The valuation process itself will be significantly impacted by the advancement of technology. Various areas of the profession have already been subject to change and in the coming years this change is likely to continue. For instance; how data is accumulated for a report, the engagement with a client, the inspection of a property and the physical contents of the report itself are components of the process which may be managed differently due to technological advances. These changes may be perceived as both positive and negative depending on how they are handled.
Advancement of Technology in Data Accumulation.
Big data becoming more accessible in the real estate sector is dramatically increasing the amount of data utilised in the valuation process and the speed it can be accumulated. Big Data can be used to generate ‘automated comparable sales models’ to mimic the traditional approach of the valuer in much less time who would previously rely on contacts and other valuers for this data. Whilst the utilisation of data systems could be of benefit to the profession by decreasing the time taken to amass data, more accessible data could become too relied upon and cause the ‘art’ of valuation to be lost. Traditionally, according to Catella, real estate expert’s base decisions on experience (60.7%) rather than data (23.4%).
There is also the possibility that Big Data could consequently lead to more diluted, less accurate information becoming available which would have a negative effect on the valuation process. For example, Big Data systems in real estate are criticised across the industry for inaccuracies and discrepancies in the data it produces. In the future, a higher reliance on big data will no doubt lead to data collection becoming a more central, specialised role in the process rather than being a duty which is left to junior staff members. The real conclusion here is that data (i.e comparables) from any source need to be verified.
Advancing technology changing client engagement:
Big Data could also be the cause for change with how client engagement is managed in the valuation process. For instance, blockchain based systems like Smart contracts could facilitate agreement on the terms of engagement and limit the chance of conflicts of interest. As well as reducing the need for lawyers being instructed to handle client engagement. On the one hand Big Data can dramatically limit the risk of conflict of interest with smart contracts, however the use of smart contracts could be considered as cold and calculating which isn’t the aura of personal service that the RICS encourages.
How Technology Advancements could make changes to the valuation process itself:
Inspection
The use of drones and image streaming systems such as Cyclomedia could allow valuers to ‘save time and money by limiting the number of site visits’. The idea behind this technology is time saving, however it’s use means a valuer wouldn’t physically visit the property to assess the property as it stands. Site inspection is a vital part of the valuation process at present, inspection of a property is a mandatory ‘valuation technical and performance standard’ in the current edition of the Red Book.
It is also a key reason as to why producing a report takes as long as it does. This time saving technique could rapidly decrease the time taken from instruction to completion by making inspection an obsolete area. However, how much of an impact these new techniques will have, as with everything, will be down to how adaptable valuers are and whether the RICS certifies that a physical inspection is not necessary for a Red Book valuation if drones or systems like Cyclomedia are employed instead.
The valuation process itself will also become more of a digital than physical process. Rather than client engagement, physical inspection of properties and contacting other valuers for comparable evidence, new technology will push the profession into a digital, data analytics age. The competency of a valuer will be assessed by one’s ability to process vast amounts of data as efficiently as possible rather than the thoroughness of inspection and quality of primary comparable evidence. It is unquestionable that the profession as a whole will experience a great deal of changes in the future, the place of the modern valuer in the future will be determined on their adaptability to these changes. Peter Williams, the CEO of Deloitte Digital, highlighted the importance of embracing technology rather than fearing it stating that property “agents will not be replaced by technology …. they will be replaced by agents with technology”.
By Harry Bowers.
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