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 […]
The 1004MC form failed on every important principle of modern science of data analysis. Can we avoid yet another complex, ambiguous monster? What are the simple principles? Data science is new. It replaces much of the old “take a sample” statistics. And we learned this “inferential sample statistics” from professors who learned it in the […]
KISS — Keep it Simpler Science! What?! How can that be?! Einstein said “Everything should be made as simple as possible, but not simpler.” The beauty of science is that it strives to make difficult things understandable. Traditional appraisal uses four or five comparable sales. The human brain can compare and understand up to six […]
Inference is defined as a conclusion reached on the basis of evidence and reasoning. I have often said the biggest problem with statistics is words. (The very word statistics is used in more than one meaning – often in a misleading way.)[1] So what is logical inference, and how is it different from statistical inference? […]
Most of us grew up being taught pie chart statistics. In elementary school that’s how you probably learned about data and graphing. Proportions were taught by using a pie chart. This seemed relevant because it dealt with the practical problem of slicing a pie so five kids could share. Much else often is taught not […]
Do you follow ethical rules, or moral principles? How does human psychology play in? It is proven that appraisers’ opinions mostly match sale price (for loans). Justifications are: The price simply reflects an efficient market. The price lands inside Richard Ratcliffe’s “transaction zone”. (The principle here is that a real “most probable” value does not […]
