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 […]
What does it mean “Can the profession be saved?” Does anyone else care except us? The second question first. Who might care? Clients who have developed a trust for you and who are comfortable with the traditional ways of doing things. There is a group of us and of them who like doing things as […]
Is Appraisal belief based? USPAP says our work should be credible: “worthy of belief.” That’s the test. What/who tests worthiness? In the Scope of Work Rule, it is “client expectations” and “peer’s actions.” In the section on “acceptability,” it goes even further, stating that an appraiser must do what “would appear relevant to the client.” […]
Major challenges exist within our appraiser education given the dramatic changes in technology. These challenges include appraisal standards, our basic and advanced education, and some claims by software providers. A quick overview: Subjective acceptability in standards; Inferential assumption in curriculum; Regression coefficients all over the place. Subjective acceptability. Many consider appraisal to still be […]
Can you just give me some magical software which will calculate my adjustments? I get asked questions like this often. Can you just show me how to do a graph a client wants? Can you just give me your class stuff so I don’t have to come all that way? So often, the question degrades […]
No it’s not. Just do what you’re told. Do what you were taught. Follow the Rules. No thinking required. What are the “rules” of appraisal? Easy: Get your intended user’s expectations (scope of Work). Pick your comps. Apply one or more “approaches”. Provide your opinion (then explain, justify and support that opinion). How will you […]
Who cares if it’s reliable? It only needs to be “credible” – believable. Credible: “Worthy of Belief” Reliable: “Repeatability of findings” Credibility comprises both trustworthiness and expertise. It has both objective and subjective elements. One can also increase credibility by being a good salesperson by convincing the reader of your viewpoint. You form an opinion, then […]
