BECOME ELITE OR BECOME OBSOLETE

Here’s a hard truth, my friends, you’re not in a race with artificial intelligence. You’re being erased by it and it’s happening quietly and systematically. And the worst part? Most of you  won’t even know it’s happening until the phone stops ringing, the orders stop coming, and the banks no longer need you.

This isn’t a conspiracy, it’s not a doom prediction, it’s the simple math of, and intersection with, an exponential technology meeting several stagnant industries.

While you're arguing about comp selection, debating about the shenanigans happening over at the Appraisal Institute, and fighting over revisions, AI is learning the entire market, every zip code, every sale, and every pattern. And unlike you, it doesn’t sleep, it doesn’t complain, it doesn’t need a license, lunch, or health insurance.

This episode isn’t about fear, it’s about freedom. The freedom that comes from realizing that we’re at a crossroads and you’ve got some choices: Reinvent your role and how you see yourself, or be gently, efficiently, and permanently replaced by a system that doesn’t even know your name or care that you need to feed your family

Let’s talk about the uncomfortable shift already happening and how to make sure you’re on the right side of it.

In this episode, I’m going to do my best to express to you what I think is coming much faster than many of you may think and encourage you all, with some urgency, of course, on what to do today if you want to be where I think you’ll need to be in order to thrive in the coming years.

I’m using the word ‘thrive’ because that’s what I always want for you as a coach as it doesn’t really serve either of us for me to see you devolve and fail. However, I also know how the human brain works, I know how the skeptical appraiser mind works, and I know how stubborn human beings can be unless or until tragedy and urgency enter the chat.

The reality is that most of you will do nothing with anything I share in this episode and for a variety of reasons, none of which are likely valid. Nevertheless, the small minority of you who do listen to what I’ll share in this episode, and the even smaller number of people who take some kind of action, I applaud you in advance since you’ll be the ones who thrive. Again, I say thrive because that is my goal for you and I don’t want to always be that guy that says, “If you don’t do this, you won’t survive!” I think it is very likely that some of you listening to this episode will not be doing in one year what you’re doing today, but hopefully you’ll be thriving in some other role somewhere else.

So, let’s get into it! AI is here, my friends, and there is simply no way to get around that fact. It is all around us and visible in so many more things and so many more ways today than even six months ago. One year ago, even I was somewhat smirking at some of the AI stuff because I watched how people were using it and thought, “well this is just dumbing people down and they’re going to eventually lose any critical and creative thinking skills they may have ever had!”

But that was a year ago. Like many of the things I casually dip my toe into, I eventually go deeper and deeper until I either find the bottom for me and abandon it, or I become obsessed for a time, I pour myself into that thing and I try to master it to one degree or another. That’s exactly what has happened with me and AI.

Twelve months ago, I was dabbling with Chat GPT to ask it some fun questions, using Gamma to make some of my slide presentations, and using Gemini on my phone to play around with the voice features about once every 2-3 weeks. Really just dabbling in all of it until I started to ask some of those programs to do a little more, then a little more, and eventually a little more. I started to watch some more videos on YouTube on how to prompt the AI platforms a little better to get better results. I started to learn how to use and eventually create my own GPTs within ChatGPT to use in my companies.

With the results I was getting from doing that stuff, I started to look at some of the new platforms and use cases that were showing up almost daily and my interest was really piqued.

About two or three months ago, I met up with my friend and fellow coach, Roy Meyer, who shared with me several more use cases, several more AI platforms, and several more ways to think about AI. After that meeting, my outlook changed completely on AI. Some for the better, some for the worse, and I’ll explain what I mean.

Since that meeting, I’ve been consuming hundreds of hours of online content about AI, its use cases, the best and worst case scenarios, not just for the future of work, but also the outlook for humanity. While we can’t and won’t get into the outlook for humanity with regard to AI in this episode, just know that I believe there are some really positive things that are already here, with much more to come, but also some really scary stuff that has the potential to make everything we’ve ever talked about on this show null and void.

What I want to share with you all in this episode is more of a call to action. The call to action is to step up now or get way behind. By ‘step up’ I mean study everything you can get your hands, eyes, and ears on regarding AI, and I don’t necessarily mean to make you a better appraiser.

There are some appraisers out there right now figuring out how to use AI to do some good research, create better charts and graphs, and write better commentary than you might be able to do on your own, and to that I say, ‘wahoo! Good job! Keep up the great work!” I have no issue with people learning, growing, adding tools to their toolbox, and making use of what is out there and getting better. In fact, I’ll say that I think most of what is being developed in the way of software tools by other companies to make your appraisals more credible will be basically obsolete in a year or two with the speed with which AI is advancing.

Given how fast AI is developing, I believe in just a year or three you’ll be able to simply prompt an AI platform, maybe one not even developed yet, to figure out your market boundaries, your best comps based on a few factors, most of which it will be able to see from your images, the adjustments to make those comps more similar to the subject, the commentary to use in defense of those adjustments, and a whole slew of additional market data to support a particular opinion of value and it will do it all in about 2 minutes and 37 seconds.

If you think I’m being hyperbolic or out of my mind, you simply haven’t been using the AI tools that are out there today. And the tools that are available today will look like handmade broomsticks compared to advanced machinery that is already developed but not released yet. If you think I’m being hyperbolic about that, all you need to do is follow the same process you’d use to complete a retrospective appraisal: just go back one year to how people were talking about and using ChatGPT, how reliable it was, and what other tools were even available compared to today. The growth of AI and AI tools in the last year alone has been nothing short of ridiculous. The growth has been astronomical and exponential and it’s all happened in months, not years.

I get it, there is hundreds of billions of dollars in venture capital out there for anything with the words AI on it, but that doesn’t mean it’s all hype or just smoke and mirrors. That just means there is lots of motivation to develop new stuff and get it to market, even if it’s not perfect. Nevertheless, in comparison to what was available in the way of AI tools just a year ago, it would appear we’ve collapsed some kind of timeline in record time, we’ve entered some kind of weird wormhole, and time is moving exponentially faster. What took decades to accomplish is now getting done in mere months. What used to take months is taking hours. And what used to take hours is taking a few minutes to sometimes seconds.

Here's the point: what we see happening with AI today is just the tip of the iceberg. If what I believe AI will be able to do in the way of developing an opinion of value in just a couple to a few years, the question for every appraiser out there is, ‘what am I doing to make sure I am at the very top of the pyramid as it pertains to problems I am solving, the tools I’m using to solve those problems, and my usefulness in the market?’

Do I think AI is coming for your job as an appraiser? I don’t know. I don’t think it would be fair to ascribe human intent to what it wants or doesn’t want because it’s not human. I don’t think AI cares what you and I do or what we want. But I do think, as soon as a CEO sees how much profit can be driven to the bottom line by eliminating 16, 50, or 2000 humans from a process because AI can do it better, faster, and with no pee breaks and no insurance benefits required, they’ll do it in a heartbeat. In fact, we’re already seeing it in the workplace.

Companies are starting to eliminate roles in a variety of areas like data entry, customer support, HR, content creation, marketing departments, legal departments, accounting departments, and software coding roles because they’ve found ways to implement AI solutions to replace some of the humans doing that work. Is it perfect? Not at all. In fact, a fintech company named Klarna let a bunch of its workers go in 2022 and replaced them with AI, only to realize late last year that the AI wasn’t as good as some of the humans were in areas of judgement, nuance, and dealing with other humans in customer service scenarios. However, that doesn’t mean AI can’t replace lots of humans in lots of other roles.

My point is not to freak you out, it’s not to say that I agree with any of it, and it’s not to say that something else couldn’t come along and make all of this stuff irrelevant. The message is simply to use all of the tools you should be using as a good appraiser and look at the patterns to forecast what might be coming and coming much faster than what you may have imagined.

If you’ve never heard of Blaise Pascal and Pascal’s wager, let me introduce you. Blaise Pascal was a French physicist, inventor, and philosopher in the 17th century and he's somewhat famous for a philosophical argument about whether or not to believe in God. While I have no interest in getting into a theological or religious argument on this topic, I've learned to really respect the argument and framework that Pascal makes in this regard.

What Pascal's wager essentially says is that we have some options when it comes to believing something to either be true or not true. What he says as it pertains to a belief in a God is that, if God exists and we believe in God, well then, we benefit by gaining some kind of eternal happiness in the end. If God exists but we don't believe in God, then we lose everything and suffer eternal damnation, at least per that belief system.

But here's where it gets interesting, because Pascal was essentially using game theory to weigh all of the options. There's a third and a fourth option in this game and the third option is, if God does not exist, even though we may have chosen to believe in God, we lose nothing because we still live our lives as we would anyway. And if no God exists and we chose not to believe in a God, well then, we gain nothing and we still live our lives as before.

What this all came down to for Pascal, and the reason Pascal's wager has stood the test of time, is because he is essentially saying that it really costs you nothing to believe that God exists and, if it's true, the rewards would be asymmetrical and exponential in the end. However, if you don't believe in God and God does exist, at least in his belief system, the downside was astronomical. If the downside to not believing is astronomical, and the reward for believing is asymmetrical and exponential and there's no real cost to believing, you're better off believing than not believing.

And so, here we are. We're at a unique intersection in time whereby we're being asked to make a wager. The wager we're being asked to make is essentially to say, if all this AI stuff is real and has the potential to put vast sums of people out of work because of what it can accomplish, and this belief leads us to do a little bit of additional research, study, and growth so as to be better prepared, wouldn't it seem prudent to just accept that belief and learn everything you could about artificial intelligence and how to utilize it? The other side of that wager is to say that you are skeptical that AI will have any significant change on how you work in the next few years and, therefore, you're not going to waste any time learning it.

The two possible outcomes are that the first premise is true and AI is going to put vast sums of people out of work, so those who are learning everything they can about it might be able to forecast better, position themselves better, and be more prepared as that happens, or that the first premise is not true and those who have put in a little extra time learning, preparing, and adding some tools to their toolbox have done just that, added some new tools, some new efficiencies, and some new ways of looking at things with no real downside.

Essentially, you either wager your future on the possibility that AI will vastly change how the world works and how appraisals are done, if they are done at all, and you get prepared, or you wager your future based on your skepticism that none of this is coming, that your job is safe, that nothing is going to change, and you just keep plugging along as is. You don't need to believe AI will definitely change the world in order to take it seriously, you just need to realize that the cost of being wrong is far greater if you ignore it.

To run it through a pascal's wager type filter, there's four options:

1. You study AI + it changes everything = You’re a market leader
2. You study AI + it fizzles = You’ve added new skills, no loss
3. You ignore AI + it fizzles = You coast, but miss the learning
4. You ignore AI + it changes everything = You’re obsolete

When you look at things using this kind of filter, you realize that the only truly risky position is to assume that AI isn't going to really have any kind of effect, and you end up doing nothing.

You've probably heard this joke before that if you're hiking on a trail in bear or mountain lion country and you happen to be hiking with others, should you come across one of these creatures, you don't need to be the fastest in the pack, you just need to be faster than the slowest person in the pack. I tend to look at learning AI with a similar jocular view; I don't necessarily need to be the best at all of this, I just need to be better than the ones around me who laugh at the premise that any of this is even really a thing. In the end, those who don't take any of this seriously are likely the ones standing there with their arms in the air wondering what happened.

Friends, here's the thing, experience used to be a strategic differentiator. Unfortunately, we are living in an era where that is no longer the case. AI and machine learning can crunch more data and absorb more transactions in half a day then you have in all of your multi decade career. That's simply a fact. The game is no longer about what you have done, how many classes you've taken, how many letters you have after your name, or how long you've been doing this, the game is changing to how well you adapt and evolve to, not only what is already here, but what is most definitely coming.

The appraisal industry is all abuzz about silly scandals at the appraisal institute, changes to industry regulations, and a proposed new form coming out some time in the future. While there's nothing wrong with staying up on changes in the industry, personally I think this is all a big distraction from the real news, which is how little time we may actually have to continue doing things the way we've been doing them.

What I see most people getting wrong when it comes to AI is they tend to think in binary terms of only two outcomes. They think AI is either nothing and will have no appreciable effect on what we do and how we do it, or they think it's going to completely destroy the planet and everything on it. The problem with this thinking is that rarely are things binary.

In the case of AI, we can simply look back over the last 10 years and see how technology, and specifically AI, has changed the way we do lots of things in the world. Maybe not in the appraisal profession specifically, but companies like Canva for image editing, CapCut for video editing, and Google Maps for all of your mapping resources within an appraisal report, these are all examples of technology and artificial intelligence slowly changing how things are done. We tend not to think much about them because they've become part of simply how we operate today. However, they were also a harbinger of, not only things coming, but the speed at which things can change.

The outlook isn't a binary one. I don't believe it's a scenario where either you're still working or you're not working in the field you're in, at least not in the near term. I believe the biggest effect will be in how our roles as appraisers, even real estate agents and mortgage lenders, will change with the speed and scale at which AI can accomplish tasks that take humans weeks, days, and hours. AI in many cases can accomplish many of these tasks in minutes or seconds and at considerably larger scale.

No, my friends, AI is it going to put you out of work, nor is the person who knows how to use AI, as the overused meme likes to say. It won't have to, the work will just slowly disappear over time. You’ll simply become obsolete.

What AI is doing in almost every industry is gutting the middle. What I mean by the middle is the easy, repeatable stuff that does not require nuance, human judgment, and complex insight. The typical tract home in an urban in suburban neighborhood doesn't need a deep analysis from a 20-year appraiser with an SRA designation. It's in this massive middle that lenders simply need speed paired with low cost multiplied by compliance which translates to good enough for 80% to 85% of their transactions.

Sad to say, but one of the only things keeping appraisers relevant, at least in the lending environment, are those compliance components like lender overlays and GSE guidelines. Since much of the appraisal industry is built on a foundation of compliance and meeting those guidelines, appraisers have been protected from extinction. However, history has shown us that regulations tend to follow tech, not the other way around. Once they have enough data proving that AI can either match or beat human accuracy at scale, those protections are gone.

What that means is that there is still opportunity at the edges. You can either be a low paid aggregator of data and reviewer of what the AI comes up with in the future or you can be a high paid specialist in a variety of different areas that AI simply will not be able to deliver the same level of expertise, authority, and relationship.

One area I don't see AI completely destroying the appraisal profession in the coming years is, of course, the non-lender segment of appraisal work. The reason being that the people who need and want those kinds of appraisals need and want a human walking them through the process. Yes, there may be some bigger players and AMCs that will end up providing some digital and AI solutions to the non-lender market that will slowly eat away at some segment of that market. However, there is still a wide-open gap that will remain for a good long time in every local market of a human being searching for another human being to take their hand and walk them through the process. The remembered, respected, and revered relationship builders will always win in that arena.

Right now, we're all having fun playing around with Chat GPT and Claude and Gemini to see how it might make us a little bit better at doing what we've always done. And although this is a great way to jump in and learn about AI, I think it's a huge mistake to think that AI is simply going to help us get more done in less time. Using AI that way is lulling people into a belief that it's just another tool to help them say things better, support their adjustments better, and throw some nice arts and graphs into the report.

AI is not just another tool to make you more efficient and your reports prettier. AI is learning faster than we can regulate it. It's gathering data and information at exponential rates. It's moving so fast that nobody really knows how to deal with it or adapt to it because we've never seen anything like it in history. This isn't about AI helping you do your job better and faster; this is about AI completely redefining what your role is in the process.

If you're thinking that AI is going to try to compete with you on skill and your hyperlocal knowledge, you’re going to be punching at the air because it doesn't need to compete with you on skill, it blows us all away at scale. AI does not need to be better than you, it just needs to be good enough and exponentially faster, while also being available everywhere all the time. The place that you and I can and will always beat AI, however, is in being 1000% more human and trustworthy when and where it matters. The ‘when’ and the ‘where’ it matters part is where our challenge currently sits. As AI grows in ability, the challenge you and I face is in identifying the quiet corners where humans want to interact with other humans. That quiet corner is where your business thrives.

My advice in this episode to anyone who's still listening is, of course to be putting aside time every single day to be learning everything you can about AI platforms, what AI can do, and how you might be able to utilize it today so that you are not stuck downstream when the floodgates open. They've been building AI into refrigerators, dishwashers, crockpots, earbuds, and microwaves for some time now. Do you really think it's not possible that it could eventually do what you're doing but do it better faster and at scale? Of course it can!

AI will, in very short time, be better at selecting comps, recognizing patterns, forecasting trends, understanding economic indicators, interpreting velocity, and of course entering data into a silly form. If you are not utilizing AI to reimagine your future, your identity, your value, and what you bring to the world, it will most certainly do it for you. The game isn't to do what you already do more efficiently or with more scatter plots. It's to fundamentally rethink what you offer, what problems you solve, what value you bring, how you position yourself, and what business you are really in.

Use AI to create a new identity and a new role for yourself before it creates one for you. I'm going to recommend you stop thinking like the appraiser you were yesterday and start thinking like a valuation strategist, a complex value consultant, a litigation expert, a divorce appraisal authority, a market risk advisor, wealth preservation expert, real estate equity strategist, asset risk analyst, valuation credibility consultant, or a value intelligence officer. You need to stop being a form filler because that will be the first thing to be replaced. Your value is not in filling out the form and ensuring that you are in compliance, so stop making that your strongest argument against AI and technology.

It's time to build a premium brand around who you are and what you do, and you can use AI today to help you do that. There will come a time that it will be too late to do that, so why not start to focus on that now while you still have time. The AI curve is vertical not linear. What would have taken 10 years to accomplish in prior years now takes 12 to 18 months. AI models that we played with a year ago go from novel and kinda useful to better than humans almost overnight.

Friends, I hope you're really hearing what I'm saying in this episode and not just listening. I don’t know with certainty any more than you do. We’re all guessing at what this all means for the future of appraising, the future of work in general, and the future of humanity. As we talked earlier with regard to Pascal's wager, I might be completely wrong on all of this and in two years none of this comes to fruition. What have you lost by learning, growing, and reinventing yourself? However, if your wager is that in two years none of this will come to fruition and you are the one who’s wrong, the downside for you is massive.

As with all advancements throughout history, at some point everyone sees the writing on the wall with their current work, what they have a hard time seeing at first is the world of new work. As an example, when personal computers came onto the scene, it was quite obvious that the role of typesetters, typewriter manufacturers, and typewriter repair techs and shops was all but finished. What nobody could anticipate with the rise of the personal computer, however, was the rise of millions of graphic designers, coders, micro-businesses, computer repair techs, and the thousands of other jobs, businesses, and roles that arose from that advancement. We can see the writing on the wall, we just don’t know what will arise as a result, but the future always rewards the prepared.

What I am quite confident of regardless of what happens with AI is that our humanistic qualities like empathy, curiosity, humor, and our ability to relate to other human beings will become increasingly more valuable. The machines are going to excel at the machine things like data gathering, computational tasks, and aggregating and disseminating massive amounts of information, and they’re only going to get better at those things, but they’ll still be machines at the end of the day.

You haven't explicitly asked me for my advice, but by listening to this podcast you are implicitly granting me the ability to give it to you. If you have the dice in your hands and I'm standing behind you whispering in your ear, my advice to you is to place your wager on the outcome that has asymmetrical and exponential upside with almost no downside and then roll the dice. My encouragement to you is to not sleep on any of this just because you think your ability to smell cat pee in a house cannot be replicated by AI.

Almost everything you and I do can already be replicated by AI and at an exponentially faster rate and scale. Just because it hasn’t completely eliminated the need for what you do today does not mean it can’t do that tomorrow. We are in the mere infancy of this ‘collaborative intelligence’ boom and, much like the morning of September 12^th, 2001, or May of 2020 when the pandemic hit, the morning after is when you wake up and realize that things will never be the same ever again. It's time to become elite, it’s time to develop all of those personal skills I’ve been harping about for the last 8 years, it’s time to focus on relationship building and doubling down on all of the things that make you an empathetic human because, if you aren’t one of those and you can’t see yourself becoming one of those, then you’re choosing to become obsolete in short time.