Property data collection (PDC) provides valuable industrial real estate insights that help you make informed decisions in commercial and industrial real estate. Its role is to observe and record various standardized data points during on-site visits including details such as building materials, floor plans, utilities, and other physical attributes.
However, misconceptions often cloud the understanding of this process. In this article, we debunk four commercial real estate myths surrounding PDCs.
Myth #1: PDC is the Same Thing as Property Appraisal
One common misconception is equating property data collection with property appraisal. While both processes involve gathering information about a property, their purposes and methodologies differ.
Property appraisers possess in-depth knowledge and expertise in analyzing market trends, assessing property conditions, researching comparable properties, and applying judgment to arrive at a final valuation. They are licensed professionals who drive the valuation process by analyzing the data collected by PDCs.
On the other hand, data collectors specialize in meticulously gathering precise industrial real estate insights about the property. This includes square footage, materials used, room layout, and high-quality photos. They play a supportive role by providing the foundational data for appraisal. The collected data helps streamline the process and reduces the appraiser’s workload on basic details.
This collaboration is called a hybrid appraisal.
Think of them as the eyes and ears (PDC) working with the brain (Appraisers). While PDCs focus on the visual aspect, appraisers bring their analytical expertise to interpret this data.
Myth #2: Data Collectors Are Going to Replace Appraisers
Contrary to the belief that property data collection could replace appraisals, it can streamline the process for appraisers instead.
Let’s say you’re trying to find the value in a small property on a quiet side street. The PDC report lays out the basics: square footage, bedrooms, bathrooms, and standard photos while the appraisal identifies and evaluates the upgrades and micro-market dynamics.
A property’s true value often extends beyond basic data points like square footage or materials. Historical significance, hidden renovations, or neighborhood dynamics are crucial factors that appraisers capture through on-site visits and expert insights. However, PDCs cannot capture these intangible elements.
PDCs are trained data gatherers, not property valuers. They lack the in-depth knowledge of market trends, property analysis, and complex valuation methodology that appraisers possess. Thus, PDCs always need an appraiser’s on-site visit and expert interpretation to accurately assess their value.
Not to mention, most loan requirements and industry standards still demand a full appraisal by a licensed professional. Thus, replacing appraisers entirely would require significant regulatory changes and shifts in industry practices.
Myth #3: PDCs Are Not Properly Trained or Qualified
While it’s true that PDCs don’t need the same level of training and licensure as appraisers, this doesn’t equate to a complete lack of training or qualification for their specific job.
Most PDCs undergo certification programs offered by industry organizations like the Appraisal Institute. Both Fannie Mae and Freddie Mac, major players in the real estate industry, mandate that PDCs undergo professional training and vetting. All of which cover aspects like data collection standards, property measurement techniques, and ethical conduct.
Practical experience is also paramount in becoming a property data collector. Thus, aspiring PDCs seek internships, on-the-job training, or mentorship opportunities under seasoned professionals to hone their skills and gain real-world insights. This firsthand experience not only enhances their proficiency but also provides exposure to the field.
On top of that, PDCs are inclined to actively participate in workshops, conferences, or continuing education programs to stay at the forefront of industry developments.
Myth #4: PDC is Bad for Appraisers
Finally on the most common commercial real estate myths—PDCs are not bad for appraisers. In fact, the relationship between appraisers and PDCs is highly advantageous to the following:
- Appraisal trainees. PDC roles offer a valuable source of income for appraisal trainees, supporting them financially as they gain practical experience. This additional income is particularly vital during the preliminary stages of their appraisal careers, helping them navigate the challenging path to becoming seasoned professionals.
- On-the-go appraisers. Busy appraisers facing overwhelming workloads can leverage PDCs to delegate specific tasks. This enhances their efficiency and allows them to concentrate on the more analytical aspects of their profession. On top of that, it allows appraisers to expand their services to include bifurcated and hybrid appraisals.
- Older appraisers. Finally, the support of PDCs allows older, seasoned professionals to continue providing their valuable insights and experience while easing into a less strenuous workload. In addition, it contributes to the industry’s rejuvenation by providing opportunities for new entrants.
Accurate property data collection is the cornerstone of informed decision-making, and debunking these myths is a step toward a more effective real estate market.
As the real estate industry evolves, embracing the collaborative constructive collaboration between data collectors and appraisers becomes essential for driving innovation and ensuring the accuracy of property valuations.
Join the conversation, share your thoughts, and learn more about real estate today with Allen Mayer—the leading voice of Toronto’s Real estate market.