When a bank, trustee, finance company (PE) or corporation commissions a valuation for their properties, there is a lot involved. After all, you don’t just determine the value of an object. Characteristics such as make, type, year of manufacture, odometer reading, maintenance and overhauls play a role in that.
The way value is determined has changed considerably over the years, for both business movable property and inventory or assets such as machinery. For example, valuation used to be done with pencil and paper, and appraisers had to use their knowledge and experience to make up what a particular object was worth. In this day and age, we use apps and Google is an additional resource to look up more information about a particular item.
This approach to valuation is only expected to evolve in the future. In this blog, we take you on a journey through time. We look at how valuation was done in the past and look ahead to the future. Will the appraiser eventually be replaced by AI?
The valuation of the past
The appraisal profession goes back more than 100 years and is as old as commerce. At this time, the task of determining value came only from the trustee and the bank. Valuation went a lot differently in those days. The only tool an appraiser had was a notebook and pencil to perform the appraisal. In doing so, his knowledge and experience, combined with a wide network of dealers, were the most important thing in valuing an object correctly. Without Google, you had to know what machine you were in front of.
Multiple tools to determine where
Meanwhile, appraisers’ toolbox has been supplemented with more digital tools to help determine value. Nowadays, the Internet, an appraisal app and Excel are good additions for performing an appraisal. Add to that Smart Stock; valuation based on data.
Yet the old-fashioned way is still used. This is because there are a number of factors that are harder to capture in data. For example, how many potential buyers there will be for a property, whether the property still meets desires in the market, what the further value course will be, and how a sale will turn out publicly.
Also, the principals for valuations are no longer the same. In addition to banks and receivers, finance companies (private equity), sales facilitators and corporations are now commissioning appraisals.
AI and big data the future of valuations?
Looking to the future, we see that that the bank and trustee will still remain the main clients for valuations. However, the share of firms performing their own appraisals will grow. Technology is also going to play an even bigger role. Appraisal apps, Smart Stock, Artificial Intelligence and Big Data can complement and take over work done by appraisers. Yet the real, physical appraiser continues to play an important role because certain objects are so unique that knowledge and experience is more useful than technology. Or because there is no suitable data to work with.
NTAB appreciates with the future
Our independent appraisal and consulting firm has been around since 1904. Over the years, our way of appraising and our toolbox of tools have evolved with the times. Our many years of experience, knowledge of the market, solution-oriented and fast method of working and digital innovations are of great importance here. In doing so, we are also proving the value of NTAB itself.
