A Study on the Use and Risk of Artificial Intelligence in the Appraisal Industry

Abstract

The purpose of this study is to investigate Korean appraisers’ perception of the potential for the utilization of Artificial Intelligence (AI) and the related risks of using AI in the appraisal industry. We conducted a mobile survey for appraisers from February 10 to 18, 2020. We collected survey data from 193 respondents. Frequency Analysis and Multiple Response Analysis were performed for basic analysis.
Factor Analysis was used to analyze various types of risks in using AI for appraisal industry. To visualize these risks, we drew positioning maps using the Multidimensional Scaling Method. Appraisers have a positive perception on the introduction of AI in the appraisal industry, but they also recognized the negative effects related to job losses and job replacements. They mainly considered collateral, consulting, and taxation appraisal as areas with high potential for using AI and areas with high replaceability of human labor. They were more aware of the substitution risk by AI in these areas. They were highly aware of accountability, privacy & security, and technical error risks. However, fairness, transparency, and reliability risks are generally perceived as low risk issues. While prior studies have mainly studied the analysis method of applying AI to the mass appraisal model, this study focused on the use and risk of AI. Understanding the perception of industry experts on the utilization of AI helps to minimize the potential risks that may arise when AI is introduced on a large scale.