Is the profession dying? Do we save it? Or change it? How does EBV © make things better? How can it be better for appraisers? For lenders? For investors? For litigation? We have several questions. These are each worthy of a look. To this end, this will be the first of several parts, to see how […]
Stats, Graphs, Data, and now – Science. Why is science relevant? Isn’t good judgement important? Science is: “the systematic study of the structure and behavior of the physical and natural world through observation and experiment.” So how does this relate to valuation? First, we can get rid of a big chunk. Appraisers cannot do experiments. […]
Part IV of VI: Data is data. It becomes useful in only two ways. Simple, huh? Appraisers and asset analysts add value to data by a systematic process. The analysis turns data into useful information. The information can then become knowledge, useful for making a decision. Analyst judgment is still required. The judgment is improved […]
It depends on the client. Clients complain depending on the motive of the complainer! Let’s first look at just residential loan clients. (The other types of clients are for another time, another post.) So, what are the “types” of complainers in the residential loan world? Some categories: Form checkers “Administrative” reviewers Technical reviewers Middle management […]
Graphs are pretty, have colors, and show things. Graphs are visual. The human ability to see and to visualize is stupendous. It’s the main connect between the world about us and our ability to think, reason, and make decisions. Visualization includes graphic plots, tables, maps, moving and interactive displays, including three, even four-dimensional interface. Part […]
Does it mean objective analysis? Or does it mean objective appraiser? This is the main difference between the Traditional Appraisal Process (TAP) and Evidence Based Valuation (EBV)©. The TAP is well defined in both USPAP (Appraisal Foundation) and in the Appraisal of Real Estate (Appraisal Institute): [themify_quote]An appraiser must act competently and in a manner […]
Stats can be troublesome. Knowing the why, the what, and the how of statistics can help rescue the appraisal profession. Continued misuse and misunderstanding will help bury it. Let’s look at these three questions. We look at misused words, statistics, and the opportunity. First: “The main problem with statistics is words.” Statistics is the study […]
A “black swan event” is random and unexpected. Popularized by Nassim Taleb in his book “The Black Swan,” which describes an event (such as the last economic meltdown) as an unpredictable event. I ask, are the repeat real estate crises of every 10-12 years unpredictable, or a bevy of black swans migrating in wedge formation? […]
Why do we put “stats”, “graphs”, and “data science” together? (Part I of VI parts.) In coming blogs, we’ll look at each of these four words separately. Today (part I) we look at the whole for its parts. We use this principle of the scientific method: take a problem apart into smaller parts, study the […]
Some ten years ago, we saw the start of the economic meltdown. Were appraisers to blame? Some tried to pin the blame that way. But was there a big lie underneath? The required (federally insured) definition of value has seven distinct elements. Were appraisers doing what they were told? Buyer and seller each acting prudently […]
There is evidence that human judgment WINS – the appraiser opinion beats the AVM and other valuations based on technology. In fact, I have often heard that the qualified appraisal, based on the human logical analysis – is the “gold standard” for the industry. This appears to be true of client groups, and appears to […]
Is valuation one analysis or two analyses? Traditionally, we have been taught to pick our comps carefully. A comparable is competitive to the subject. A competitive sale is similar to the subject. And a property is similar if it can be compared to the subject. Is that one analysis, or two analyses? From the 1930s […]
Can personal opinion be objective? The definition of “Appraiser” in USPAP requires “one who is expected to be competent, independent, impartial, and objective.” Clearly, the definition requires delving into the mind of clients, users, and perhaps the public. Can this be true? Perhaps we can look elsewhere in USPAP for help. The definition goes on […]
The last economic meltdown happened because something wasn’t working. Appraisers can take two attitudes: 1) They are just reporters of “expected selling prices”; 2) They are just following standards. Is it the lenders and underwriters who determine risk, or is it appraisers? So appraisers can say they only do as they are told. Is […]
Our education tells us a comp is similar and competitive. So how do we measure “comparability”? If our job entails studying market data to get an answer … might it be important to know exactly how to describe a comp? In researching the literature, including journal articles, I find little help. Only two or three […]
