From an appraiser shortage to turn-time challenges amid record-breaking volumes, the past few years have been a whirlwind for the appraisal industry. HousingWire recently sat down with Jaro Managing Director Gareth Borcherds to learn what steps housing professionals can take to speed up appraisals.
HousingWire: What steps can housing professionals take to ensure a faster appraisal?
Gareth Borcherds: Before we answer that, it’s important to understand what has happened with appraisals since 2019. We saw in 2020 and 2021 some of the most extensive challenges with appraisals due to the volume we experienced as an industry, and we saw nationwide turnaround times extend out to the longest I’ve seen in a decade. Appraisals have gotten a lot of attention due to that and much of what we saw in 2022 were reactions to what we deemed as an untenable situation with appraisers.
The solutions we have seen are focused on addressing either the supply or the demand of appraisals. The appraiser regulators have seen that we need to make it easier or at least more feasible to add appraisers to the industry. The GSEs have looked at the demand side and tried to reduce the number of mortgages that require a full appraisal or require an appraisal that takes less time from the appraiser.
Both types of initiatives are important, but no one seems to be talking about how we can get more production out of our current set of appraisers. The quickest way to ensure a faster appraisal process is going to be to learn how to work with valuation providers as partners in the process rather than the way most appraisers feel, adversaries.
The most important step we can take to ensure a faster appraisal is to find ways to bring appraisers back as partners in the process. There are several ways we can do that from how we allocate orders, set fee schedules, and handle reconsiderations of values. There is a human element to this process that we need to get back to solving. To create a great borrower experience with speedy turnaround times we must also create a better experience for the vendors that help us fulfill the borrower’s expectations.
HW: What are the biggest appraisal challenges you foresee in the coming year, and how can they be mitigated?
GB: I see four main challenges for the industry in their appraisal process this year.
- Confusion around all the appraisal options now available and the processes to support them. The mortgage industry saw more initiatives released around appraisals in the last 18 months than it feels like have been launched in the past decade. All these changes have led and will continue to create process challenges for lenders as they learn to fully adopt all the options they now have around appraisals. The appraisal process, albeit slow, used to be simple. Build a panel of vendors and assign the appraisal to the next vendor in the list. Now that process includes PDR reports, hybrids, and full appraisal reports. It’s important to make sure that your appraisal department and vendors are trained and understand all the criteria around each option. Then make sure you are building processes that are robust and efficient at routing orders down the correct path.
- Consolidation and lower volumes. I see two problems arising this year for appraisal departments as we deal with consolidation and lower volumes. First, they will inevitably grow their vendor list to add the vendors from the acquired businesses. This leads to more vendors to manage, more special circumstances and nuances injected into the process. Second, lower volumes and more vendors will mean less influence with vendors. Building a great appraisal process requires partnering with appraisal management companies and appraisers to deliver a great experience. Be very careful on how you allocate orders and volume to ensure you are getting the right performance out of your vendor partners. Don’t be afraid to consolidate vendors to match volume.
- Technology to support the growing needs of the appraisal department. Most appraisal desks in the industry are still using technology that hasn’t seen any significant improvements to it for many years. Technology investments are getting a lot of attention. Appraisal departments aren’t always getting the attention they need to solve the challenges they are facing. Appraisal desk managers need more than order management software, they also need business intelligence and property intelligence. In fact, if there is one thing the appraisal process needs more than anything else, it’s an understanding of the property that is going to be appraised well before an appraiser ever sees the assignment.
- The growing negative sentiment towards appraisers. One thing we aren’t doing enough of is talking about how appraisers fit into our future view of the digital borrower experience. Appraisers will continue to be an important part of the mortgage process, regardless of the changes being made. Appraisers are in a challenging spot right now and going through an immense of change. They are dealing with trying to understand appraisal bias in their industry, new product types and regulations, and a lack of ability to truly influence the industry. To make it worse for them, they are not large enough for technology companies to truly invest in the right tools for them to be more efficient. We must find ways to bring appraisers along the digital journey and make them partners again.
HW: How is Jaro using tech to revamp the appraisal process?
The Jaro platform is built on three core principles.
- Flexible and customizable end-to-end order management – You can customize most anything in our system, all without the need of a development team. Our no-code solutions allow for your teams to build in your own enhancements to the order process and automate a lot of checks. This can make a better process or help your manage more appraisals with less headcount.
- Data and analytics embedded into the entire process – Our platform focuses on intelligence in three areas. A) Process management and performance. In our platform you can get performance insights across the entire process. We can measure almost anything you can think of in the process. This data helps you build a better process and understand your own nuances in the process. B) Property intelligence. Because we build tools for the use of appraisers, we have deep understanding of property and data that allows us to provide property intelligence at the time of placing an order. With our AssignIQ score for example, we can more accurately predict when fee increases are required and when an appraisal is going to take longer to get fulfilled due to its complexity. C) Appraisal Quality. We have a fully embedded quality control tool, but we also have other tools that help with reconsideration of values and evaluating reports. All this data feeds back into vendor profiles to make sure that the best quality vendors continue to receive work not only based on turnaround time, but also their quality of reports.
- Fully integrated platform – We build our platform to be fully integrated into the rest of the loan technology. We have and can integrate with LOS or POS systems to make sure that our system and products are built into your other systems so that adoption rates for your process are as high as they can be.
HW: How is the Jaro team uniquely situated to help improve appraisal processes?
GB: One thing that makes us unique is that we are building a platform that truly supports the needs of everyone in the appraisal process. Our customers include appraisal desks, appraisal management companies, and even staff appraisal firms. We are building the first platform where the entire appraisal can be ordered and fulfilled in one place. We are currently in beta with our own suite of valuation tools and plan to go to market later this year with tools that allow appraisers to complete reports significantly faster. We are on a mission to help appraisers complete reports in 2-days.
However, I think our biggest asset is that we understand that technology is not a silver bullet. Sometimes when selling technology that is what we end up positioning our products to be. I’ve spent my entire career standing at the intersection of business and technology. I’ve worked as a data analyst, process and business consultant, and studied organizational behavior and change management while getting my MBA at Purdue University.
All these experiences have led me to understand that everything is connected. Building a great appraisal process requires the right mix of people, process, and technology. To build great software, we must understand the people and processes we support as if we were them. Having run the operations of an AMC myself, I’ve experienced the pain of what everyone goes through in the appraisal process. We can partner with you not only on the technology, but also consult with you on your process and people. We can use data and our expertise to help you improve your own processes to maximize the benefit of your technology.
We are focused on holistic change and improvement to the entire valuation ecosystem.
To learn more about Jaro, visit tryjaro.com.