Using NDC Shift with a la mode to help deal with the new age of appraising

This is a guest post from Brian Trotier, Executive Vice President and Chief Operating Officer at National Data Collective. You can find NDC Shift in the TOTAL Store here.

For many appraisers who have been in the business more than 20 years, the changes that have taken place in the past five years are more than double the number of changes that took place in the previous 15 years. This pace of change has caused much confusion and anxiety in the entire appraisal profession and the recent introduction of the Collateral Underwriter (CU) by Fannie Mae (FNMA) has only increased the perception by appraisers that they are being singled out.

What can an appraiser do to help deal with all of this change? Well, the first thing is to understand what has changed and why. In spite of the broad assertion by many in and around the appraisal profession, the sky has not fallen. Due to the huge losses suffered during the recent economic downturn by virtually all of the financial services industry and in particular the residential real estate segment, regulators, legislators, and lenders have been hyper-focused on how to better use BIG data to identify and reduce risk. This may be different from what has been done before, but then again every industry that first starts using BIG data and new analytics to market or sell or identify trends often goes through a dramatic transformation. If you don’t believe this, ask anyone who owned a travel agency in the ‘90s what impact online airline ticket sales have had on their business. Now in real estate, as Bob Dylan would say, “the times they are a changin’.”

This is why appraisers need to pick good partners like a la mode and NDC to help keep their appraisal business in sync with the times and moving forward in step with the new analytics being used in systems like the CU. When you boil it all down, the essence of the CU is the desire by FNMA to evaluate the overall consistency of the appraisal profession when computing the value of a residence being used as collateral for a loan FNMA is likely to end up owning. Admittedly, there are problems with the CU and it will take time for those to be identified and rectified, but even Microsoft has to issue patches and fixes to its software regularly. For now, the most important message about the CU is to use common sense and good data in tandem with a robust formfiller software system.

To reduce the risk of one of your appraisals getting flagged by the CU, you need to be sure your data sources are reliable and not exposing you to consistency and accuracy issues like those flagged by the CU. To do this, you need to use more than one data source when completing an assignment. For a variety of reasons ranging from cost to convenience, many appraisers rely on a single data source like the MLS for their subject, market, and comparable research. This reliance on a single source of data can often contribute to the inconsistencies the CU flags when evaluating an appraisal report. For this reason alone, it is more important today than ever before for an appraiser to utilize at least two independent data sources when doing research and writing a report. The data from many MLS systems and from many county recorders/assessors may be out of date or simply inaccurate and this may be partly responsible for the holes found in the CU database and how it flags the appraisal reports it analyzes. By using two sources, these apparent inconsistencies can be identified and resolved before you submit your report to your client.

This is one of the big reasons a la mode and NDC partnered to bring you NDC Shift, a tool designed to take the comp results obtained by using NDC’s proprietary search algorithms and “shift” that data into your a la mode formfilling software. This makes it easier for you to use NDC as your primary or secondary source of data to test the consistency and accuracy of your research before you finish your appraisal report and deliver it to an AMC or lender to run through the CU. NDC Shift also saves you time (push a button to transfer your search results), money (no more paying someone $10-$20 to type up your reports), and potential errors (caused by re-typing search results). For more information on NDC Shift, find it in the TOTAL Store here or contact one of NDC’s data coaches at 1-800-964-2374.