Reviewers ask why a certain sale was not used as a comparable. Why don’t they know I already used the best comps, just like I was taught? Don’t they know I used what was competitive, similar, and “able to be compared” – Just like The Appraisal of Real Estate 15th ed. says: A good comparable […]
We have heard a lot about “modernizing” the appraisal process, particularly from the GSE’s (Fannie Mae and Freddie Mac). What is clear, is that the path is not clear. The GSEs, pressing for an improved valuation product, are in a difficult situation. On one hand, they are supposed to cooperate. On the other hand, they […]
Fannie Mae’s Director of Collateral Policy, Lyle Radke, spoke at the Housing Wire conference this week. The audience was mostly non-appraisers. They laughed when he said: “Appraisers see their job as an art form. It’s hard for them to rigorously explain exactly what they’re doing.” For the record, what we do at Valuemetrics.info is exactly […]
No report. Can it be? Does modernized appraisal require a modernized report? And how about non-appraiser appraisals (valuations)? (Here we use the word ‘appraisal’ in its generic public meaning.) In the past, our thinking, expectations, laws and regulations, have separated the development of an appraisal from the report of an appraisal. In the past, that separation […]
Everyone knows what’s a market — (or do they)? Market Value is the ultimate goal of appraisals, of AVMs, of evaluations, of BPOs, hybrids, exceptions, and all forms of opinions (everyone has one). So, market value must be based on “the market”! To measure it, we must first know what it is. The dictionary has […]
Three comparables have been the standard for many years. On the residential appraisal side, some clients ask for more (such as current listings). For ‘general’ appraisal, typically four to six comparable sales are enough to achieve believability (credibility). Believability arrives at the user’s desk in a readable report. In the past, the standard residential form […]
Zillow Zestimate has been the go-to source for consumers to check what their house is worth for many years now. Zillow leverages the traffic that this brings to their web site to sell other real estate services (not valuation products!). The Zestimate has been amazing at driving traffic to the Zillow web site, but does […]
Obsolete! Such a harsh word. Can it be? Is the problem convolution? Does it mean I will soon be obsolete? Not needed? Not loved? Terrible. What can be done? Yet all the little signs are pointing that way. “Automated” valuation models have much of the market, and continue to gain. Other valuation methods and appraisal […]
Obsolescence, in appraisal education, is of three types: functional, physical, economic. If we are to stop the obsolescence of the appraisal ‘professional’ model, it may help if we look at the established body of knowledge with this in mind. Recall our context. We are looking at the “five frictions” – process, standards, education, user expectations, […]
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 […]
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 […]
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) Lower fees will discourage newcomer appraisers. Each cycle, the ‘appraiser shortage’ cycles with […]
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 […]
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 […]