The 1004MC “market conditions” appraisal addendum was created by Fannie Mae and Freddie Mac to require a form-based market analysis. This added to the traditional practice to collect a handful of ‘comps’ to opine and foretell market price. There are problems and unintended consequences. The ANSI requirement is that residential appraisers measure houses according to […]
If education regurgitates only prior ‘established, time-tested’ methods, nothing happens. This is the fourth in our series on how progress in appraisal is stymied by the five frictions: process, standards, education, client expectation, and regulation. We will end this series after the new year with a simple, yet comprehensive, mystery solution. Stale education perpetuates appraisal […]
We considered one cause of the Great Recession. This was the perversion of the very definition of the value. In the sociology of ‘groupthink’ (where the group is wrong, but everyone says it’s ok), Dunning-Kruger gave us another cause. (There are more to come – stay tuned!) In a good world, a profession, legislators, administrators, […]
Does it mean objective analysis? Or does it mean objective appraiser? This is the main difference between the Traditional Appraisal Process (TAP) and Evidence Based Valuation (EBV)©. The TAP is well defined in both USPAP (Appraisal Foundation) and in the Appraisal of Real Estate (Appraisal Institute): [themify_quote]An appraiser must act competently and in a manner […]
A “black swan event” is random and unexpected. Popularized by Nassim Taleb in his book “The Black Swan,” which describes an event (such as the last economic meltdown) as an unpredictable event. I ask, are the repeat real estate crises of every 10-12 years unpredictable, or a bevy of black swans migrating in wedge formation? […]
Some ten years ago, we saw the start of the economic meltdown. Were appraisers to blame? Some tried to pin the blame that way. But was there a big lie underneath? The required (federally insured) definition of value has seven distinct elements. Were appraisers doing what they were told? Buyer and seller each acting prudently […]