Challenges don’t affect only large companies. Since the internet has become part of our lives, many small businesses have seen the emergence of enormous Challenges. Many have altered industries completely, wiping out several small businesses. For example, on-line book shopping has pretty well killed off the small bookselller.
Another example is developing in real estate (see article here). We probably are all familiar with the need to have an appraisal when refinancing a home. We want these appraisals fast, so we can close on the loan, and cheap – because who wants to pay more for closing costs than necessary. In response, Automated Value Models were developed. These created a change in appraisals from 100% being done by appraisers to only 25%. Yet, because of the huge boom in construction and refinancing the number of appraisers still continued to grow.
But now, a company out of Calgary named ZAIO (see chart here) is creating a database of 100% of homes in America’s top 250 cities. This will provide far more accurate appraisals than AVMs yet at a cost possibly lower. This database will have photographs of every home, as well as assessor’s data and the company’s own valuation. It should be complete by 2010. Yes, this is a huge undertaking. And it will cost $75million. But, in the future lenders will be able to get immediate appraisals, cutting the loan processing time by a week, while lowering the appraisal cost from $300 to $125. Do you remember when we all thought no one could map the entire United States and make it available on line? And now we all use MapQuest or Google maps. For free to us, as this database access is paid for by advertisers. So is it really hard to imagine a database of all our homes? And a consistent appraisal application?
This makes huge senes to everyone but —- appraisers. ZAIO is making the database available to local appraisers. They can purchase a "zone" of 10,000 homes for $9,500. But many are saying "no thanks" fearing it will hasten the decline in demand for their services. Others are hoping to retrench to supporting executive relocations and other niche opportunities. But, the fact is that this service will do to the 100,000 appraisers what Amazon did to the corner bookstore. Very few appraisers will survive except those using the automated ZAIO database.
If you are an appraiser, you have to face either buying into the ZAIO model or finding a new occupation. For the self-employed appraiser, or the small business, this is tough to face. But trying to Defend & Extend their old occupation in the face of this new Challenge can only create a disaster. While some revenue is possible, it’s time to Disrupt and find personal White Space. It’s time to create a new Success Formula before the revenue runs out.
And possibly time to consider investing in ZAIO. Their database will be used for not only appraisals, but evaluating mortgate portfolios of lenders and possibly insurance value estimations. It’s not a big jump to imagine a future when insurance adjusters can use the ZAIO database to start their process, and possibly use satellite pictures from Google to determine the damages. Possibly leading to insurance estimates made fast – from the office. And then a whole new market, insurance adjusters, might face the Challenge appraisers now face.