Why Stats, Why Graphs, Why Data, Why Science? (Part VI of VI) How is this stuff different from the established classical, traditional appraisal “process”? Is this technology or a new theory? Are data, and science somehow better? Or is it just mumbo-jumbo to look impressive? Is there something wrong with traditional appraisal theory? The traditional […]
It was pointed out to me after part 1, that a hybrid like a mule, is sterile and the end of the biological line. Is this true about the hybrid appraisal? A hybrid appraisal, as applied today, means that someone other than the signing appraiser, usually an agent, goes out and does the property inspection. […]
Price indexing is also known by other words, such as time adjustments or market conditions adjustments or trend analysis. A number of techniques have been recommended over the years. Most are flawed. Oddly, the algorithm mechanics of calculating are fairly simple and intuitive. Best of all, once done correctly, the payoff is really high: You […]
One appraiser brain says you must be “independent, impartial, and objective.” (USPAP) It wants to be good. It wants integrity and to sleep peacefully at night. But there’s another brain. It’s primal and wants to survive. It has other responsibilities: meet the bills, feed the family, pay the mortgage, and pay government taxes/fees. And recorded […]
Well, of course – appraisal is not based on our subjective beliefs. It is based on support! Support your opinions and conclusions! Support your results “by relevant evidence and logic.” Form your opinion, then support it . . . These words have always bothered me. A scientist does not form an opinion, then figure out […]
Simple. It’s valuation based on evidence, not belief or “good judgment.” What is “evidence”? Evidence can be anecdotal, empirical, or logical. Logical evidence is the easiest, and strongest. If A, then B must follow. We only need to agree that A is a fact, or is true, or as an assumption. Generally, there is no […]
Appraisers provide clients a point value. From two weeks ago. An opinion. What clients need: A forecast, a risk analysis, an underlying “fundamental” value; annual and spot update revaluations. Why not? Why not us? Why not you? What are competitors providing? AVMs provide testable reliability (risk) measures BPOs are faster and cheaper Economists provide analytic […]
Is the science different from the old routine – “support your opinion”? It kinda sounds like the same thing. Of course. No real difference. But is it possible there a difference in the thinking process? Would a scientist think about the problem differently? First, let’s be clear on one thing. We get paid for four […]
What kind of appraiser are you? Different appraisers have different attitudes! Some have a lot of experience, others a lot of education. Others emphasize the ‘art’, while others consider themselves ‘quants’. Let’s put aside the ‘art’ versus ‘science’ discussion, where the artists say: “No computer will ever replace the appraiser”, or “No amount of education […]
We have been taught that appraisal solved one problem: the opinion of value. We were taught an “appraisal process” (now a “Valuation Process”). The process is called a procedure. It goes like this:[1] Identify the problem Decide on your scope of work Collect the data and describe the property Analyze the data (include market analysis) […]
Appraisers have been taught to first analyze the subject property. Is this correct? What would an economist do? Would she analyze the property, or figure out the market? Well yes, an economist would try to figure out a market. First, it’s important to consider what type of market we are talking about. What are the […]
An Algorithm can leverage appraiser market knowledge and experience. Algorithm combines computer power with informed human brain power. Algorithms are the key to the future of valuation work. Let’s continue on from What is an Algorithm? Part 1. The future appraiser must own competencies in the use of models, algorithms, visualization, and the delivery of […]
Asset Analyst: More than an appraiser? It is clear that the need for personal value opinion is going away. Yet the old appraisal practices and standards require an opinion. The new way is cleaner. Show your work – Just like your third-grade teacher told you. The old standards focus on the appraiser. The new standards […]
“General” appraisers may not care about the 1004MC (market conditions addendum), or its replacement. But they should care about what happens next! The 1004MC was created by Fannie Mae/Freddie Mac in response to the economic meltdown around 2009. Appraisers were blamed. Everyone else tried to avoid looking culpable. Especially those who had profited greatly. Our […]
Can science be unscientific? Why do we care? In USPAP (Uniform Standards of Professional Appraisal Practice), the word science is not used. Not once! The word scientific is used only in Advisory Opinion 9, where it refers to “scientific aspects” of environmental contamination. In The Appraisal of Real Estate, 14th ed. the word is used […]