Around 1986, licensing and education efforts started – in order to “help prevent another crisis” like the Savings and Loan meltdown of those mid-1980’s. Effectively, the standards of the professional appraisal organizations were adopted in a joint effort of those groups. Then the “congressionally authorized” non-profit Appraisal Foundation took over licensing as well as standards […]
To regulate or improve something, you first measure it. The word credible appears in the most recent version of USPAP (©1999) some 276 times. The Uniform Standards of Professional Appraisal Practice as published from time to time by the Appraisal Foundation. The word credibility is used an additional 39 times, specifically as a measure of […]
Evidence is shortly defined as “Something that shows proof.” It’s precisely defined in the law, and also addressed in philosophy and epistemology. Epistemology deals with methods, validity, and scope in the theory of knowledge. In the philosophy of science, evidence is what confirms (or not) your hypothesis. Evidence justifies belief, but only if respected. It […]
Editor’s Note: This is Part 3 of the series on Excess of Appraisers and how this cyclical phenomenon is affected by the five frictions of modernization. The emerging excess of appraisers is inevitable and recurring. We have questioned the first two of the five frictions on modernization: practices, standards, education, regulation and client expectation. In this […]
Truth can be hard to swallow! I find their ‘truth’ not credible. Not believable. Why? Well, for one thing. One important thing. That belief conflicts with MY belief. Clearly, my beliefs are better than theirs! Anybody can see that. At least they should see that. How can they be so stupid? Brad Cable just sent […]
Editor’s Note: This is Part 1 of a new series on Bias. Easy – Just don’t be biased. Don’t even think about it! Alternately, we can have the government regulate and require it! To know what ‘unbiasedness’ is, and how to achieve it, we have to be able to measure it. We cannot enforce anything, […]
Market-specific price indexing is powerful and underused! It improves accuracy and precision of appraisals. It enables an objective market analysis. It forms a natural path from traditional, judgment-based appraisal to informative, evidence-based professional analyses. Best of all, it enables a sense of pride in appraisal work, while making it more fun! Market Price Indexing (MPI)© […]
Why the letter R? R is a letter. It may be the most important letter to you since Sesame Street! Appraisal services as we have known them continue to decline. AVMs continue to capture a larger market share. Slowly, but surely. But the AVM industry has other issues. Traditional, judgment-based appraisal was built on your […]
A valuation model may not be a model valuation. What happened with that sentence? It’s called “equivocation.” Something I learned about in my college English class. What I learned is that a word can be used for different meanings. Equivocation can be used to make language more colorful – to entice, to irritate, or to […]
How can we fix the excess of appraisers? Easy — we do what we have always done, each time . . . 1) We will raise the standards (“cost of entry”). 2) We will make it harder to become an appraiser; 3) Lower fees will discourage newcomer appraisers. Each cycle, the ‘appraiser shortage’ cycles with […]
Yes, personal bias in appraisals can be eliminated. The appraisal ‘process’, in its current standard, is “loose.” It is not internally biased either way. But it is vulnerable to systemic human and analytic bias. It enables and conceals bias. It is vulnerable to attack — as being “too high” or “too low,” depending on the […]
How can we fix the excess of appraisers? Easy — we do what we have always done, each time . . . 1) We will raise the standards (“cost of entry”). 2) We will make it harder to become an appraiser; 3) Let the lower fees discourage newcomer appraisers. In past issues of the Analogue […]
AVMs (Automated Valuation Models) are often touted as something appraisers should understand and do more of. This is a problem of words. “AVM” is not descriptive of a formula to calculate value. It is an industry. Each company in the industry does use algorithms, formulas, and calculations to predict (estimate) value. The use of the […]
The conditions of the market, in real estate, means the relationship between supply and demand. Supply and demand issues (at a point in time) are particularly important for new construction. In such cases, forecasting may also be important where build-out and rent-up times affect value. For existing properties, like houses, it seems much simpler, as […]
Appraisers historically have been sold bogus franchises, software, and other magic solutions. Only $199.95 — Push the enchanted ‘calculate’ button and get ‘correct’ adjustments. Sounds good. It is nice to think that for this small charge, I can save hours and get the right, fully mathematical solution to an adjustment amount. I will be wonderful! […]