THE APPLICATION OF COMPUTER IN REAL ESTATE APPRAISAL
ABSTRACT
The use of computer as an electronic device have been embraced in all field of human endeavour ranging from banking, engineering marketing, construction with real estate appraisal inclusive. This paper is centered on the application of computer in real estate appraisal. The computer is increasingly used by real estate appraiser for various purposes. The word processing software permits the appraiser to write up the individual property appraisal report. The same or different software permits the appraisal the appraiser to fill in appraisal forms with the requirement information that is found in the appraiser’s files and acquired from other sources. Computer spreadsheet software allows the appraiser to calculate multiple regression coefficients of correlation after data from the appraisers’ files is entered into the software. Blocks of residential single family are inserted into the program to see what housing characteristics have the most effect on the resulting appraised value. Property tax appraisers with a mass appraisal to accomplished actively use computer multiple regression models. At least part of the appraiser’s wealth of information that comes from a daily inflow of data from various sources may be filed in the computer database. The computer has become a necessity rather than a luxury or an occasionally used piece of office equipment.
INTRODUCTION
The typical professional appraisal of a generation ago would be flabbergasted by the inroads made by electronic media in the modern appraisal office. Even in the past ten years, the manner in which appraisal data are accumulated and analyzed and the way that the appraiser’s estimate of value is transmitted to the client have undergone a transformation that is still ongoing. With the increasing availability and range of use of small, easily programmed office computer, the appraisers must be acquainted with a variety of appraisal-based computer applications. A few of these are highlighted below, with suggestions for the equipment necessary to keep pace with the developing electronic products.
THE COMPUTER: Even the smallest real estate or appraisal office can now take advantage of the computer’s storage and problem-solving capabilities. What kind of computer is best for the appraisal office? That depends on the nature of the appraisal work, the complexity of the assignments the appraisal will undertake, and the size of the appraiser’s budget.
It is best to tackle the question of what computer to buy by working backward; that is, the appraiser should begin by considering the requirements of the software that will be used in everyday practice. The appraiser may have already decided to buy one of the major appraisal software packages, which could cover everything from case tracking, including data collection and report preparation, to management of the appraisal office, including bill and staffing. Should the computer be “IBM-compatible” (One that meets the operating specifications designed for IBM, Inc., products, referred to as PCs, or personal computer). Macintosh computers are often favoured by design and publishing firms. There is excellent mac-based software available for the mot appraisal functions – for example, word processing, spreadsheets, databases, office management, communications, graphics, photo editing. Etc. There also are very sophisticated Mac programs for all the standard forms used for residential and general appraisaing; however, there are more choices of software vendors for the PC. The beginning appraiser should follow the recommendations of the managing appraiser who will be reviewing his or her work to ensure compatibility. Generally the new appraiser can be included under the managing appraisers’ current software license for a relatively small fee.
THE APPLICATION OF COMPUTER IN REAL ESTATE APPRAISAL
Most likely, the appraiser will need a modern, a computer – based telephone, to gain access to the wide range of information available on the internet. In addition, the appraiser may want to establish an electronic link to one or more lenders, which would require a computer with sufficient memory in addition to a modern capable of making such connections efficiently. Of course, the minimum capability required by today’s computer applications only establishes the baseline requirement for the appraisal office. The difficulty is in deciding how far beyong the minimum the appraiser should go.
Some state appraiser licensing offices, as well as the major appraiser societies, offer introductory classes or seminars in computer technology and application for the real estate appraisal. Because of the rapid development of more powerful computers, as well as new software to take advantage of the computer’s growing data-handling capabilities, attendance at one of these classes should be useful for the experienced computer users and the neophyte. The computer hardware and software purchase decisions needn’t be made in a vacuum.
By seeking experts advice, and dealing with one of the major computer manufacturers, even the beginner can take most of the trauma out of the purchase decision. With the right information, the computer buyer should be able to invest in a system that will be adequate for three years of services. That means that the system should not only meet the appraisers’ immediate needs but be expandable to cover reasonably expected additions of equipment and software.
The most important features of the computer purchase will not be apparent until after a problem arises. Who is responsible for fixing the computer when something goes wrong, and where will the repairs be made? IF the computer system is purchase with an intended period of use of three years, the most desirable warranty or services contract will be one that provides for three years of on-site maintenance, to be performed within a stated time of the request for service. Such a warranty may require an additional fee, but will help reduce a major source of stress for the computer owner. After all, when an appraiser is relying on a functioning computer system to produce and transmit appraisals, a non functioning machine means that the appraiser is virtually out of business.
What price can the appraiser expect to pay for a system capable of handling all, of the operations mentioned above? That depends on many things: the systems motherboard, the command system, which determines how fast the system can operate; RAM, or random access memory, which determines how many operations the system can perform at the same time; hard drive memory, or data storage capacity; a monitor of adequate size and image definition; and the specifications of the modem, DVD/CD drive, and other peripherals. The good news is that prices continue to fail. Expectations are that this year’s system will have much greater speed and capacity and yet cost less than last year’s system. A basic “office suite” of software applications, including word-processing, spreadsheet, graphics, and mailing List capability, is likely to be included in the price of the basic system. The cost of appraisal-based software applications will depend on the appraiser’s needs and on how much time the appraiser is willing to spend searching for the best price available.
THE PRINTER
Today’s appraisal software not only allows a user to complete any of the numerous standard appraisal forms, it provides the form itself. The key to making a professional presentation is the quality of the printer used to print out the completed term. Given the dramatic drop in prices of laser printer, there is no substitute for a laser printer capable of producing six or more black-and-white pages per minute, at a resolution of 600 by 600 dpi (dots per inch). The price for such a machine used to be around S1.000, but they are now available for:$500 and up. A useful second printer is a color ink-jet machine that can produce more attractive renderings of photographs. It has become possible to purchase one for well under $500.
THE BACKUP SYSTEM
As with any serious computer use, the appraiser should ensure that no data are lost in the event of a power failure or mechanical malfunction. The backup system properly consists of two components: (1) a battery (not just a power surge protector) to which the computer is connected to provide a secondary power supply – in essence, a cushion of time during which the computer can be shut down in the event of a power failure without loss of data and (2) a second computer memory (hard drive or cartridge), installed inside or outside the machine, that can b used (and refreshed periodically) to keep a copy of everything that is stored on the computer. It should be possible to buy both components for a combined, price of less than N75,000. Note: The backup system disk or cartridge should not be left in the machine or it will suffer the same fate as the main system in the event of power toss or malfunction. A final word of warning: During an electrical storm, it may be prudent to shut down one’s computer completely to avoid risk of data Loss. There is no backup system yet invented that will survive a direct hit, or even a near- miss, from a bolt of lightning.
THE INTERNET
From its beginnings 40 years ago as a telephone-based method of computer information exchange for the military, what we now term the Internet has emerged as a major method of wor1dwde communication.
Efficient access to the resources available via the Internet requires a modern capable of transmitting 28,800 bps (bits per second) or better and subscription with a service provider that provides the initial access link. Once one is online (has gained access to the Internet), one can reach government, educational, and private sources of information around the globe. One can also be a recipient of communications in the form of electronic mail, referred to as e-mail.
Current predictions are that use of the Internet will only increase in coming years. Its use for appraisers is growing exponentially every year, as more and more data sources, including multiple listing services, provide online access to their databases. The number of government offices allowing access to public records is also growing. Information on national, regional, and local economic, employment, and other trends is readily available. There are a growing number of services specializing in data on various types of commercial and residential properties.
The cost of access to the Internet is surprisingly modest. Some Internet providers (such as America Online) provide their subscribers with access to numerous newspapers, magazines chat availability shopping, and other services at a base monthly rate for a specified number of hours of access to the service, with an hourly rate for each additional hour. Unlimited Service is available for a higher monthly fee, Other service providers provide access to the Internet, but no additional programming.
Geographic Information Systems (GIS)
Satellite based mapping systems have been in use for as long as satellites have orbited the earth. From their initial military and weather technology based applications, mapping systems based on Latitude and longitude are now entering the commercial market place. The utility of the maps. Once available online from the United States Geological Survey (USGS), has been greatly expanded. Commercial services now provide (via computer disk or the Internet) reference maps that provide overlays of national, regional, and local data and are capable of incorporating the appraiser’s own data The cost of such maps will depend on the source and method of transmission.
Electronic data interchange (EDI).
The present trend toward consolidation of financial institutions has resulted in fewer users of appraisal services, particularly in the single-family residential mortgage loan marketplace. The lenders that now dominate the field arc moving increasingly toward the most direct method of communication of property valuation – electronic data interchange, or EDI. An electronic link between the lender and the appraiser via modem allows a computer in the appraiser’s office to transmit the required information almost instantaneously. Using EDI, the appraiser no longer needs to print hard copies of the report that includes the basis for the estimate of value. Now the appraiser enters the necessary information into the computer and then uses the computer’s modem to connect to the lender’s computer and relay all of the required information with the speed of a telephone call. The computer software that allows for such efficient transmittals must be customized to meet the lender’s requirement, but the lender may provide the software at little or no cost to the appraiser.
THE CAMERA
No modern appraisal office is complete without a digital camera that can be used to make and transmit images without the need for film or printed copy. The digital camera may be no larger than the typical 35-milimeter camera used in the past. It will have a view finder, lens, and built-in flash. Within the camera body, however, is a miniature version of a computer, capable of receiving images, recording them in digitized (computer-readable) format on a memory chip, and. releasing them to a printer and / or another memory device, such as a computer hard drive or disk. Once the images have been downloaded – that is, recorded and/or stored elsewhere – they can be erased from the camera’s memory which can then be used to record new images.
The digital camera uses no film and requires no professional processing. The number of images the camera is capable of recording and storing depend:; on the size (the amount of memory) of the chip inside. With a digital camera, the appraiser can import photographic-quality images directly to an appraisal report. If the report itself is transmitted electronically, the photos are incorporated within the report, to be viewed on the recipient’s computer monitor.
A digital camera with enough memory for hundreds of images (depending on the degree of resolution desired, with higher-resolution photos requiring more memory per image).
USE OF TECHNOLOGY:
In recent years there have been many references to use of “artificial intelligence’ in the appraisal process. The use of appropriate resources, including computers, can help an appraiser function more efficiently and more accurately, but these tools serve only as aids to the appraiser. There never will be a substitute for the skilled and informed judgement of a professional appraiser.
CONCLUSION AND RECOMMENDATION
The skills required of the professional appraiser touch on most areas of real estate practice. The best-qualified appraiser will have some at the abilities of the economist, city planner, surveyor, local estate developer, builder, and broker. Familiarity with appraisal-based computer applications is rapidly becoming a practical necessity however impartiality objectivity, knowledge of appraising fundamentals, and the quality of judgment that comes only with experience are the professional appraiser’s chief credentials.
The application of computer in real estate appraisal have contributed immensely to the efficiency and productivity of real estate appraiser and the estate survey and valuation profession. Therefore it pertinent for all valuers and estate firm to have access to this modern tools “Computer” and harness its enormous benefits so as to increase professionalism and productivity.
REFERENCES
Adair, Alastair, Mary Lou Downi (1996) European Valuation Practice. Theory and Technique. London. E & FN Spon, publisher.
Baum etal (1995) Property Investment Appraisal. 2nd edition, London: Routledge publishers.