So how credible is your appraisal?

[or Death of a Profession]

We need to look at this “how credible?” thing.  Maybe a “Believability Score”!

USPAP says credible is “worthy of belief.”  Ah ha!  Explained.  We just need to measure “how worthy” is your opinion.  A worthiness measure!  Just what our appraisal user/clients need.

So that is our goal?  To measure believability/credibility.  Measure worthiness.

Then the next question is – who gets to measure this belief worthiness?

We get even more explanation from USPAP.  It’s found in Standard 3, “Appraisal Review.”  Surely a measure of goodness, of worthiness, of believability will be found there.  Let’s look.  It says, “the reviewer is required to develop an opinion.”

Of the “completeness, accuracy, adequacy, relevance, and reasonableness of the report.”  The report – not the development.  Not the analysis.  Not the data selected.  Not the adjustments algorithms used.

So, worthiness and believability are based on this broad set of unmeasurable criteria.  Opinion.

But there is a solution.  Simple.  A simple reviewer choice – Worthy, or not worthy.  Believable, not believable.  Good enough, not good enough.  Or – ROV – a customer challenge.

Strange that the appraisal discipline, made up of numbers and categories, falls back to belief-based measures of worthiness!

We can do better.

AVMs do better.  The GSEs (FannieMae, Freddie Mac) are filling the gap (with the new “UAD forms”).

Lenders and other agencies struggle to apply subjective belief-based work to a risk-based calculation.

We have risk analysts, portfolio analysts, and public trust decisions, all building calculated decisions and measures, built on a “believe me” appraisal underpinning.  No wonder the greater industry is looking for something better.  Like AVMs, like piecemeal data collection and analysis, like “in-house” risk and value analytics.

Things appraisers can’t – or won’t do!

Appraisers won’t, because doing superior analytics is resisted.  More work, more balking, more reviewer disbelief, more loss of income.  More USPAP risk and organizational resistance.

“An appraiser must … employ those recognized methods and techniques …”  “Acceptable” methods.

The GSEs and, consequently, banks and other lenders, publish printed rules of “acceptability.”

These client acceptability rules often transmute themselves into “checklists” of adequacy.  These themselves are USPAP enforced upon appraisers.

I submit to you that current education, personal training, and even ‘modern’ substitutes for experience repeat old ways.  Old judgment-based “pick comps and make adjustments instead of data-science, evidence-based data selection, and certainty measures.

All Believability Scores.  BS embedded in the system.

The five frictions on appraisal advancement assure the death of the profession.  A score to settle.

(Future writings will consider econometric and behavioral ways to measure reliability or “believability”).