accounts, the degree to which they are actually using the Internet is surprisingly low, with over 27% of appraisers not using the Internet at all and less than 5% using this valuable tool on a very frequent basis (Figure 3).
Appraisers have the opportunity to use a variety of applications, including word processing, database, and spreadsheet software. Of these, the survey results indicates that word processing software is the most commonly used by appraisers. The manner in which each appraiser utilizes such software varies; however, some of the most common uses include typing memos and letters. All 10 regions use word processing software on an above-average basis (above a 3.5 on a 7 point scale); over 27% of appraisers reported using word processing software very frequently, while less than 7% reported not using word processing software at all. Although there is little difference (no statistical difference) between the average word processing use among appraisers across the 10 regions, region 1 has the highest usage of the 10, while region 2 has the lowest (Figure 4).
The type of software least used by appraisers is database software. Database software allows users to store, search, and retrieve data. Data records can be queried and retrieved based on desired search criteria. The benefits this offers in the storage and retrieval of comparable property data as well as client information is apparent. Nevertheless, the use of database software by appraisers is very limited, with over 43% of appraisers claiming not to use the software at all. In fact, over 70% of appraisers use database software on a below average basis (below a 3.5 on a 7 point scale); less than 10% of appraisers use database software on a very frequent basis (7 on a 7 point scale. See Figure 5).
Spreadsheet software also offers appraisers opportunities for increased efficiency and overall increased job utility. The main use of spreadsheet software involves mathematical calculations, which for an appraiser can include the adjustment of comparable property values or the discounting of cash flows in the income approach to value. Surprisingly, however, almost 42% of appraisers responded that they do not use spreadsheet software at all. Spreadsheet use ranged from a low in region 8 of 1.8 on a 7-point scale to a high in region 4 of 3.54 on a 7-point scale, with less than 7% of appraisers using spreadsheet software on a very frequent basis (Figure 6).
The survey results summarize the manner in which appraisers are utilizing computer technology and common business software, and suggest that appraisers are upgrading their equipment as well as their technological skills, some faster than others. It is readily apparent that there is an industry move toward a more technologically savvy appraiser. As shown in Table 2, appraisers in region 4 rank within the top 3 regions for level of computer skills as well as for word processing, spreadsheet, and Internet use. Conversely, region 8 on average has the lowest computer skills and utilizes spreadsheet and database software less than the other regions. However, region 8 ranks second out of all 10 regions in terms of Internet use and furthermore are highly likely to upgrade their computer system within the next 2 years. Similarly, region 9 ranks 9th out of the 10 regions in level of computer skills, but first in likeliness to upgrade their system. Interestingly, region 1 has the highest word processing use and the lowe st Internet use.
The overall results of the survey lend credence to the supposition that appraisers do depend on technology to conduct their jobs more efficiently and effectively. The results also tend to indicate that technology is a high priority for appraisers as evidenced by their use of the most current technology and their eagerness to keep up with current technology.
Bennie D. Waller received his PhD in Finance from the University of Mississippi. His research interests include alternative valuation methods, electronic commerce and artificial intelligence in the fields of finance, banking and real estate.
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|Title Annotation:||analysis of results|
|Author:||Waller, Bennie D.|
|Date:||Oct 1, 2000|
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