mark r. linné , mai, sra, ai-grs, cae, cdei, frics · welcome & introductions our moderator:...
TRANSCRIPT
Mark R. Linné, MAI, SRA, AI-GRS, CAE, CDEI, FRICS
Welcome & Introductions
Our Moderator:
• Peter Houstle – AIDC Executive Director
Our Presenter:
• Mark Linne, MAI, SRA, AI-GRS – Chief Strategic and Valuation Officer,
ValueScape Analytics, Inc.
Mark Your Calendars:
• June 11 - Artificial Intelligence, AVMs, and Blockchain: Implications for
Valuation (Online)
• July 30-31 - Fundamentals of Separating Real Property, Personal Property, and
Intangible Business Assets - Rockville, MD
Admin:
• Post questions in chat box (Alt-H)
• Recording will be posted on AIDC website
Communicate
• Click Chat to add a comment, question,
share an idea…
• Click Raise Hand to ask to speak.
• Click Q&A in the Webinar Controls. A Q&A
window opens.
SETTING THE STAGE
Washington DC: 1 hour
Denver: 2 hours
Kansas City: 4 hours
National Seminar 2019
Today: 45-60 minutes
WHAT DO YOU THINK OF WHEN YOU HEAR A.I.?
A CORNUCOPIA OF VIEWPOINTS
ValueScape Analytics, Inc., proprietary and confidential information, all rights reserved
PUTTING THINGS IN PERSPECTIVE
Adding Intelligence to a
Dumb Device or process
produces an exponential
outcome
A FUNDAMENTAL TRUTH
OUR PRIMARY ANALYTICAL TOOL
WHAT ELSE WAS HAPPENING IN 1982?
THE WISDOM OF CHILDREN
The tools of the Present Are the Tools of the Past…..
We just don’t know it yet
Elvis has left the building
A FUNDAMENTAL TRUTH
BIG DATA
More data on virtually everything
How is the data analyzed?
What is the benefit?
Data availability will only accelerate - Big Data 2.0
Where are the tools to analyze?
What you need to look for
What you need to do
The Tale of Two Teslas
WHERE DO WE START?
Tesla
I HAVE A FASCINATION WITH…
NIKOLA TESLA’S LEGACY
Alternating Current (A/C)
Wireless Technology
Radio
Fluorescent Lighting
Television
Remote Control
Personal Computing
Wireless Transmission of
Electric Power
Particle Beam Weapons
And yes-A.I.
LOOKING AT A.I.
A set of technologies that enable
machines to perform
sophisticated tasks such as
judgement
evaluation
problem-solving
decision-making
pattern recognition
comprehension
recognition of language
WHAT IS AI?
The Internet
Big Data (BD)
Machine Learning (ML)
The Internet of Things(IoT)
FOUR BUILDING BLOCKS
The Internet
Highway
Connectivity
Enough Said
Big Data
Its just data now
LOOKING AT THE BUILDING BLOCKS
Machine LearningAimed at making computers learn from the
data they are exposed to by themselves
without being explicitly programmed
The Internet of Things(IoT)Imbuing inanimate items with moderate
amounts of intelligence: 50 billion connected
trucks, refrigerators, cars, washing machines,
heart monitors, devices galore…..
THE TWO KEY ELEMENTS
World Economic Forum:We stand on the brink of a
technological revolution that will
fundamentally alter the way we
live, work and relate to one
another. In its scale, scope and
complexity, the transformation will
be unlike anything humankind has
experienced before”.
WHAT ARE THE RAMIFICATIONS?
By 2022-50% of all of our
interactions will involve A.I.
Deep Learning accelerates
everything
Software that writes itself
AI that can analyze volumes of
texts and make decisions
Everything can ultimately be
automated to one degree or
another
THINGS TO THINK ABOUT
Siri
Alexa
Self-Driving Cars
ChatBots
AI IS ALL AROUND US
Today
Search (Sergei’s Thoughts)
Content
Recommendations
Data mining
CAPTCHA
Education
Chatbots
TODAY, TOMORROW, NEXT WEEK, NEXT MONTH
Augmented Reality
Self-driving cars/trucks
Sensory Chips in Everything
TOMORROW
Intelligent AgentsKnows what you (want it to) know
Knows what you like (if you want)
Knows how you do things
Interacts naturally with you
Is both responsive and proactive (without being intrusive)
Is always on (but can be turned off)
The collection of all of your professional experiences
Available with a few words and a click
Learns from you as well as others (via their digital
assistants)
NEXT WEEK
A Digital You
Avatars
Speed Dating
Speed Interviewing
Shopping
Interacting
Socializing
Monitoring
Giving up the notion of
privacy
NEXT MONTH: A DIGITAL YOU
Between open source software libraries, hundreds of APIs and SDKs, and
easy assembly kits from Amazon and Google, the barrier to entry is lower
than ever before.
Google launched an “AI for all ages” project called AIY (artificial
intelligence yourself). The first product was a do-it-yourself voice
recognition kit for Raspberry Pi.
Amazon has launched DeepLens, a $249 deep learning-based video
camera.
Amazon is offering $7,500 for the winners of its first DeepLens hackathon,
which involves building machine learning projects.
YOU DON’T NEED A PHD IN COMPUTER SCIENCE
TO BUILD YOUR OWN A.I.
Health Care and medical monitoring-wearable tech
IntelligentX wants to introduce the world’s first AI- brewed beer.
DeepFish in Russia is using neural networks to identify, well, fish. It
merges radar technology with AI to differentiate between fish and noise
in radar images.
Hoofstep raised VC money to bring deep learning-based behavioral
analysis to horses.
SimpliSafe
AI EVERYWHERE
AI is also coming to cannabis tech
DeepGreen uses computer vision to identify
the gender and health profile of cannabis plants.
More out-of-the-box “AI for X” in 2020.
Prevalence of this trend and increasingly absurd-seeming
examples reveal that machine learning is not an exotic
technology. Rather, it is one of the building blocks for modern
software and applications.
AI BECOMING COMMONPLACE: THE TRENDS
THE BOTTOM LINE:CONNECTING AI TO REAL ESTATE
The old order changeth, yielding place to the new…”
AI IN REAL ESTATE:
HISTORIC INVESTMENTS IN AI ACROSS INDUSTRIES
Buyer experience
Matching buyers to properties more effectively
Broker vs. Bot
Recommendation engines
Real Estate firms emphasizing their use of AI: Rex Real Estate
Augmented Agents
IN REAL ESTATE-AI HAS FOCUSSED ON BROKERS
The more likely that AI can
replace the process of
examination, interpretation
and analysis
THE GREATER THE AMOUNT OF DATA..
General Data Acquisition
Broad Market Overview
Specific Data Acquisition
Sales/Income/Cost
Narrative Description
What/When/Why
Property Inspection
In person/Drone
Unusual Properties (No two alike)
Applying market data to subject
Interaction with Client
Reasoned Conclusion
LOOKING AT APPRAISAL SKILLSETS
General Data Acquisition
Broad Market Overview
Specific Data Acquisition
Sales/Income/Cost
Narrative Description
What/When/Why
Property Inspection
In person/Drone
Unusual Properties (No two alike)
Applying market data to subject
Interaction with Client
Reasoned Conclusion
LOOKING AT APPRAISAL SKILLSETS
Lawyers: Intelligent assistants to digest legal documents
Wealth Management: Sophisticated asset analysis
augmented recommendations
Accountants: Intelligent assistants for routine data analysis
Teachers: Intelligent agent-lead class presentation
Journalists: AI writes 50% of stories; 80% of online content
Researchers: Intelligent assistants to sift through and
summarize data
Consultants: Intelligent assistants to digest data and make
recommendations
HOW HAVE OTHER PROFESSIONS
DEALT WITH THESE CHALLENGES?
Gaining data-driven actionable
insights:
AI can be leveraged to perform
Market demographic studies
Environmental research
Financial analysis
USING AI TO AUGMENT APPRAISAL SKILL-SETS
Discern patterns in data
Turn reams of data into
actionable insights
Spot trends (the next
popular neighborhood)
Help Decisioning
MACHINE LEARNING/INTELLIGENT ASSISTANTS CAN….
Awareness of relevant technologies
Real-time understanding of market
trends
Understanding data aggregated,
summarized, analyzed and
specifically applied for our subject
property
A series of “what if” analyses
Beginning the move to predictive
valuation-what will the value of my
property be?
THINK WHAT THAT COULD MEAN FOR APPRAISERS…
Scenarios to consider
APPRAISAL WILL CHANGE
Change will be driven by
clients-we are a service
profession
The greater the data the
more likely that automation
can/will prevail
Valuation is extremely
vulnerable from this
perspective
A CHANGE IN SKILLSETS
Market Insight will continue to be valuable
Looking at the property will likely still be required in the short-term
Augmented analysis bringing together expert systems/intelligent agents makes the most sense
“Augmented” Intelligence is the key
Differentiate yourself with real-time and complete market knowledge
Become a Data Valuation Scientist
THE BEST STRATEGY FOR APPRAISERS
Good-bye desktop, good-bye lap-
top
Hello tablet and iPad
This changes everything
Three monitors is not the solution
Going smaller and going mobile
Completing the appraisal in the
field
TAKE ADVANTAGE: MOBILE TECHNOLOGY
TAKE ADVANTAGE: AUGMENTED REALITY
Not just what you an see
But what you cannot see
Linked together based on
geography
Think layers of a cake
The Landscape of Valuation
EVERYTHING about a property
Demographics
Economics
Trends
Legal
Zoning
HEY SIRI: SHOW ME ALL RETAIL PROPERTIES IN METRO DENVER
HEY SIRI: LOOK AT MY SUBJECT PROPERTY AND FIND THE SALES THAT ARE
MOST SIMILAR IN AGE, USE-TYPE, SIZE AND LOCATION
HEY SIRI: NARROW THE SEARCH TO THE LAST SIX MONTHS OF
SALES
HEY SIRI: MINIMIZE THE DIFFERENCES, RANK THE MOST
COMPARABLE SALES AND DISPLAY THE TOP SIX SALES
HEY SIRI: SHOW A 1.5 MILE RADIUS AROUND THE SUBJECT AND
IDENTIFY ALL RETAIL PROPERTIES: SUMMARIZE VACANCY, SP/SF;
ABSORPTION
SIRI: SEND THE TYPICAL CONFIRMATION MAIL TO THE BROKER
WITH QUESTIONS RELATING TO ALL FIVE SALES
SIRI: SEARCH GOOGLE AND IDENTIFY ALL ARTICLES ON RETAIL MARKET CONDITIONS; SUMMARIZE AND EXTRACT
RELEVANT NARRATIVE
Market Analysis
Valuation Analysis
Valuation Conclusions
Probability of Accuracy
Futurecasting
SO WHAT IS MISSING?
TAKE ADVANTAGE: NEW ANALYTICS
Regression Analysis
Geographically-Weighted Regression
Monte Carlo Analysis
Non-Linear Modeling
More Data-Better Models
Think of it as electricity
It will be everywhere, in every
device and process
You can buy it today on Amazon
It will be everywhere and in
everything
WHERE DOES THE OTHER AI GO FROM HERE?
Sift-through relevant market data and
analyze adjustments in a fraction of
the time
Reinvest the time savings in analysis
and prediction
Execute better analysis of risks and
opportunities, real-time monitoring,
advanced models and predictive
analytics
Integrate and monitor data and
identify what is important and relevant
Personalize predictive analysis
AI-BASED TECHNOLOGIES WILL ENABLE APPRAISERS TO
THAT ALL SOUNDS GOOD - SO WHY THE URGENCY???
WHERE IS AI BEING USED IN VALUATION?
THE STATE OF AVMS
Where are we today?
Better Data
Machine Learning
A.I.
Hyper-Accurate Modeling
Visual Recognition/Evaluation
Non-Traditional Data
Neighborhood-Level Data
THE (VERY) NEAR FUTURE
The Ability to Deal with Qualitative Valuation Elements
View
Floorplan
Quality
Condition
“Curb Appeal”
Kitchen/Bath Remodel
Consumer Preferences
CHALLENGES
Fannie Mae/Freddie Mac Data/Analysis
Closed
Private
Banks can see
Appraisers can’t
The Very Predictable Outcome
Goliath knows more than David
How does a sole practitioner deal with that?
ACCURACY WILL ONLY INCREASE
Pedro Dominguez
The Master Algorithm
R Squared to the Nth
Understanding the unknown
Figuring out “human nature”
$1,000,000
Crowdsourcing Perfection
+/- 4.5% Absolute Actual Value was the goal
+/- 4.0 was achieved
THE ZILLOW PRIZE-2019
Two Continents/Three Time Zones
Artificial Intelligence
Machine Learning
Big Data
THE INGREDIENTS
SOMETHING ELSE TO FEAR
The “Soft” Appraisal
Consumer Prosumer
Consumer needs a HELOC
Consumer downloads app
Consumer takes photos of interior/exterior
A.I. Validates that a bath is a bath, etc.
Geofencing ensures location and time/date
Data uploaded to lender
Loan decision immediately; funds disbursed……24
hours?
CAN APPRAISERS WORK WITH AVMS?
What does that actually mean?
An AVM, or
The technology itself?
My Experience
The challenges
No “Real” Guidance
USPAP/Foundation not Helpful in the least
Confusion and Distrust
AVM STANDARDS AND THE FUTURE
No Standards
USPAP Useless
IAAO 2018 AVM Standard
Some AI Member input (primarily review)
Same old/same old (with all due respect)
No real “interactive” focus or advice
A Thought
This is the “undiscovered country”
AI could have a meaningful impact, not just “how to work with AVMs”, but-
“How does a valuation analyst work with statistically-derived data, predictive analytics, etc.”
LEST WE IGNORE THE CANARY IN THE COAL MINE
AVM Development in CRE Space
Failed in 2001 (CoStar in its infancy)
Multiple efforts by multiple players in the last 18
months
Not as complex as residential; fewer variables;
Less “qualitative or emotion-based”
Technology available in the assessment world for at
least two decades
Its Here
Implications
It would involve a person
It would involve Big Data
It would involve AI
It would involve ML
It would leverage an Appraiser’s Skill Set
It would learn
It would advise
It would be a tool
WHAT WOULD AN INTERACTIVE RESIDENTIAL
OR COMMERCIAL AVM LOOK LIKE?
Continue to be open to change
Look for opportunities to analyze
data more effectively
When intelligent agents become
widespread-adopt!
Keep up to speed on every
technological advantage that you
can
MAKING THE RIGHT MOVES
IN THE MEANTIME-GET READY!
Data is the new gold
Its interpretation is critical
AI-Human intervention becomes all
about enhanced data-data about
data
The real promise of data-what
makes the world tick?
THE TRANSFORMATIONAL ASPECTS OF AI
It is here today
It will be all around us
It can help us as appraisers
Over the course of the next several
years is will subtly and not-so-
subtly be the driving force in
redefining how we live and work
AI offers amazing opportunities to
empower appraisal-be prepared!
AI IS NO LONGER A SCIENCE FICTION TOPIC
That is your decision
I believe more in the promise of AI
than I do in the risks
Shovels and tractors augment
physical abilities
AI is no different
Prudently applied-it presents an
horizon of unquestionable
abundance and opportunity
WHICH TESLA VIEWPOINT IS MOST RELEVANT?
THE STATE OF AVMS
Where are we today?
Better Data
Machine Learning
A.I.
Hyper-Accurate Modeling
Visual Recognition/Evaluation
Non-Traditional Data
Neighborhood-Level Data
THE (VERY) NEAR FUTURE
The Ability to Deal with Qualitative Valuation Elements
View
Floorplan
Quality
Condition
“Curb Appeal”
Kitchen/Bath Remodel
Consumer Preferences
CHALLENGES
Fannie Mae/Freddie Mac Data/Analysis
Closed
Private
Banks can see
Appraisers can’t
The Very Predictable Outcome
Goliath knows more than David
How does a sole practitioner deal with that?
ACCURACY WILL ONLY INCREASE
Pedro Dominguez
The Master Algorithm
R Squared to the Nth
Understanding the unknown
Figuring out “human nature”
The Zillow Prize
$1,000,000
Crowdsourcing Perfection
+/- 6% Absolute Actual Value
SOMETHING ELSE TO FEAR
The “Soft” Appraisal
Consumer Prosumer
Consumer needs a HELOC
Consumer downloads app
Consumer takes photos of interior/exterior
A.I. Validates that a bath is a bath, etc.
Geofencing ensures location and time/date
Data uploaded to lender
Loan decision immediately; funds disbursed……24
hours?
The COVID connection
CAN APPRAISERS WORK WITH AVMS?
What does that actually mean?
An AVM, or
The technology itself?
My Experience
The challenges
No “Real” Guidance
USPAP/Foundation not Helpful in the least
Confusion and Distrust
AVM STANDARDS AND THE FUTURE
No Standards
USPAP Useless
IAAO 2017 AVM Standard
Some AI Member input (primarily review)
Same old/same old (with all due respect)
No real “interactive” focus or advice
A Thought
This is the “undiscovered country”
AI could have a meaningful impact, not just “how to work with AVMs”, but-
“How does a valuation analyst work with statistically-derived data, predictive analytics, etc.”
LEST WE IGNORE THE CANARY IN THE COAL MINE
AVM Development in CRE Space
Failed in 2001 (CoStar in its infancy)
Multiple efforts by multiple players in the last 18
months
Not as complex as residential; fewer variables;
Less “qualitative or emotion-based”
Technology available in the assessment world for at
least two decades
Its Here
WHAT DO OUR CLIENTS THINK?
Joint Banking Conference:
Illinois, Michigan, Ohio
Walking to my presentation
The best prop EVER
THINKING ABOUT THE FUTURE
THANK YOU!
Mark R. Linne, MAI, SRA, AI-GRS
ValueScape Analytics, Inc.
303-995-0899
Peter Houstle, Executive Director
Metro DC Chapter of the Appraisal Institute
301-924-1020
www.AppraisalInstituteDC.org/education.html