Peer To Peer Data Sharing, With You In Complete Control
Data you've compiled over the months and years on your subjects and comparable sales is the single best source of data you'll ever find. The problem is that most independent fee appraisers don't collect enough recent comps in their databases to make their own data as useful as aggregated sources like MLS closed sales or third party data providers' discs.
What if there was a way to aggregate the comps data from a number of local appraisers who all agreed to opt in and exchange that data? Suddenly, you've got a rich source of data and analysis you trust (because you've agreed to work with the appraisers involved -- presumably because you know they do good, professional work) which is just as accessible and useful as an MLS import or a CD from a data provider.
At the labs, we're working on such an application. We've given it a lot of thought, and judging from the quantity and quality of feedback from you, in e-mail and in person, you have too. Here are some of the articles we've produced here that touch on this exciting subject: Please read Collaboration and data sharing: Let's talk about why and how, The Comps and Data Share Debate: Does Size Really Matter? and Data sharing: Small, exclusive groups of peers you trust, all by Research Fellow Woody Fincham.
This project page summarizes our thought process as detailed at greater length in those articles, and will serve to update you on where we are in the process. So check back often.
Let's go point by point through how and why this should work.
Why share data?
The best reason: Enhanced service to our clients, which means more clients and more work. Not unrelatedly, our perception in the mortgage market will also be enhanced. We're already perceived as experts; now we'll be perceived as keepers of the best, most reliable mortgage information available.
It's also a huge convenience. Does this sound familiar? You're doing a property that has old and outdated MLS and tax records. You have measured the property, only to find that there is 300 square feet of extra gross living area, with a full bathroom. We see this everyday, and a situation like this can blow your preliminary data out of the water. On top of it all, it's a rush order and the client sending you the work is one of your big ones. Unless you have a previous file on the property, you are stuck with the data you pulled, and now have to re-pull and replace it.
Now imagine this: same property, same situation, except you have a verified data source set up and managed by other professional appraisers that shows all instances and updates to the property as seen every time it was appraised. You look into the database and see that it was appraised three times in the last five years, all for refinance purposes, by three different appraisers. Of course the data may vary a little depending on measurement technique and site data collection, but it all correlates into essentially the same information.
Wouldn't you take that over an agent's sales oriented comments, or unreliable public record data, any day?
Does sharing data violate USPAP? Gramm-Leach-Bliley?
Intellectual property rights?
USPAP insists you gather and analyze information about the subject and comps that's "available ... in the normal course of business." If reliable, professional information like the kind described above is available, USPAP doesn't forbid its use -- it encourages it.
Any data exchange would redact or separate identifying information -- the kind you're prohibited from sharing by GLB and financial privacy regulations. Value opinions, client data and other similar data points simply won't be disclosed.
Finally, as an appraiser, you own your work product. You license your clients to use it to make their underwriting decisions, but it's your intellectual property. That's why the kind of system we're talking about, where you as the appraiser are in charge of deciding who does and does not get to share your data, is the only kind that protects intellectual property rights. AVM developers are stealing your data right now without your permission. An opt in, peer to peer exchange will combat that, not mimic it.
Aren't I just helping my competitors?
The idea behind sharing data is that we want better and more accurate information to use in our reporting. The further we get away from ambiguous agent remarks, and not having access to FSBO (for sale by owner) information, the better and more accurate our work will be.
To win and keep business, we have to do a lot more than get good data. We have to market, manage, provide superior customer/client service, deliver on promises as far as turn times, and more basically we have to use the data we gather well.
More practically speaking, since you decide whether to participate in a peer to peer data sharing pool, you can exclude poor appraisers you feel you can only compete with because of the quality of your data. (I.e. because they undercut your fees, do quick but sloppy work, etc.) It makes sense that you would want to share with the kinds of appraisers who aren't going to be able "helped" by access to more and better information. Like you, they get it now, it just takes a lot longer.
Why is data shared among appraisers better than other data?
An MLS is great for getting basic profiles about a property. But don't forget that it's a selling tool. Many times the information is polished to make a property seem more attractive than what it may be. Nothing wrong with that, but as appraisers, comments like "cream puff" or "cozy" are just a bit vague.
Tax/assessor data is notoriously unreliable and varies widely from jurisdiction to jurisdiction. It's also often a lot older than recent appraisal data. Even new, it often doesn't come from the kind of professional, rigorous analysis an appraiser uses in the normal course of business.
Finally, while third party data is good and useful, it's limited (as I'm sure you're aware) as to where their data exists and where it's good. And if it doesn't come from appraisers, and comes instead from public records, or BPOs, or what have you, then it's not better quality data than appraisal data -- just delivered in handier form. Peer to peer data sharing eliminates that "advantage."
Is this just a way for a la mode to make money redistributing the data from my WinTOTAL and XSite?
No. A peer to peer network means that the data ins't passing through a central server, either in Oklahoma City (where a la mode is headquartered) or anywhere else. While we're far away from any pricing decisions, any fees collected by a la mode would be for the technology, not for the data, which it wouldn't touch.
Beyond that, a la mode owner Dave Biggers has said publicly that even if it made sense to have his company be a central repository of WinTOTAL data from which appraisers could draw, he wouldn't authorize doing it that way. It would be more trouble than it's worth and there would be plenty of complaints that he was misappropriating or misusing the data somehow -- the kind of trouble other companies that do collect data and redistribute it are getting into these days.
a la mode makes its money providing appraisers with tools they use to make enough money to renew their memberships every year. Nickel-and-diming it is other companies' business model.
For more on why a peer to peer system is preferable to a centralized system, read Woody Fincham's article here.
What different ways can this be done? Which way are you leaning toward?
There are two basic ways this could work. One is a "push" system. If you opt in to a data sharing network of your peers, once a day (or whatever the group set it to) you would "push" your property data out to all the appraisers on your data sharing "buddy list." Then you and they could each access everyone's data on their local machine.
Another way is a "pull" system. In this setup, you would query your "buddy list" with property characteristics you're looking for. If the query turned up a potential comp in another appraiser's database, that property's information would get pulled into your report for your examination and possible use.
The advantage of a "push" system is that queries are faster and you have more flexibility to work with what's on your local machine than to have a go-between script or program trying to search for you. The advantage of a "pull" system is that you more closely guard your data and maintain more control than if it all gets sent to everyone else's machine regularly.
Which one are we leaning toward? Well, right now we're right at the stage where we're trying to figure out which one makes more sense. To help us do that, we'd like to hear from you. If you've read this far you're obviously interested in this topic and would consider using tools that made this kind of data exchange a reality. What do you think? Send ideas and feedback to labs@alamode.com referencing CompsXchange in your e-mail subject.
