For modernization, we must note how coarse are the choices available to the loan originator: AVM, appraisal, hybrid, waiver, evaluation. Each choice involves different, but pre-set steps. There is little flexibility. It is not a continuum of analytical depth. To compare valuation systems to each other, we must look at the parts of the analysis, […]
The FHFA (Federal Housing Finance Agency) wants input on modernization in the world of housing finance. A big change. Human response to change is – resistance. A natural human first reaction is anger. Change is first seen as a threat. “Who are they to disturb my nice comfy world?” That threat of loss triggers us. […]
A great deal of economic, social, and political talk has been around affordability of housing. To explore this topic, it may be helpful to ask some questions. Good policy starts with the right questions. In simplest terms, some people have the resources to have nice homes in nice neighborhoods, others have just tolerable homes for […]
For some people, Evidence Based Valuation (EBV)© feels like a threat to “proven” appraisal practices. Others may believe it is a pressing, needed radical change. It is neither. Modernized appraisal unifies the best of established theory and modern methods. It is that simple. Traditional appraisal practice was built on sound fundamentals of economic theory. These […]
Opinion is the required end product of appraisal, mandated by the quasi-governmental regulations. By “appraisal waiver” exception, analytic results may be allowed. (No opinion is necessary.) modernized Editor’s Note: This post is an intersection of Appraisal Modernization, Part 6 and Bias Part 5 The FHFA (Federal Housing Finance Agency) wants input on: Appraisal modernization; Data […]
What is “Appraisal modernization”? (This is part 5 in an ongoing series on Appraisal Modernization. Part 1 starts here.) The Federal Housing Finance Agency (FHFA) is seeking input to “create a more streamlined and accurate collateral valuation process.” It also wisely recognizes that new regulations “could have negative unintended consequences.” Said director Mark Calabria. While […]
In this time of New Year’s resolutions, bias has been much in our consciousness. Bias Pt 3. As a new appraiser, I knew little about bias. I did know that appraisers were expected to be unbiased in their opinions. It seemed simple. Be fair, and don’t let anyone bribe you to give the ‘value’ they […]
A year ago, in a land free of enemy Covidians, the topic was the failed resolution. We suggested a new attitude and new way to tie intent to results. Simple. Do yesterday to change today! Then know that today becomes yesterday in a blink. Blink. So today we suggest certain steps. These involve unlearning (as […]
Is it time to recognize the importance of EDA in all valuation products? EDA is Exploratory Data Analysis, sometimes called PDA (Preliminary Data Analysis). Who does it? Is it necessary? And why do we care? EDA (Exploratory Data Analysis) is a key part of the modern, data science solution to value and risk. It’s an […]
The “Appraisal Process” requires good judgment in picking comps. USPAP (Uniform Standards of Professional Appraisal Practice) uses the word comparable 95 times. Comps MUST be important. However, it is not defined. The Appraisal of Real Estate states a comparable must be similar, competitive, and “able to be compared.” In the 14th Edition, it is used […]
Three approaches to value evolved from the scarce data of the last century. With abundant data, three predictive models have evolved. What is the difference? Approaches vs models. The difference is like looking at a cube from the side or from the top. The top gives one view. The side shows another. In fact, they […]
Bias, We Got it Handled? We got standards, we got smarts. And we have issues . . . This is the second of a series asking questions and seeking answers about bias in valuation. Part One is here. President Biden proposed to “establish a national standard for housing appraisals.” The purpose is to ensure adequate […]
Judgment vs. Data. Computer quants vs field experts. Each thinks they have a better hammer. Quants think the experts have their eyes closed. “Experts” think the quants are hammering screws. Both have sore thumbs. Better In part 2, we considered heuristic analysis which focuses on mental efficiency to help make judgments and decisions quick and […]
Reasonable reasoning please! Its not as bad as it sounds! We can figure this out. That’s what abductive reasoning means! Figure it out! The three types of reasoning go along with three types of logic: deductive, inductive, and abductive. Deductive reasoning means a general rule leads to a specific conclusion, always true; Inductive reasoning is […]
Evidence is a necessary part of any research or analysis. In a prior blog, we considered that it was a core part of EBV (Evidence Based Valuation©). We noted three basic types (or ‘support’ for a personal opinion). We have logical – “if A, then B must follow”. We have empirical – “If A, then […]
