Appraisal Analysis is not a part of the UAD 3.6 “form” as required by the Fannie Mae and Freddy Mac.
Critical thinking requires we get stupid before we get smart. Like: “what is an appraisal”?
The commonly accepted meaning is the appraisal report. The numbers and words thing you hold in your hand, or see on the screen. Right?
Wrong. According to USPAP definitions, it is about the development of an opinion, or the opinion itself, not the report.
The current GSE UAD URAR 3.6 dynamic data-centric entry forms are how you report your analysis. And how is this analysis done? The development of the valuation result? Three ways:
- My opinion, supported by my objective vast experience and years-ago education and training. Trust me, and my highest ethics. I strive to meet “user expectations” as per USPAP. The reconciliation states the greatest weight is on sales comparison.
- My professional opinion, supported by careful analysis of three comps. Picked ’cause they are similar, competitive, and “able to be compared.” Adjustments are from my experience, and the adjustment sheet my trainer gave me 10 years ago. Very reliable. The reconciliation explains my opinion of the best comps.
- An analytic result, based on data science modeling using:
- one of the five complete-data similarity algorithms;
- one of the three fundamental adjustment/predictive
- And risk/variation analysis for additional information and reliability scoring.
Method #3 is possible today. It invokes the “science of data” analysis. It is destined to replace traditional legacy practices. We call it Evidence Based Valuation (EBV)©.
You, the appraiser, are needed for your knowledge of the data science process, the analysis, and the deeper intuition – using your sharpened and detailed judgment!
Software for residential appraisers is designed for you to input the detailed data required by URAR 3.6. Most attempt to provide some help with analysis. Some try to provide automation for downloading data, or making adjustments. We may have a problem looming here.
Automated analysis (including artificial intelligence use) requires the appraiser to understand the process, and explain its implementation. Appraiser intelligence!
Today, models and algorithms are easily built, customized, and reused. This can be existing for-a-fee software, or it can be open source. We have some practitioners who simply use AI to directly apply basic analysis models. No coding required.
Our Stats, Graphs, and Data Science classes — along with our free public service webinars and blogs, the CAA, and our website — are intended to move the valuation profession to its inevitable place: True professionals, competent in data science, visualization, critical thinking, and rapid, direct valuations (whether opinion or not)!