STRATMOR Study: Newer Technology Can Help Lenders Solve Problems With Appraisal Delays, Cost

In its May Insights Report, STRATMOR Group’s Customer Experience Director Mike Seminari analyzes the real estate appraisal process in an article entitled, “The Next Big Mortgage Technology Change: Appraisals.” Seminari discusses the results of a recent study on appraisal operations conducted by STRATMOR and commissioned by appraisal management software company, Reggora.

“Now that volume is down and lenders are catching their breath, they can finally turn their attention to alleviating the continued pain felt around the inefficiency, the lack of visibility and the overall lack of control associated with the appraisal process,” says Seminari. “Today there is an opportunity for appraisal streamlining and automation, and ultimately, higher productivity and lower per loan cost. After decades of lagging from an automation standpoint, there are solutions available today that can eliminate manual tasks and shorten appraisal turn times.”

Even though originations are lower, appraisers are having trouble submitting appraisals on time, Seminari says. When the lender can even find an appraiser to take on an assignment, nearly four in ten appraisals (38 percent) are still coming in late. According to the research, lenders said turn times were the most important factor in the appraisal process (38 percent), with “Quality” a close second (35 percent). Lenders said it takes an average of more than seven days from the time of application to the scheduling of an appraisal.

“Lenders who use Appraisal Management Companies (AMCs) see appraisers miss delivery dates more often than those who use a Panel approach (23 percent vs. 14 percent),” says Seminari. “They also run into delays more often than those using Panels (13 percent vs. 9 percent).”

And these aren’t the only problems lenders reported with their AMCs. Appraisal costs are up overall, increasing from around $350 a decade ago to $629. Additionally, there is more variation in AMC pricing versus Panel pricing; AMC pricing ranged from $355 to $950, a difference of $595, while the Panel approach ranged from $438 to $750, a variance of $312.

Seminari notes that lenders also cited frustrations around collecting appraisal fees, placing orders, and lack of transparency. Participants said they spend more time following up (29 percent) than on any other appraisal task. Scheduling was the second most time-consuming task cited at 23 percent and correcting and editing ranked third at 16 percent.

“Investments in technology that automates manual processes and potentially shortens cycle times is a good long-term strategy for lenders to consider,” says Seminari. “At STRATMOR, we’ve yet to see appraisal solutions take center stage like other innovations before them, but it may only be a matter of time before they will.”

 “The big question is, do the return on investment (ROI) numbers pencil out?” says Seminari. “In a constricted market like the current one, lenders have their hands full just trying to stay afloat. But the even bigger question may be, can lenders afford to ignore appraisal innovation?”

A second Insights Report article by STRATMOR Senior Advisor Sue Woodard discusses the importance of the Employee Experience (CX) and the role it plays in the customer’s experience. In her article “Employee Engagement and the Customer Experience,” Woodard examines the importance of leadership “showing up” for employees, especially during turbulent times such as the ones lenders are experiencing now. Woodard outlines four steps lenders can take now to help end this year profitably.