When I first started life as a valuer, a key component of the role was the inspection, and given that it predated the internet, it typically required copious amounts of notetaking which were subsequently transcribed into a report.

By comparison, the focus of the cohort that’s now entering the profession is all about how to fill in a form as opposed to doing an inspection.

As a result, the intuitive art of knowing what to look for has apparently been lost.

Back in the day, knowing what to look for could have been something simple, like knowing the difference between a stud and a nogging – which is an element of construction that most new recruits know nothing about.

Curiously, while clients (lenders) appear happy to accept that risk, the inspection and the report writing have been marginalised by automation.

Advanced skills are no longer readily available in the market and this is where the valuation profession is most at risk.

No critical thinking

The problem with shoe-horning the standard inspection within the AI space is that the valuer loses the ability to think critically when suddenly confronted with something unique.

What the profession appears to have forgotten is that the ability to think critically is an essential skill required to advance professionally.

As a result, advanced skills are no longer readily available in the market and this is where the valuation profession is most at risk. Few have the knowledge or confidence to progress beyond the ‘resi’ space, and doing so often means taking a financial haircut.

Equally dangerous, the profession’s younger cohort seems comfortable accepting data as fact, without understanding or testing the veracity of the evidence.

In short, many valuers appear comfortable taking shortcuts in an attempt to meet budgets.

Defenceless in court

The danger of favouring a proforma valuation over more detailed written analysis is that you’re less capable of demonstrating the process and how you arrived at your conclusions. As a result, within a court environment, you’re more likely to be held negligent.

Admittedly, tablet-based inspections do provide the opportunity to free-write additional notes. But my observation is that once valuers get into the habit of ticking boxes, additional notetaking – whether it relates to asking an owner about a water stain in the ceiling or whatever – doesn’t happen.

The trouble is that when there are six or seven valuations to be completed every day, it becomes a numbers game and $200/valuation is a lot less remuneration than 30 years ago.

The byproduct of valuers undervaluing their own work is that they have become price-takers.

It’s difficult to embrace change without discussing the challenges that it brings. But to get a better handle on the role valuers play in the market, consider what would happen if they were taken out of the economy for a single day: In short, the markets would stop.

Conceptualise the risks

One of my primary goals as a lecturer of first and third-year valuation students is to firstly improve the high attrition rate and prevent high first years’ from dropping out. Much of this attrition can be attributed to students not really understanding the doors that can open to them, well beyond valuation, selling or leasing.

By reinforcing the relevance of a valuer’s skills to the broader market, I’ve ensured that students are now better informed and educated as to what options are available to them.

Anecdotally, while around three-quarters of my students repeatedly tell me they want to become property developers, what they lack is the ability to conceptualise the risks.

The key to making student valuers as ‘job ready’ as possible is to ensure they’re aware of the [industry] constraints they need to deal with. It’s very rewarding to see the lights switch on within a student’s thinking, and this typically happens when they understand the issues around risk profiling.

Price and value

When I asked a class last week whether they encountered any learning gaps, one student wished he’d been taught how to manage money.

It’s a timely reminder of the old axiom about ‘cost not equalling value’. While the market obsesses over size, and location, what people typically don’t consider is affordability.

As a result, it’s common for people to buy properties on what they can afford rather than what it’s worth.

I recently witnessed two parties take the bidding on a subdividable property to $951,000, which was well over $130,000 more than seasoned developers were prepared to pay.

This helps to explain why mortgage stress is become more prevalent.

When valuers are most exposed

It’s when prices are changing that valuers are most exposed.

I have noticed that many valuers still think it’s OK to use old data regardless of what the market is doing. Those who do are most exposed when there’s downward pressure on prices.

Turnaround times [may] mean it’s unrealistic to bring a pen and pad to the ‘pie and sauce’ work. But if you lack local knowledge, you’re clearly at a disadvantage – and more so within falling markets.

Heightened market risks aside, given the time pressures on valuers now, they also run the risk of getting burned out.

While I certainly do not profess to know all the answers, I feel a strong responsibility to ensure I leave the profession in a better state than when I started.

Hopefully, this may trigger some ‘critical thinking’.