Luke Tomaszewski thinks the appraisal field is a rewarding one, but it has more than its share of challenges, from the thresholds to get into the business to multiple regulatory hoops that eat into appraisers’ efficiency and profitability.
An appraiser himself, Luke has attempted to be part of the solution. His Chicago-based company eValuation ZONE attempts to be a more appraiser-friendly Appraisal Management Company than AMCs have traditionally been — and his start-up, ProxyPics, Inc, aims to leverage technology to improve efficiency for not only appraisers but for most sectors of the housing industry through real-time property snapshots.
Tomaszewski spoke with Mortgage Media’s Dave Stevens about the challenges facing appraisers and about ProxyPics — its concept, applications and reception.
Uphill climb for appraisers
The appraiser population is an aging one, and there’s soon to be a shortage, Tomaszewski said. “I have read that the average age of an appraiser is just at about 60 years old, and we have very few new appraisers coming into the industry,” he said. Training a new generation? No one wants to take on a trainee, have the burden of having to perform a majority of the inspections with them, and then see them go off and become the competition, he noted.
Getting into the industry is hard enough, he said — he was lucky to make $15,000 annually his first few years as an appraiser, “and then you still have all of your expenses.” There was a degree requirement that’s since become a touch more flexible, but that only goes so far.
“I think one of the big problems there is, if I graduate college, as an example, I could probably get a job starting at $60,000 immediately — or I can go into the appraisal industry and, you know, have a bit of a pain point for the next two or three years making next to no money. I think that’s the big problem that we have,” Tomaszewski said. “I think it’s an attractive industry, and a lot of people would get into it, but we have to offer more incentives to those new people coming in, where they could perform inspections on their own.”
The Home Valuation Code of Conduct rules, affecting FHA loans and all mortgages sold to Fannie Mae or Freddie Mac, hasn’t helped. The rules — which were intended as a reform, to prevent collusion between lenders and appraisers — require banks and brokers to have an AMC select an appraiser from its own pool. It is, Tomaszewski suggested, something that sounds better in concept than in actual practice.
In actual practice? “Once HVCC came out initially, it was a nightmare.” The industry, and appraisers in particular, are highly suspicious and skeptical about AMCs as a rule, he said, because they would seriously impede appraisers’ ability to make much of a living. “It’s purely because of those really large AMCs that came out in the beginning when HVCC started, because they would literally take half of the fee that the lender paid them, and they’d pay the appraiser 200, 250 dollars, and that was very problematic.”
Inefficiency has also been a problem, with appraisals reviewed by analysts who were not appraisers themselves and not well positioned to understand them, and an appraisal could be bounced back for a minor, technical faux pas: “You’d submit a good appraisal and then the person on the other end of reviewing it did not understand it, and if it didn’t check the check box, they would reject it to you — waste your time, waste the client’s time, along with the borrower’s.”
There’s starting to be a shift, though — there’s a recognition that there are good AMCs and bad ones. His eValuation Zone, of which he’s been the CEO since 2010, aims to be one of the good ones.
The company has certified reviewers who perform all reviews and work on a regional basis, getting to know client and appraiser — “and we’re not about the fee,” Tomaszewski said: eValuation Zone collects at most 20 percent of the fee as the AMC, he said. And if your appraisal comes in late or has a minor mistake — a minor, technical issue that’s easily taken care of, “we’re not going to cut you off from work like some companies we’ve seen in the past that did,” he said: If they reject an appraisal, it’s going to be something serious that the appraiser missed, and the appraiser will generally appreciate that they caught it. The appraiser should be focusing on the valuation analysis, not jumping through hoops of “dumb commentary.”
Really, it’s too bad there’s been such a fallout due to “bad AMCs,” he noted — done right, they can be a boon. “Overall, I think AMCs could provide … a lot of great value to the lenders along with the appraisers who have a good relationship.”
The Automated Valuation Modeling process has resulted in some efficiencies, as long as it’s not relied on solely, Tomaszewski said. He recalled a visit to an appraisal firm in Australia in which the appraiser has an entire support team and some 90 percent of the information is already filled out on the tablet — the appraiser can focus on analysis rather that wasting time on data entry. “What I think we need to do is not only incorporate the technology that an AVM brings, but I think we need to combine that with some assistance from an appraiser, a data service that provides photography needs like we do.”
The ProxyPics promise
And speaking of technology, there’s Tomaszewski’s new company, ProxyPics. It’s been compared by some, including Tomaszewski himself, to the likes of Uber and Lyft — leveraging both technology and a new business model relying on short-term agreements with members of the public. It allows for a quick and timely look at the property in question, with a photo and data within a matter of hours.
Tomaszewski got the idea some four to six years ago when doing an appraisal in the Chicago area — sometimes he would miss a comp photo, and would dread going back out for one photo, through some somewhat sketchy neighborhoods, when it could take an hour or more to get across the city.
“A thought just came into my head saying that I know somebody’s on that block that would happily take that photo if I gave them a couple bucks,” he said. And as smartphones came out with GPS and with better and better cameras, the improved tech allowed him to put his idea into practice.
It’s not just having neighbors take the property photos. The company has developed a custom questionnaire option, so the user on the street can plug in answers to questions like whether the property has damage or what the condition of the roof is. And there’s other tech in place to ensure accuracy and security — geofencing tech that locks up the camera if you’re at the wrong property; machine learning tech that ensures the number on the digitized photo matches the actual address.
Nor is it just appraisers using ProxyPics, the proud CEO said: Insurance companies are using it, too — brokers don’t have to go out and shoot the usual front, rear, roof and garage photos themselves. (Especially nice for brokers with a big geographical footprint — a Chicago broker doesn’t have to drive to Indiana or Wisconsin.) A merchandising company wants to use if for merchandising audits. Tomaszewski says he spoke with someone from the Department of Defense about potential government uses of the tech.
Feedback has been very positive, from the folks agreeing to take the photos, who say ProxyPics pays very quickly (with money direct-deposited within 24-48 hours into one’s account, Tomaszewski said) — and from the clients, many of whom are used to waiting three to four days for a typical exterior inspection. Using ProxyPics, the wait is six hours at most for 88 percent of the requests, he said. A lot of the runaround is eliminated — client calling inspection company to place order, inspection company conferring with local inspector, local inspector slotting it in somewhere on their schedule. “Once you place the order within our platform, within a second it pings every user within a 10-mile radius of that subject to take that photo. Once they accept it, a six-hour timer turns on. Once they complete it, it instantly goes back to our clients, so there is no delay.”
The type of arrangement the company has with the individuals taking on the photo jobs is in keeping with where the workforce is headed, Tomaszewski said, citing a projection by Intuit that by 2020, 43 percent of the workforce will consist of such “gig economy workers,” people working on their own schedules like Uber or Lyft drivers, or ProxyPics photogs.
And the sky’s the limit as the technology continues to improve, he noted: “Once 5G gets enabled here in the States, we’ll be able to do literally anything. And that’s really what I’m excited about right now.”