I was curious about what is “critical race theory”. I didn’t understand what it was about. The Sunday paper article – yes, I still read the morning newspaper every morning . . . seemed to summarize CRT and the oblong political football it seems to have become. Why critical? Why Theory? And what does this […]
Appraiser training tells us to use good judgment – repeatedly. In fact, the word ‘judgment’ is used over 300 times in the current USPAP book. It must be important. It’s also used some 800 times in The Appraisal of Real Estate. It must be important. The basis of appraisal theory in the United States is […]
Misused terms: AI (Artificial Intelligence), ML (Machine Learning), makes you look smart. It makes for clever marketing. And it may be BS. The most important “algorithm” for valuers is A+B=C. Words are important. They help us understand each other and avoid wars. Marketers, in particular, tend to bandy about clever words, designed to impress you […]
Is it “Obvious”, like some people have “common sense”? Or is it counter-intuitive? We compared price versus value in Part I. (There, the leading paragraph defines “market value” as per USPAP Advisory Opinion 22.) The Appraisal Foundation opinion goes on for a full page to explain the explanation of the definition, and the importance of […]
Is it time that matters? Or is it different market conditions? At one point, I was told to stop teaching that it’s a ‘time adjustment’. Because it’s actually a ‘market conditions’ adjustment. This bothered me. It seemed like yet another step backward in the march of appraisal practices. Comparing market conditions at two different time-groups […]
Market value for home loans in the United States is precisely defined. The understanding of “market value” is the single most important concept defining what appraisers do. Buyer/seller are prudent, knowledgeable, well informed or advised, and ‘typically’ motivated; there is no ‘undue’ stimulus; and the sale is in cash terms, with normal exposure, and “unaffected […]
USPAP (Uniform Standards of Professional Appraisal Practice) ethics rule specifically states that “An appraiser must not perform an assignment with bias.” It defines Bias as “a preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment.” As we noted in a prior Analogue Blog, there are two types of bias: personal […]
Could the very definition of market value hold bias? Let’s look. First, we need to figure out what types of bias there might be. There are two major categories: 1) analytical bias; and 2) human bias. And there may be some overlap! Analytical bias generally comes from two places: Error in data selection; Error in […]
Faster we understand! But what is “better”? Faster is one of the ways we can make more money. Faster can be personally satisfying — if I can deliver a good or better product by being more efficient. Efficiency comes through good systems, and personal competency. Aha! So better can involve better systems, and more knowledge. […]
Basic sequence of valuation is basic: identify problem, gather the “comparable” data, adjust, and report. Simple. Basic. The Market for Valuation Series, Part 1 How about AVMs? (Automated Valuation Models). The words are a bit different, but the process is the same: Enter the address, apply the data collect algorithm, apply the predictive algorithms, spit out […]
Postpone appraisal modernization. We can do that later. Why? Change and improvement should, normally, come from a profession. When a profession fails to bring improvement, eventually consumers/clients press for change. That’s what seems to have happened. The two largest consumers of appraisals now have pressed for change. Fannie Mae and Freddie Mac have realized the […]
Is there bias in the American Dream? Do we need a “loan conditions” adjustment? Read this series here. Loan conditions have nothing to do with ‘financing’ adjustments as we know them! One is local. The other is global. So how might loan conditions affect “market value”? Financing conditions are often related to motivation in sale […]
Legacy appraisal practice “the valuation process” is well established. Therein lies the problem. It is not designed to use modern methods toward objective, unbiased results. First, lets distinguish the different kinds of bias. We need to separate personal bias from analytic bias. Personal bias can be intentional, or unintentional (unconscious). Analytic bias itself can come […]
Appraisers have adjustments for “market conditions” and “sale conditions.” Why not “loan conditions?” There are similarities and differences. This is Part II in this series. Read Part I here Loan Conditions. Market conditions, for any particular market, price levels – trend together. So, appraisers apply ‘time’ adjustments to compensate for this change in ‘market conditions.’ […]
How about “loan conditions”? Clients only need a value in order to quantify risk. Is this scary? Editor’s Note: This post is an intersection of Modernization and Risk. There are only three uses for knowing value: 1) collateral loss, 2) investment gain, 3) equitability. Historical value may only be relevant to #3. Loss or gain […]
