Executive Conversation: Scot Rose on tech advancements in the appraisal process

HousingWire sat down with Class Valuation’s Chief Innovation
Officer Scot Rose to discuss the company’s latest advancements in tech,
including 3D imaging technology.

Q. Class Valuation has had an exciting year of expansion so far (see here and here). What’s fueling this growth?

There’s no question the past year has been momentous for Class. I joined in April of 2018 when things were building steam. Narrow Gauge Capital had just invested in the company, and Mike Detwiler came on board as Chief Executive Officer. The vision they had for the business was inspiring. They saw an industry ripe for modernization and an AMC poised to propel the space forward through technology, innovation, and Thoughtful Change. Since then, we’ve hired the right team members into the right roles, allowing us to ramp up quickly to deliver on that vision. I’ve been fortunate enough to be at the forefront, working with key industry stakeholders to define the future of the valuation industry. We are now proud to unveil our findings this fall that support valuation modernization efforts industry-wide.

Q. How does Class Valuation distinguish itself from other
AMCs?

We recently had a third-party company survey and speak with
several of our clients and appraisers for their unfiltered thoughts on Class
Valuation. The feedback was clear – our dedication to exceeding customer
service expectations as well as our innovation efforts are what keep us at the
forefront of our partners’ minds. We’ve built our business on putting customers
and appraisers first. We strive to be on a first-name basis and regularly reach
out directly to check in on their satisfaction with our team and services. The
origination process can be stressful for all involved, and we do our very best
to ensure we are offering a transparent, high-touch experience every step of
the way. In addition, Class is known for custom-built technology solutions that
enhance our customers’ experience. Tools to see state-by-state and
county-by-county pricing, current turn-times, and order status are just some of
the features we’ve long provided to our clients. Now, we are advancing that
foundation even further with our custom-built technology that is defining
valuation modernization.

Q. In what ways is Class Valuation making the appraisal
process easier and more transparent?

We are focused on creating the industry’s first true Property
Fingerprint for homes across the country. We define Property Fingerprint as the
future of data collection in the home valuation process. This cannot be done
with traditional valuation tools and is only possible thanks to our mobile
inspection app designed for appraisers with features like 3D property scanning,
highly accurate rendered floor plans, and much more robust data collection. Until
this point, we’ve been relying on largely manual processes to collect property
information and value homes. Now, we can use advanced technology to ensure
greater transparency, granularity, speed, consistency, and credibility on every
home valuation.

Q. How does 3D imaging technology transform the appraisal
process?

The application of 3D scanning in appraisal and mortgage
banking is infinite, so I can only scratch the surface here. There has been a
lot of attention recently around our industry’s move to a bifurcated process
and appraisal modernization, so I will focus there. To do this responsibly, we
need to give the desktop appraiser and all other stakeholders enough
information to be confident in the results. Trying to get appraisers on board
to trust minimal data in a PDF report that includes some property information,
photos, measurements and a perimeter floor plan completed by someone they don’t
know can be difficult. The appraiser completing the desktop appraisal often
questions the credibility and reliability of the data, creating barriers to the
scalability of the solution. With 3D scanning, Computer Vision technology creates
consistent and accurate measurements, detailed floor plans displaying the true
functional utility of the home, and a virtual tour that guarantees full
transparency. This allows the appraiser to view the property interior and
exterior virtually. Additionally, it provides more robust and granular data,
allowing us to understand much more about the home than ever before: volume of
rooms, ceiling height, the year/make/model of all major appliances in the home,
window measurements, and spatial context of major attributes to the home both
positive and negative (like where predominant views are visible from).

Furthermore, not only are we solving for process challenges
on the front end, but this provides much more transparency and credibility,
improving the overall collateral risk process for all downstream stakeholders.
We see tremendous value in this for secondary market participants (e.g. rating
agencies, investors, MI companies, etc.). We know this will improve the REO
process and bring long needed transparency and ability to understand more
accurately the investments that need to be made to bring a property up to
marketability. As I mentioned earlier, there is just so much potential, and I
think we will see the far-reaching value this has in the months and years to
come.

Q. Some experts say
tech firms are slow to develop appraisal technology. How is Class Valuation
bucking this trend?

That is a good question. Maybe hesitant is a
better description than slow. There has definitely been a lot of development
around the appraisal process but with little success. I believe this has been
due to a lack of adoption, which is arguably the most important part of
technology development. You can have a very strong product, but that is not
enough in and of itself. That is how we are bucking the trend. We are not only
investing in the technology, but we are equally — if not more importantly – building
adoption. We have a whole team dedicated to outreach and engagement, led by
Julie Jones, which focuses on keeping our appraiser partners informed and
prepared for our future. We are providing, technology, mobile devices, and more
to our interested appraisers to make them more efficient and improve report
integrity along the way. We are integrating with their current software
platforms to provide a seamless transition and improve their productivity,
allowing them to be early adopters in the changing landscape.