A National Standard Is Needed For Transmitting Appraisals Electronically
By Charlie W. Elliott, Jr., MAI, SRA

The greater financial community, after a decade of planning, posturing and procrastinating, has finally leaned to starboard, turned its rudder, trimmed its sails and is pointed in the direction of subscribing to Electronic Data Transmission as a primary means of appraisal delivery. Most appraisers are becoming ready to transmit appraisals electronically however there is still much work to be done before we can enjoy a fast, efficient and open system allowing all to participate.

For at least a decade, the technology has been available to transmit documents in a secure environment at very minimal cost. Yet during this period many, if not most appraisals produced have been prepared as a hard copy and sent either by U. S. Mail or shipped by overnight delivery.

Today there seems to be a change in the air. More and more financial institutions either have their own electronic systems or accept appraisals via conventional email methods. Not to say that past efforts have not been made by the financial community to become more technologically progressive but many such efforts have been held back by the anchors of control, conservatism and complacency by a variety of the crew members on this voyage in uncharted waters. Why have these efforts failed or at best been met with mediocre success and how can new efforts prove more successful?

The answer to this question is subject to opinion and in the opinion of the author few parties in our industry are exempt from responsibility. Battle lines seem to have been drawn between that of the financial institutions including primarily banks, mortgage companies credit unions or lenders and that of the service providers or appraisers.

Since most of the power and money is vested within the lenders and since they control the purse strings, they have been calling the shots. These shots have not been called in a collective or organized way by the lenders but usually by individual institutions in attempts to serve their own individual needs without regard to the industry as a whole. It is also fair to say that when any consideration was given to the industry as a whole relative to shot calling it was usually done with the idea of gaining an advantage rather than working in concert with other lenders. This is not meant to criticize, as the job of management of a business is to increase the value of the business for its shareholders. However, as is in the case of government, some compromise is often necessary in order to accomplish the greater good of having an open and efficient platform from which to operate.

All of the stakeholders here have a vested interest, and it is only natural for each party to protect its turf as best as can be done. There seems to an attempt on the part of the financial industry to design proprietary systems requiring appraisers to pay fees for receiving orders with little regard for any type of national standard. Paying a reasonable fee for access to business through an electronic system is not within itself an unreasonable practice, however, by design it is most often a proprietary system which becomes only one of many which the service provider much subscribe to and deal with. Such systems are also a problem when the systems are used as tools to extract unreasonable profits from a transaction where little or no value is added and where competition is stifled.

One method of electronic appraisal transmission that is very practical and economical for all is that of the Portable Data File or PDF file. This product is offered by Adobe, is very easy to use, is cost efficient and can be used by anyone anywhere to transmit documents including forms and photographs. The software cost nothing for the receiver and approximately $200 for the sender. This is a very reasonable price for the appraiser and cost the lender nothing for receiving the appraisal The downside to this product is that it is not interactive and lenders receiving appraisals from service providers are unable to auto populate data into their systems. Therefore keyboard input is required in order to transfer data into other systems once the appraisal is received. Adobe is used by many lenders but the larger more powerful institutions seem to be going in the direction of developing their own proprietary systems which do not interface with any of their competitors, and a charge of anywhere from $2 to $8 seems to be the norm to the appraiser for using the service on a per transaction basis. Said another way, an appraiser performing say 1,000 appraisals would be required to pay between $2,000 and $8,000 just for the privilege of receiving and transmitting orders. This cost would have been as little as a couple hundred bucks with Adobe Acrobat Writer.

Many appraisers who consider themselves independent contractors, have resisted change for many years and have for the most part been successful in retaining their jobs while digging in their heels. Some typically complain about having to deal with middlemen or appraisal-management companies, while having less than state of the art appraisal equipment and services. Examples include the refusal of some to subscribe to Internet and e-mail service. These services are the very basic communication tools in today’s business environment, and any serious player should not only be willing to spend the few dollars per month to subscribe to these services, but should also consider them essential to win the attention of clients and to provide the level of service expected by clients. Other appraisers have generally subscribed to the above services in an attempt to become state of the art, but many have found the large number of software and system subscriptions to be confusing, expensive and very time consuming. There are no fewer than a dozen different systems offered by the large players, and there are many others offered by those wanting to be considered large players.

The attitude and approach by all parties must change if there is ever to be a simple, fast and efficient electronic data system for transmitting appraisals.

For this to happen both lenders and appraisers must change their attitude toward the issues involved and enter into a serious dialogue. We have seen little or no attempt from our trade organizations on either side of the aisle regarding this issue. The Appraisal Institute, the largest and most influential appraiser trade organization has entered the fray with its own proprietary system, which is only compounding the problem. Either the lenders and appraisers or a private company working with them such as Adobe must come together to offer a system, which does not place the selfish interest of one in front of the other. The cost should be a modest one-time software fee to all users.

Finally, the time has come for our industry to have a better mousetrap, built for the exclusive purpose of catching mice and not each other. We the players need to collectively design and build it. If we do not someone else will at our expense, and they will deserve any and all of the credit for filling a vital need.

Charlie W. Elliott, Jr., MAI, SRA, is President of ELLIOTT® & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889 or at charlie@elliottco.com or through the company’s Web site at www.appraisalsanywhere.com.