Expert Insights: Modernizing the Appraisal Process

This piece originally appeared in the May 2022 edition of MReport magazine, online now.

As VP, Principal Product Manager for EXOS Valuations at ServiceLink, Phil King serves as a subject matter expert for EXOS Valuations, responsible for developing its product strategy and digital roadmap.

King has been in the appraisal management industry for more than 20 years, and has been with ServiceLink since 2009, holding several operational management positions throughout his time with the company.

From desktop and hybrid appraisals to leveraging artificial intelligence (AI) and machine learning, the appraisal industry has truly modernized in more ways than one within the last decade. The pandemic accelerated the industry’s appetite for new advancements, and it is only a matter of time before they are fully embraced by the GSEs (government-sponsored enterprises) and the industry as a whole. MReport recently spoke with King about some of the top trends the appraisal industry should be watching in 2022 and what lies beyond.

What are some of the latest trends and changes you are most excited about in the appraisal space?
As someone who has been in the appraisal management space for more than two decades, I have witnessed a great deal of change over the years. I am most encouraged by the progress we have seen recently with appraisal modernization.

With the GSEs now allowing appraisals to be conducted remotely, leveraging public records like MLS (Multiple Listing Service) data, floorplans, tax records, and prior valuations to complete desktop appraisals, it will only be a matter of time until the modernization of the appraisal process is realized—my estimate is that this could occur as early as 2023.

Desktop and full hybrid appraisals can change the game by drastically reducing turn-times and creating more transparency and ease for the lender and borrower alike. That said, the industry will need to focus on data collection and how best to use this data to determine accurate valuations. How effective we are in leveraging this data will dictate how far we go as an industry with a more digital, automated valuation process.

What are some future tech trends the industry should be aware of?
Borrower-conducted inspections for home equity loans, enabled by sleek mobile applications powered by AI and machine learning, are going to be getting more buzz in the near future.

ServiceLink’s research has shown that today’s consumer is ready and willing to take a self-serve approach, if given the option, and this is simply an evolution of that. This is also going to help speed up the process as well, which is a welcome relief as some appraisals are currently clocking in at 14 days in certain parts of the nation.

For lenders interested in exploring borrower-conducted inspections, they should take a step back and consider their risk tolerance and decide if partnering with a provider that can give them technology that they can drop into the hands of their borrower is something they have the appetite to pursuit.

Lenders also need to be mindful of AI and machine learning as key drivers to meeting evolving consumer demand. The industry is doing an excellent job at advancing valuation technology, but if we really want to start looking at how to take this experience to the next level, we need to think about how we can further automate it. Luckily, there are millions of records and databases across the industry. We have the data and have the technology, but how do we automate the process to make it better? That is a question that will continue to be top-of-mind as we go down the path of appraisal modernization.

How can lenders prepare for appraisal modernization?
Everyone is going to need a hybrid appraisal solution. Lenders need to prepare themselves to conduct hybrid valuations, keeping a 2023 timeframe in mind.

It is in a lender’s best interest to start taking stock of their valuation processes and speak to their providers now about whether they currently have, or are working on, a hybrid solution and how that will impact their workflows.

They need to ensure that their processes can absorb the hybrid process, and need to have the correct underwriting guidelines in place. Additionally, they need to ensure that their systems can handle various delivery methods and file formats, among many other considerations.

Lenders also need to have a strong provider that is ready to hit the ground running with hybrid appraisals when the time comes so that they can remain competitive in this evolving landscape.