Editor’s Note: This is Part 3 of the series on Excess of Appraisers and how this cyclical phenomenon is affected by the five frictions of modernization.

The emerging excess of appraisers is inevitable and recurring.  We have questioned the first two of the five frictions on modernization: practices, standards, education, regulation and client expectation.  In this writing, we consider how education (or lack thereof) continues to bring the decline of the profession, and contributes to the recurring cycles of economic instability.

How can this be?  Education is the river of knowledge.  It is the foundation, the message, and core of a professional reality.  Appraisal.

In order to see how this friction contributes to the decline of appraisal as a public trust – we must look at its recent evolution.  And we must look at the context.  The context of change in data completeness, data detail, computer analytics, visualization, and integration of expert judgment – appraiser judgment.

The following is a list of all the major improvements in appraisal practice education in the last 30 years:

The education is still “pick some comps, adjust, and report your opinion.”  No change.  What happened?

The World changed. Change happened in the availability of complete (or substantially complete) data, instant computer calculation of algorithms, interactive maps and graphs, and the ability to customize both appraiser inputs as well as specialized user dashboards.

These tools have entered into nearly all other major fields, such as medicine, engineering, psychology, decision theory, transportation, and even recreation.  But not asset analyses.  Why?

Here is how appraisal curricula has failed the profession, and in turn the public good:

• Statistics. It was recognized that analysis of larger data sets matched the need for market analysis.  Unfortunately, the earlier authors assumed that traditional inferential random sample statics had to be the answer.  And so we were presented with p-values, t-scores, confidence intervals, hypothesis tests, and even pretend random samples from pretend populations of sold properties.  We learned that models were what automated valuation models used (AVMs).  And the teachers of the inferential statistical cleverisms never actually used such sophisticated stuff in their practice (if they even actually did appraisal work).
• Forms. Residential forms force-fit three comps into 8½ by 14 sheets of paper.  This felt good as the human brain has difficulty grasping more than four or five pieces of information at a time.  Things turned electronic, with web-accessed data and canned form-filler software for math and hand entry.  Later, packages became available for automatic filling in of form boxes directly from online data sources.  The paper form was replicated on a computer screen, better than just a photo of the paper form.  Forms were/are designed for data display, not for analytic methods.
• Spreadsheets, from the world of accounting, later started to include add-ons for math, and even short algorithms. A great advantage of spreadsheets is that you can do anything with any cell.  The great disadvantage of spreadsheets is that you can do anything with any cell.

Education curriculum continues as an “established body of knowledge,” using forms, and spreadsheets and words.  A regurgitation.  An inappropriate, non-useful reteaching, and reiterating of inferential statistics, and multiple regression.  An excess of cleverism!

And the reteaching then entrenches in practice, regulations, standards, and user expectations.

Neither inferential statistics, nor multiple regression — are appropriate for judgment-based appraisal work.  Our professional organizations and the “CE continuing education mills” continue to mill out hours, not modern methods.