Patrick M. Lamb May 2nd, 2008
Lamb Hanson Lamb’s core competency is performing residential and commercial real estate appraisals. This has been their niche for nearly four generations. Historically, the real estate appraisal business has been a very durable industry because the demand for services runs with certain marketplace inevitabilities such as probate, taxes, and property transactions. However, the way they perform real estate appraisals has changed several times in the last twenty years as a result of shifts in banking policy, legal regulations and new technology.
In the 80’s, word processing, electronic databases and the internet were nonexistent. Real estate appraisers were required to go to the county court house to gather sales documents directly from the assessor’s office; property photos were physically developed at the a one-hour photo mart, and all appraisal reports were hand-typed, mostly by a receptionist. This all took time and a specialized skill set that the market place paid good fees for – appraisal fees were at their highest at that point.
In the early 90’s, however, the dawn of the computer drastically changed the way information was recorded and accessed. Real estate information that was originally in paper format held by the county and large title companies suddenly moved to a computerized database format. Larger real estate appraisal firms benefited greatly from this transition since they could afford to purchase or license access to these expensive database services. Instantly, appraisers could perform their duties without spending countless hours working through large catalogues of printed records at the court house.
Independent real estate appraisers working in small shops or out of their home could not feasibly cover the expense of a database. As such, they stuck to the old ways of appraisal reporting. Eventually, the independent appraiser couldn’t compete as larger firms were able to cut weeks off the delivery of reports.
Consequently, as access to real estate information became available at their fingertips, appraisers found themselves having to perform more of the research and report assembly tasks that were previously performed by hourly workers. Learning these new technical skills really presented a challenge for the well-established appraisers who have been operating under the previous model for years.
Simultaneously, the overhead structure at appraisal firms was changing as the increased use of computers and real estate databases eliminated the need for typists and young researchers. These people were beginning to be replaced with hardware, software, and technical specialists who knew how to setup and maintain the systems.
Computer databasing was the first big technological transition, along with the emergence of the internet and the digital business environment. For many in the appraisal industry, this was a lot to digest.
About the time Patrick Lamb entered the family company, Lamb Hanson Lamb Appraisal Associates, Inc. His college experience at the University of Washington had been heavily influenced by new technology. During his tenure at the “U”, the hottest concentration on campus was Information Systems. He was fortunate to take advantage and learn software programs that were beginning to dominate the outside business world, as well.
At the time he joined Lamb Hanson Lamb, the majority of the appraisers at the office and in the appraisal networks he joined knew little about computers. Patrick was able to use his computer skills to barter for appraisal mentoring, and begin to steer the company into the technical realm.
In his first year at the firm he was an apprentice to several residential appraisers; doing research, taking pictures, making maps and filling out forms for his mentors. Over this time, he was exposed to the existing systems and technology that had been developed for performing residential appraisal reports. The systems were impressive yet suffered from a multitude of technical and human errors.
Coincidentally, the appraisal industry as a whole was in need of streamlining as the volume of residential mortgage work increased. This was due to the deregulation of the mortgage industry and an unparalleled drop in interest rates. This phenomenon drove the implementation of technology efficiencies in the residential lending process.
The streamlining consisted of using a new digital form of reporting that standardized the residential appraisal process, making it far less time consuming. Unfortunately for the industry, though, the larger banker clients saw this as an opportunity to put downward pressure on fees and higher expectations for fast turn times. Consequently, the established appraiser networks, faced with shrinking fees, felt that the one way to stall the fee drop was to constrain the number of appraisers in the industry. So, they set out to increase the barriers to entrance by upping educational requirements and eventually passing legislation that mandated all trainees to be licensed. (This argument was masked as a way to limit fraud, yet that should be the role of the established appraiser mentors not the naive apprentices. The increased barriers only hurt new employees trying to get a start).
Suddenly, Lamb Hanson Lamb’s residential department was caught in a storm. Fees started falling, education costs soared, technical staffing and systems costs increased, pressure from clients escalated and, worst of all, the feasibility of hiring and training new employees began to fail. This stalled their potential for growth. At the same time, the appraisers were struggling to learn these new computer skills. Their morale was low, despite the spike in business from the hot real estate market and declining interest rates.
To hedge himself from the apparent decline in the residential appraisal market, Patrick decided to focus on another side of appraising. He become a trainee in the commercial department, and again, his technical skills played an intricate part in securing training opportunities with mentors. Within the first couple of months in the commercial department he realized that the technology and systems used to perform narrative commercial reports was five to ten years behind the residential department and depending on the appraiser, sometimes even greater. There was little to no use of Excel; only a basic understanding of Word; no use of digital filing or archiving; no use of Access databasing, and little understanding of computer networks and Internet capabilities.
While most commercial appraisers in the office and throughout the nation were well-established, (of an older generation), and contained massive amounts of education, experience and knowledge, they were entirely resistant to the new and emerging ideas. More so, their influence in the firm made them seemingly invincible to change, as even the boss was hesitant to learn new tricks. Patrick also discovered that, despite their great depth of knowledge and background, that there were no superstar employees. Their revenues and production were flat, if not on the decline. This in part, was due to all the time wasted fidgeting with the report formatting, editing, publication, and redundancies. In sum, Patrick felt they all “shared a deficiency of digital wherewithal.”
It quickly became evident to Patrick that he could create a new system that combined his computer skills with some of the digital efficiencies he witnessed in the residential department. He knew that the fees for a standard commercial appraisal report are ten to twenty times greater than the fees for residential appraisal reports. He believed that with the system he envisioned, appraisers could produce commercial narrative reports at a rapid speed, yet with greater reliability, less errors and nearly seamless transferability of data. Therefore, he began developing a template for commercial appraisers.
Patrick states that “creating a template was definitely a work in progress, an evolution that still exists today”. To make the whole process work well, the entire office needed to become digital in unison. They had relied on thirty years of appraisal history locked in paperback copies, sitting on shelves collecting dust. The filing system for the old reports was random and burdensome to access.
To start the evolution, Patrick hired a friend to come into the office and scan as many documents as he could, then convert the paper into a Word document that could be filed. From this point, he was able to categorize hundreds of zoning code descriptions, market area descriptions, building type descriptions, etc. that were accessible to anyone in the office. The advantage to having easy access to this data was that it was now in a digital narrative format that read well - likely created by the well-educated, experienced and knowledgeable real estate appraisers mentioned before. A young trainee could simply cut and paste a sample and modify the existing statements to meet the needs of the new assignment. He or she could build off of what had already been created and wouldn’t have to stare into a blank page.
Within the template design stage, he also saw that technical skill was not the only component of a success. More so, he had to learn how people interfaced with the system. It was his exposure to human behavior and reactions that began to mold his vision into a reality. “This took a few years to perfect…which is an overstatement since it’s still nowhere near perfect”, he declares.
By 2005, the template system was relatively operational, and since then,the system has provided many competitive advantages to the firm. Nevertheless, Patrick says it has been somewhat difficult to convince established appraisers in the office to adapt. He believes that this is one of the greatest challenges he’ll face in the upcoming years as other firms begin to benefit from their own technological advances.
To maintain competitiveness, Lamb Hanson Lamb operates on a six-month cycle, to ensure that their technological systems and methods are up-to-date. They realize that systems will change, and Patrick, as CEO, hopes to create a culture at Lamb Hanson Lamb Appraisal Associates, Inc. that embraces the willingness to change, while abandoning the comfort of “doing things the old way”. This is the true template for success.
