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Is Appraisal belief based?

USPAP says our work should be credible:  “worthy of belief.”   That’s the test.  What/who tests worthiness? In the Scope of Work Rule, it is “client expectations” and “peer’s actions.”  In the section on “acceptability,” it goes even further, stating that an appraiser must do what “would appear relevant to the client.”

The concept of belief is further formalized in the review standard.  Standard 3 requires the reviewer to be credible.  The reviewer must develop a credible opinion — of the opinions and conclusions being credible. In other words, a credible opinion of the credibility of an opinion.

Historically, this was a good deal.  It was all we could expect.  All we had was sparse, unsure, and opaque data.  It was the best we could do.

What do we have today? In most market areas, we have:

  • Complete data
  • Instantly available
  • Real Analytics Software
  • Clear modeling decisions

We can replace opinion with presentation of results.  Results!  Kinda like we learned in the third grade – “show your work.”  The teacher said to me:  “I don’t care how smart you are, and that you’ve got the right answer – I want to see how you got there.”

I want to see how you got there.  AVMs can provide answers.  Homeowners can provide an answer.  Anyone can provide a number.  Give an opinion.  Even an educated opinion.

What the world needs is a profession that can show the work.  The data, the logic, the metaphor, the story.  The work that a client can follow.  The appraisal professional says see my data, see my analysis, hear my explanation, follow my logic.  The amateur says “trust me, believe me”.

The difference is clear.  If you were a client, what attitude would you prefer?

  • “Trust me. I know a good comp when I see it. I know what I am doing here!” Or,
  • Here is how the data is selected, here is the algorithm, and this is the reproducible result.

The client need not hire another appraiser to believe your believability.  The client can hire another appraiser to follow your tracks, your modeling decisions, and replicate your results.

Results

Results – not opinion.

This is the essence of Evidence Based Valuation© and Evidence Based Appraisal©.  Best of all, the client can have a risk/reliability measure.  Which is what most clients really need – instead of an opinion.