Mamas, Don't Let Your Babies Grow Up to Be Appraisers

Issue 07-16-17   |   Reviewer:   Larry Walther, Ph.D., CPA, CMA


The appraisal business has historically been huge. Lenders often require that loans be supported by underlying tangible assets that have a fair market value (the price at which a willing buyer and seller will agree to an exchange transaction) sufficient to at least provide collateral for the loan. Fair value for real estate is often determined by reference to sales of comparable properties in the same area.

In this regard, "Mamas, Don't Let Your Babies Grow Up to Be Appraisers" (Bloomberg Businessweek, July 17–23, 2017) is clearly on to something. Automation easily enables the pulling of data sets that provide these values; no need to spend hours tracking down the data, as was once the case. Indeed, some lenders now find computer-generated appraisals to be sufficient, leaving human appraisers in the cold.

Meanwhile, accounting rules are continuing to tilt toward fair value measurements in accounting, and this poses an interesting question. Will it generate a new service business in the accounting field? If so, who will do the work?

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