An appraiser must be worthy. You must be believable. Your work must be credible. That’s what it says in USPAP (Uniform Standards of Professional Appraisal Practice). Note that the source is the Appraisal Foundation—declared therein to be “the nation’s foremost authority on the valuation profession.” It uses the word “credible” 82 times in the Standards […]
Statistics for appraisers started to become a hot topic some 15+ years ago. I was more involved with the Appraisal Institute then, and often argued that with the changes in data sources—appraisers would have to learn to apply statistics. Around 2003, the AQB (Appraiser Qualifications Board) revised qualifying education to include the requirement for Finance, […]
Graphs serve several purposes. There are two main mindsets in building graphs. One of them seems completely ignored in traditional appraisal ‘procedures.’ The old way of appraisal is to gather 4 or 5 comparables. They are “competitive” and “similar”. We are told that if they are competitive and similar, they make ‘ok’ comps. Ok comps […]
The body of a letter to the U.S. House Committee on Financial Services about systems reform. Appraisal reform or Appraisal industry reform? It is critical to understand that ‘appraisal’ does not equal ‘valuation’, or risk analysis, or anything else. It is a precise definition of a nebulous product. The current U.S. House Committee on Financial […]
Is the science of Logic in art? Is there art in the science of data? Ask any musician or artist. We have perspective, the golden ratio, octaves, and even measurable human body and brain responses to music, visuals, and other sensual inputs. I have never read or heard a data scientist say there is no […]
Credible— USPAP (Uniform Standards of Professional Appraisal Practice) says an appraisal must be credible. The word ‘credible’ is used some 82 times in the Standards themselves (although used repetitively in the same context using identical words most of those times). Then an additional some 103 times in the Advisory Opinions, mostly re-quoting the first 82 […]
Is the sale price the best indicator of value for appraisers? A recent study[1] includes a graph which shows that some 90% of appraisals hit the sale price exactly, or were higher, while only some 10% were below the sale price (when the sale price is known). Is this a bias on the part of […]
Stress testing of regulated banks forecasts how declining economic conditions may impact bank safety. Loans, secured by real property can be significant in the overall portfolio of a bank. This property collateral portfolio itself will have different characteristics, depending on the locations, property types, and business types involved in the underlying collateral. Different properties will […]
Hybrid Appraisal Part VII: Is it possible that Hybrid appraisals can benefit us all!? Consumer heaven? Taxpayer benefit? Public trust? Hybrid appraisals are touted as being a “modernization” of the appraisal process. Simply put, a non-appraiser does the inspection of the property, there is no physical assessment of the neighborhood nor any of the comparables. […]
Hybrid Appraisal, Part VI Is it possible that Lo-Brid or even No-Brid appraisals could be even faster and more cheaper? Hybrid appraisals have been hyped as being a “modernization” of the appraisal process. While the appraiser still fills out the “Fannie Mae” form, the actual property visit is done by another person (with as yet […]
What is an adjustment? In a prior blog, we noted that no one seems to really know! We looked at the AI Dictionary of Real Estate Appraisal. We looked at The Appraisal of Real Estate (TARE). And we looked at the “Uniform” standards. All these sources tell us that adjustments are important and should be […]
And change it does. The biggest changes slip in almost without notice. USPAP recognizes change. In fact, Standard 1-1 says: …the principle of change continues to affect the manner in which appraisers perform appraisal services. It specifically recognizes change in cost, construction, marketing, law, lending all lead, or should lead to corresponding changes in appraisal […]
Price indexing is a result of a good market analysis. What is it, and how can it help? Price indexing solves many of the problems that the 1004mc was intended to do. It is not difficult to do. The result looks something like this: If you do this using the recommended specific procedure, you will […]
We know there is science in art. Musical scales. Perspective and the golden ratio. The ordered sequence of a good novel. It’s difficult to be a good artist without knowing, or at least intuitively applying the truths found in the logic. Both science and art reflect our search for the truth. Our primal human nature […]
An opinion of value is just that. Everyone has one. Asset value is wanted for one of three reasons: to measure risk, forecast profit, or to achieve fairness. Mostly the clients are collateral lenders, investors, and regulators/litigators. An appraisal is an opinion of value by an appraiser acting in appraisal practice. There are other opinions […]
