Written by Nathan Thomas on August 10, 2004
Written by Nathan Thomas on August 10, 2004
According to a la mode CEO and founder Dave Biggers, technology's role in the appraisal profession has evolved from purely cost-cutting and timesaving to opportunity creation and client retention. Biggers made his remarks in a presentation in San Francisco at the Appraisal Today conference there last week.
Digital photography overtook film as the photographic media of choice, laser printers supplanted dot matrix, and formfilling software trumped the typewriter because appraisers could leverage those new technologies to save time and money, increasing their income-generating opportunities, the quality of their product and their profitability.
Today, though, technology must be a multiplicative asset. Technology "needs to make other areas and assets more effective," Biggers said. "Marketing, communication, mobility, and collaboration are where we see a la mode breaking new ground now."
While opportunities for innovation are less obvious now, there are more possibilities that can radically transform an appraisal practice's business model. Differentiation is the key.
"Who or what is your competition? From your client's perspective, not yours," Biggers asked. "How does your competition beat you, and how do you win, for specific clients and products/services?" He invoked the "principle of substitution": Would someone pay more for your service than someone else's if there's no difference?
Decide where you add value, he said, and differentiate on those bases. Differentiating on irrelevant items wastes "marketing bandwidth." Your potential clients have a limited amount of time and effort they're willing and able to spend listening.
How you differ from large Appraisal Management Companies (AMCs), from Automated Valuation Models (AVMs), from other appraisers in your market, or from REALTORS® doing Broker Price Opinions (BPOs) and how you add value beyond them is the key to maximizing your profitability. Examples might be technology, mobility, communication, fees, flexibility, adverse risk reporting, objectivity, or reporting formats.
A small business or sole practitioner has more flexibility than a large AMC with a national footprint. Where a URAR is necessary, an appraiser is the choice every time over a BPO. And you may have the ability to leverage technology to more nimbly respond to client concerns and satisfy their needs than the appraiser down the street.
Ask your clients what it would take for them to switch to a competing appraiser, or a REALTOR®, or even an AVM, Biggers said. That's the best way to determine where you add value today.
Marketing your added value may take money. It's important to make a commitment to spend it even - especially - in down times. And since few appraisal businesses have engaged in much concentrated marketing, it's really a deferred expense from earlier years.