Quiz: How many comps are “just right?” First we must ask: What is a comparable? We can take two attitudes: 1) “I know a good comp when I see it!” or; 2) What does our accepted literature say? The Appraisal of Real Estate says . . . “The data used for comparison … should come […]
What are the Three Erroneous Zones? Problem solving works best if you can give the error a name. Do appraisers operate in the three erroneous zones? Errors are best handled if you can clearly identify the type of mistake. In the Fall of 2013, The Appraisal Journal, published my paper, Common Statistical Errors and Mistakes: Valuation […]
Market value: easy to see, easy to reckon and easy to “support.” How could this possibly be a problem? We recognize that there are other definitions of value. Many. The question we ask: Is market value always value in the market? After the last economic crisis started, I looked at the standard definition used for […]
“The good is often the enemy of the best.” (Bill W.) Traditional appraisal has been good. Up to just a few years ago, even at predictive methods and collateral risk conferences, I often heard the words: A real appraisal is the ‘gold standard’. What happened? Did appraisers suddenly get worse? I don’t think so. Appraisers […]
Sez the “anti-statistics” guy! Statistics has been touted as an appraisal tool for a while. For many years, while heavily involved in the Appraisal Institute, I became a statistical evangelist and people would run from me. I’d come to believe that there was a gap in appraiser education. I presented a (relatively unnoticed) paper for […]
R² or r² is a number which has been squared. Or is it? It’s popular and feels sophisticated. Especially if it’s ‘high’. Higher is better. Or is it? There are actually a number of ‘fallacies’ around the use of R2 or r2. First let’s distinguish between the big letter R and the little letter r. […]
My friend, David Braun, points out in his book, The Valuation Analyst, that scope creep has turned into scope running. I’m sure many appraisers, particularly residential people will agree. He points out that as the reviewers ask for more, appraisers are finding ways to not be specific. This has turned into a self-perpetuating loop: “As […]
In our second fallacy, we begin with a question: have you noticed how a new thinking context reveals weaknesses in the traditional appraisal process? The new thinking context is that of data science. Data science reflects dramatic evolving changes. The cause is simple, but twofold. First is the availability of market data. Second is the […]
Appraisal Myths, Fallacies, and Foibles, #1 is the first in a series. Hype vs Reality: Adjustments and Comps – is the title of my talk on August 4th, 2017, for the Northern California Chapter of the Appraisal Institute. In preparing for this talk, it came to me that much of our discussions revolve around how […]
“Progress Slow on Robot Takeover” Appraiser This is the headline from an article in the San Diego Union Tribune this morning. The article went on to say, “Data complexities, trust issues, and the persistent need for human input restrain scaled-up automation.” No Turbo Charged Appraiser Yet. As a brand-new appraiser trainee, I was in awe […]
Recent presentations and articles on “Big Data and Appraisal” universally say that big changes in technology and analytics are affecting appraisal. What I don’t hear is: What can I do about it? Will I be able to work in five years? Will our appraisal organizations be around? If there is a place for me, what […]
Can I Reproduce? Please? Why won’t they teach me how to reproduce? We hear of a “reproducibility crisis.” What is it? Who cares? How does it affect me? And finally – Do we reproduce properly in the appraisal process? Depending on the author, the scientific method can be broken down into four parts, or five […]
Are You Worthy of Belief? Is your work “believable”? Standards require work to be “credible.” My curiosity got me this time. I researched “get people to believe you.” As you might guess, what I found is unsettling. First of all, one of the pieces of advice was to actually tell the truth! Imagine. Also, back […]
If regression is just a math formula, how can anyone claim “Ours is better than theirs”? Who do we believe? The reality is that the standard least-squares formula is just the inner algorithm. There is the input, the magical regression algorithm, and the output. Four useful appraiser things to consider: The analyst’s decision that regression […]
Is it just change, a little change or a big change? What is the likely answer? There are two change possibilities: 1) You will be mostly replaced by a machine; 2) You will be running the machine in combination with your subject-matter knowledge. As humans, and as appraisers, we still have some natural advantages. But […]
