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How technology is redefining the art and science of valuation

Enhanced automation in valuation, big data and artificial intelligence are technological innovations that are shifting the construction and real estate appraisal landscape.

John Busi, President – Valuation and Advisory, Newmark Knight Frank
18 February 2019

Enhanced automation in valuation, big data and artificial intelligence are technological innovations that are shifting the construction and real estate appraisal landscape.

What technology-driven changes could happen over the short to medium term? How will technology advances in real estate impact risk assessment and risk mitigation? Will predictive analytics shift the valuation 'problem' from 'what is the value?' to 'what will the value be?'. These are just some of the questions our industry needs to address and that we will explore at the World Built Environment Forum Summit in May. If I'm a valuer I'd want to understand how my industry is changing and what I need to do to be ready.

I'm now on "high alert" with regard to the rate of change that can impact an industry due to the exponential advances that technology is creating through machine learning, augmented reality, and artificial intelligence. Last year's keynote was no stranger to this change – in fact, as one of the founders of Tesla, J.B. Straubel is spearheading that change. His opening session set the tone for two days of discussion about how adapting and embracing technologies is no longer a choice for participants in their respective industries.

One year later, there's a consolidation taking place in the valuation industry today that is being driven in part by the anticipation of seismic shifts in the impact of technology. Valuation professionals are unsure how near or far this technological renaissance is and how it will impact their professional livelihoods. The confluence of regulatory changes, technological advancement and the market's demand for speed are driving change faster than ever before. The panel I'm on will examine what appraisers should be ready for and what they can do to prepare for the future state of the industry.

There are also two sides to this story. The first is how technology can aid in the efficiency of producing valuation solutions and the other is related to risk assessment. Consumers of valuation solutions (investors, lenders, rating agencies, GSEs) who are processing volumes of valuations will have new risk assessment models created by big data aggregation and models propelled by artificial intelligence.

The "suite" of technological innovations that will converge on the valuation industry in the near term will alter the landscape that we've operated in for decades. We're already seeing drones that inspect property, smart phones that replace laptops and desktops as workplace production tools and automated valuation models (AVMs) that process all the data that gets collected via algorithms and machine learning.

Challenges await among the opportunities

The data ownership challenge will continue to infuse inertia in the acceleration of progress. Data rights, proprietary sources, privacy issues will act as governor on the technological advancement engine. This will sort out as data becomes even more accessible and commoditized, but it will take time.

Young professionals will be advantaged in this new world order because all the tools that are reshaping the industry have their origins in the technology that millennials and later generations grew up with.

Facilitating important discussions

I'm biased about the speakers that I'm most interested to hear from. My panelists have major roles within the largest institutions across the globe and incredibly important positions within our industry. They have insights and perspectives that need to be heard. I've looked up to these leaders throughout my career and I know that they all have something to say. As a professional valuer I'm going to listen and I know I'm going to learn.

Explore this, plus related built environment topics at the RICS World Built Environment Forum Summit in New York, May 2019. Join John Busi as he moderates a session titled: 'Valuing Real Estate in the 21st Century: How is technology redefining the art and science of valuation?'

Panellists will include:

  • Cate Agnew, Head of Valuation – Executive Director, Natixis Corporate & Investment Banking 
  • Therese Rutherford, Managing Director – Head of CIB Appraisal, JP Morgan Chase
  • Alyce DeJong, Global Chief Real Estate Appraiser, PGIM
  • Wayne R. Miller, Senior Vice President - Chief Appraiser, Bank of America
  • Thomas Boyle, Senior Vice President and Chief Appraiser, U.S. Bank
  • Tye Neilson, Chief Appraiser, Wells Fargo
  • Mark Snow, Managing Director – Chief Appraiser, Citibank