Should appraisal practice go back to original historical principles?  Yes!

Is the appraisal “body of knowledge” now well established — and finally in place?

We here have long campaigned for the profession to “get with it” and start teaching modern methods.  Modern methods include artificial intelligence, data science, and critical thinking processes needed to supplement traditional practice with evidence-based practice.

We were wrong.  We apologize.  We did not go back far enough!

Perhaps we should return to real, original, economic concepts of appraisal.  Time-tested, proven, and established!

The original thought leaders and authors in valuation realized that appraisal is a study of the market, not the study of other sales.  The buyers and sellers and the prices to which they agree.  Often quoted, as per Richard Ratcliffe, MAI, back in 1975:  “Appraisal is market analysis.”

This “Analogue Blog” has long advocated for real appraiser modernization.  Modernization in the point of view of valuation professionals, not our client-users, not regulators.  Client users want cheap, fast, close-enough.  Appraisers want personal competence, safe objectivity, and personal satisfaction.

Over the years, Appraisal changed from a market analysis focus to rules that comply with quasi-governmental USPAP, and the quasi-governmental Fannie Mae and Freddie Mac “guidelines” and forms.

The old forms required three comps.  (Narratives, five or six comps.)  Adjustments required.  Lender clients expect form compliance.  Pick comps, make adjustments.  “Support” your adjustments.  And do what your peers do.  Just like USPAP requires.

That old, old way somehow got lost.  The “appraisal process” got warped.  The emphasis that you must pick comps first’ — took over.  The official teaching from the Appraisal Institute and all other schools (except Valuemetrics of course), was that you pick comps first, then figure out how to do a market analysis.  Backwards.  Backwards!

Thus, habits and expectations to ‘pick comps’ first became embedded in our soul. It became part of the groupthink, the teaching, the training, client demands, GSE guidelines, peers’  actions, standards, state licensing, and state regulations.  Fully embedded.

“Explore and identify the relevant data” must come first.

Kinda hard to be one small voice in the sea — pointing out this fundamental fallacy.  Why bother?

Bother because it affects things.  It affects the profession, the consumer, racial issues, and even economic cycles and “meltdowns.”  It affects the public trust, wasted time spent on one opinion over another opinion of credibility.  Trust-worthiness …

No wonder the appraisal ‘industry’ has come under attack.  An easy target.  Easy.

We must discard the attitude of “I know a good comp when I see it“ that overrides the original, traditional, and scientific basis that “appraisal is market analysis.”

Market analysis must come first.  That is all that we teach in Valuemetrics.info classes.  Market analysis.  And that is our mission in the CAA^© (Community of Asset Analysts).

Learn how.  Join us for a happier, more productive, professional life!