In
a podcast recently, the guest asked the host an interesting question that went
something like this: “If you walked into a local coffee shop and you saw a
50-year-old woman with thick-framed glasses and greying hair pulled back into a
bun, would you think she’s a librarian or a sales person?” The host, while he knew he was being set up
for something, said, “Naturally, my mind would immediately go to
librarian.” The guest went on to explain
that this is the natural presumption based on appearances and our
predisposition toward certain images we as a society have of particular
occupations. Then he added, “There are
over 300,000 sales people here in the United States, while there are probably
around 30,000 librarians. Statistically,
the likelihood that the woman you see in the coffee shop is a sales person
rather than a librarian is ten times greater.”
Interestingly,
the guest used this example not to make a point about how we need to shed our
prejudices and join hands to sing along to a Joan Baez record. He actually used it to set up the following
point: while there are times when our presumptions are dead wrong, quite often
they’re right on the money because they’re based on a wealth of past
experiences. This caused me to think
about something I had read that same day about appraisals.
It
was recently announced that housing giant
Freddie Mac plans to dispense with traditional appraisals on some loan
applications for home purchases, replacing them with an alternative valuation
system that would be free
of charge to
both lenders and borrowers. The folks at Freddie Mac confirmed
that they could
begin the no-appraisal concept as early as next spring. You
read that correctly, ladies and gentlemen: NEXT SPRING!
What
does this have to do with the example with which I opened this week’s
newsletter? Instead of
using professional appraisers, Freddie plans to tap into what it says is a vast
trove of data it has assembled on millions of existing houses nationwide,
supplement that with additional
information
related to valuation, and use the results in its assessments of applications. In other words, they’re going to use their
wealth of past experiences.
For
consumers, the company believes, this could not only eliminate appraisal expenses
–
which typically
range from $350 to $600 or more
(some areas are seeing these costs bumping up against the $1K mark) –
but could
cut down on current closing delays that
are related to the appraisal process.
The
spring is still a number of blizzards and a long thaw off from today, and it
remains to be seen how all this will take shape, but it’s a breath of fresh air
to see things in this industry evolving with the times –
sort of like the card catalog at the library going computerized!
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