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 […]
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 […]
Graphs for analysts and appraisers are how we see. It is difficult to vision a median or clusters or market relationships using just numbers. It is even blurrier when someone uses p-values, R-squared’s, and t-scores, claiming these somehow ‘support’ their personal opinion of value. Bad enough in regular work. Even worse gobbledygook when used as […]
Hairy scary hybrid parry. Let’s look deeper, now that we seem to be away from the original hype. When this thing first came up from the GSEs (FannieMae and FreddieMac), a hybrid appraisal was narrowly defined. Basically, it separated the desk job from the field job. I was even in a room once where the […]
“Ya gotta make this stuff simple” I am told . . . Data Science: Get the right data, clean the data, apply predictives, get results. Property analytics: Get the right data, clean it, apply predictives, get results. So let’s expand this: Step 1. Identify the problem, download all the data you will ever need. Step […]
We clean, scrub, transform, wrangle, munge, map, shape, enrich, enhance, prepare, preprocess, improve, and … verify. Data scientists spend 80% of their time on the data. Those of us who continue to move into these more objective methods – find this to be true. In fact, once you have the data prepared and enhanced, the […]
Judgment versus science. Judgment wins! (Part I of “Data Collection”) I have heard such things as “No science formula will ever replace my experience and training.” And “no AVM (Automated Valuation Model) will ever inspect a house.” Judgment wins. Except for one problem. The market share of valuations continues down for appraisers. AVMs, ‘evaluations’, broker […]
Everyone talks about the “market,” but no one tells us exactly what it is. The Dictionary of Real Estate, 5th ed. Appraisal Institute, defines “Real Estate Market” as “Buyers and sellers of particular real estate and the transactions that occur among them.” Close, but no kewpie doll prize. I have had at least three graduate […]
Consumer home loan valuations serve those who pay the bill – the lender. This cost is passed on to the buyer, and the buyer usually has a right to get a ‘copy’ of the report. However, the valuation is not there to help the buyer decide whether the price is fair or a good investment. […]
No computer can replace my expert judgment and experience! We’ve heard words like this. And there is a contingent of “quants” who rely on a high level of competence in quantitative methods, which may include statistics, machine learning, and artificial intelligence. Each expert type has a hammer. And each is right in their own way. […]
More graphs: in data science, why are they so important? Graphs provide the way for the human brain and the computer to connect. And why is that important? More Computers are really good at certain things. They can handle lots of data and can quickly carry out complex instructions (algorithms) with no mistakes, with perfect […]
Evidence is a necessary part of any research or analysis. In a prior blog, we considered that it was a core part of EBV (Evidence Based Valuation©). We noted three basic types (or ‘support’ for a personal opinion). We have logical – “if A, then B must follow”. We have empirical – “If A, then […]
Reasonable reasoning please! Its not as bad as it sounds! We can figure this out. That’s what abductive reasoning means! Figure it out! The three types of reasoning go along with three types of logic: deductive, inductive, and abductive. Deductive reasoning means a general rule leads to a specific conclusion, always true; Inductive reasoning is […]
Three approaches to value evolved from the scarce data of the last century. With abundant data, three predictive models have evolved. What is the difference? Approaches vs models. The difference is like looking at a cube from the side or from the top. The top gives one view. The side shows another. In fact, they […]
The “Appraisal Process” requires good judgment in picking comps. USPAP (Uniform Standards of Professional Appraisal Practice) uses the word comparable 95 times. Comps MUST be important. However, it is not defined. The Appraisal of Real Estate states a comparable must be similar, competitive, and “able to be compared.” In the 14th Edition, it is used […]