Hairy scary hybrid parry. Let’s look deeper, now that we seem to be away from the original hype. When this thing first came up from the GSEs (FannieMae and FreddieMac), a hybrid appraisal was narrowly defined. Basically, it separated the desk job from the field job. I was even in a room once where the […]
Graphs for analysts and appraisers are how we see. It is difficult to vision a median or clusters or market relationships using just numbers. It is even blurrier when someone uses p-values, R-squared’s, and t-scores, claiming these somehow ‘support’ their personal opinion of value. Bad enough in regular work. Even worse gobbledygook when used as […]
Appraisers study some economics. Data training is “pick comps carefully.” AVMs use data. AVMs (Automated Valuation Models) usually use a lot more data, even dozens or hundreds or …. Appraisers usually pick six or seven comps, based on good judgment and training and experience. We are told comparables should be similar and competitive, so they […]
Cognitive dissonance is the mental stress we feel when we’re confronted with conflicting beliefs and requirements. How could this possibly be a USPAP issue? USPAP, (Uniform Standards of Professional Appraisal Practice) may cause psychological dissonance in appraisers – because the review standards and practice standards have different requirements! For the appraiser, Standard 1-2(h) requires results to […]
It’s not me, I’m not biased! Is it me, the model, or the data? A great problem with legacy appraisal is that bias is about personal bias, rather than analytical bias. USPAP (Uniform Standards of Professional Appraisal Practice) only addresses human bias. Similarly, The Appraisal of Real Estate by the Appraisal Institute only addresses analytical […]
I have been accused of using new big words, when old little ones would do! Yes. Guilty. Why? What is the context? What are the goals? What is the path to the goals? The context is that most readers of these blogs are appraisers or collateral/risk people. The context is also that all related financial […]
In this Part II, (see Part I here) we will reduce the comparison to the component comparable parts. Appraisal: Pick comps. Make adjustments. Opine a number. Data Science: Identify data. Clean the data. Run predictive algorithms. Similar huh? Well – yes and no. Let’s look around. We begin with the beginning: What questions do we […]
Data-driven is a buzz phrase. It can be useful. It can be counterproductive. “And in this corner we have . . .” It’s the appraisers versus the quants in the boxing ring. It turns out that people who are experts in a subject-matter field (appraisers for example) tend to discount the words “data-driven.” The experts […]
Take a sample or pick comps: different or the same? Most of us grew up first learning descriptive statistics: mean, median, standard deviation and such. Later, we learned that it was usually impossible or too expensive to get all the data, so we got a sample which seemed to be like the whole ‘population’ we […]
There will soon be no need for residential appraisers. I remember years ago, doing education for my merging AIREA/SREA chapter(s) in San Diego. AVMs were just coming to our attention. I invited a MAI who happened to also be a PhD in economics, Phil Mitchell. The room was full. Someone asked about those “automated algorithmic […]
“I know a good comp when I see it! I have good judgment. I know my market. And I’ve been doing this for a long time.” (Oh yeah – I’m also pretty smart.) What do we learn to get an appraiser license? We are told that a comparable is competitive to the subject. Then, a […]
Judgment to analysis to science to econometrics? When will this foolishness stop? I liked appraisal the way it used to be. It was slower, but more fun: Pick six or seven comps, go look, take pictures Pick three or four ‘good’ ones. Explain, justify, and support your opinions Then data got easier – on line. […]
Believe or don’t believe. Is there a parallel between appraisals and how people respond to pandemic warnings? Appraisal reviewers decide whether an appraisal is “worthy of belief” (“credible”) or not. Similarly, people decide whether to believe in the need for public health orders. Steven Dinkin (president of the National Conflict Resolution Center) recently had some […]
We hear about models and algorithms. We are told the appraisal process is a model. And so are the cost, income, and comparison approaches. No big deal. Ok. So now we know there are big models, and sub-models. An appraiser must know how to model. We have also heard about automated valuation models (AVMs). Hmmm. […]
In Part IV, we continue our quest for modernization of appraisal. In Part I, we clarified that an appraisal is an opinion. We figured out that opinions don’t modernize well! We also saw that market price may or may not be true value. And that clients of all types need more than a historic point […]
