No it’s not. Just do what you’re told. Do what you were taught. Follow the Rules. No thinking required.
What are the “rules” of appraisal? Easy:
- Get your intended user’s expectations (scope of Work).
- Pick your comps.
- Apply one or more “approaches”.
- Provide your opinion (then explain, justify and support that opinion).
How will you be judged? Two ways:
- Did you follow the above rules? (the “valuation process”).
- Does the reviewer believe you? (credible = worthy of belief)
The safe way is just don’t rock the boat. Is critical thinking necessary? Perhaps not. If you follow the rules.
Times, they are a changing! In the development of the modern data science approach to valuation, critical thinking is the essential element of professional asset analytics.
As a graduate student at San Diego State University, I taught a section of the “Freshman Success Program.” Critical thinking was emphasized as part of a student’s success. Concurrently, I continued to take numerous graduate econometrics and statistics and math and programming classes – where my critical thinking was, “How might this apply to appraisal?”
(I was studying data science before the idea existed. You can imagine my surprise about five years ago when I learned that data science, as its own discipline was taught in dozens of universities offering Masters and PhDs in the field!)
What I learned about data science is it involves three core principles: complete data, computation, and subject matter expertise. For valuation this means:
- Complete data recognizes that the old (inferential) “sample” statistics were obsolete. Picking comps subjectively in judgment sampling is even worse and destroys any hope of an objective result.
- Computation recognizes the superiority of the computer’s ability to calculate algorithms modeling instructions, and visual interface to the human brain.
- Subject matter expertise is an explicit element of the data science approach to problem solving. This science requires the analyst’s critical thinking skills.
The optimal analysis takes advantage of the brain-machine interface. It exalts your expert knowledge.
In the Valuemetrics.Info curriculum, we identify three types of reasoning: abductive, deductive, and inductive. Then integrate, classify, and explain the different types of critical thinking necessary for Evidence Based Valuation.© We also note the four core paths to credibility in reporting. (But that is for another blog on another day). The “new valuation modeling paradigm” is a science which recognizes that judgment is involved. Judgment = a required part of good science.