Feader.chegg.com Search Textbook Solutions | Chegg.com CASE PROBLEM 5A: Branch Manager Abigail Blames Automated House Appraisals Abigail is a branch manager at Property Appraisals LLC, Gwenn said, "I am aware of the problems the home a regional company whose primary business is apprais-appraisal industry is facing, but I still think that your ing the value of residential properties. The appraisals office can do better. There is still demand for custom- serve a couple of important purposes. Sellers sometimes ized, professionally prepared appraisals of residential use the appraisals to provide guidelines for setting the properties. Stop blaming automation, and look at what price of a property placed on the market. A more ex. you could be doing to enhance revenue in your branch." tensive use of the appraisals, however, is by mortgage Abigail responded, "Maybe we could work together lenders, such as banks, that want an accurate value of a on deciding how much of a revenue enhancement would house before issuing a mortgage. Abigail has a staff of please you." four property appraisers plus an administrative assistant Branch revenue has shown a decline for nine consec- Case Questions utive quarters even though residential sales in Abigail's city have shown a slight increase over the same period. 1. How justified do you think Abigail is in blaming Gwenn, the CEO of Property Appraisals, has been up- low-priced Internet appraisals for the decline in rev- set with the declining number of appraisals conducted enue at her branch? 2. Why should Gwenn bother to negotiate with Abigail at Abigail's branch. During a face-to-face meeting with Abigail at her branch, Gwenn asked, "Will you please about revenue-enhancement targets? 3. What approach to negotiation should Abigail take explain why you cannot stop the decline in business?" to arrive at a reasonable target for revenue enhance Abigail responded, "As you well know, the property ment for her branch? appraisal field is suffering from automation, and par ticularly algorithms. A lot of potential customers areSource: A few of the facts in this case are from the following simply visiting Zillow.com to figure out how much their sources: "Why Automation Is Killing the Property Appraisal home is worth. The Zestimate provided is absolutely Light, "Mama, Don't Let Your Babies Grow Up to Be Appraisers," Business," Knowledge Wharton, August 21, 2017, pp. 1-4; Joe free. Stan Humphries, the chief analyst at Zillow, boasts Bloomberg Businessweek, July 17, 2017, pp. 29-30. that the company values about 100 million homes ev. ery night, with an error rate of 4.3 percent. That's pretty Associated Role Play tough competition." Gwenn then countered. "Okay, I can see that if some- Abigail and Gwen agree to have a discussion about nego body wants a quick estimate of the value of a house, they tiating a revenue-enhancement goal for Abigail's branch. might use Zillow. But what about when a person wants One student plays the role of Abigail, who plans to open an appraisal that is not simply plucked off the Internet?" negotiations with a goal of a 2 percent revenue increase Abigail said with a pained expression, "'You must be Another student plays the role of Gwen, who opens the aware that people are getting estimates supplied by firms negotiation session with a goal of a 10 percent increase in India for about $25. The Indian firm never gets near in revenues. The role players can choose any basic the property. They assess information from the Internet, (Chapter 4) or advanced (Chapter 5) negotiation tech- including Google photos, and make their estimates using niques they think will work well in this scenario. Run the software. Again, that type of competition is hard to beat role play for about 10 minutes. Observers might provide when we charge about $375 for an appraisal." feedback on the negotiation skills of the role players