The appraiser is supposed to be accurate. What is “accurate”?
Dictionary meanings say accuracy is “the condition or quality of being true, correct, or exact.” Tell the truth. Can it be? Hmmm. A search for truth. OK. So how do we come to know the truth? Are we supposed to be paid truth-seekers? Cool.
I read that there are four ways to “know” truth: Tradition, Authority, Insistence, and Science. Wow! Let’s look at these briefly. This sounds serious! Let’s look at USPAP and The Appraisal of Real Estate.
Appraisers have long been steeped in the value of experience, learning from our mentors, and education handed down to us by our important organizations.
Per the forward to The Appraisal of Real Estate 14th ed. We have been taught that the ways of doing appraisal things are fundamental and well established. They need not be reexamined and revised:
History confirms that the applicability of certain valuation techniques may rise and fall as real estate markets move through their lifecycle, but the fundamental principles of valuation that have always been the core of this book remain unchanged.
It also gives weight to the “sound application of recognized valuation methodology.” These thoughts are also set out in USPAP (Uniform Standards of Professional Appraisal Practice). In fact, this concept pronouncement starts the “performance” of USPAP in Standards Rule 1-1, the very first sentence: “…employ those recognized methods and techniques …”
It appears that we have two recognized, traditional, pervasive sources of tradition, authority and repetition – in agreement on what is the truth. We have found it. No need to question it.
Ironically, the comment to SR 1-1 explains the opposite notion: “This Standards Rule recognizes that the principle of change continues to affect the manner in which appraisers perform appraisal services.”
Which is it? Employ recognized methods, or change? Another conflict, another dissonance for appraisers “do it this way, but also do it that way.”
So, what is ‘truth’ or accuracy for appraisers? We have the tradition – multiple editions of USPAP and The Appraisal of Real Estate. We have authority – the state laws and enforcing organizations. We have insistence – take USPAP every two years, and repetitive continuing education. But do we have science?
Yes. The traditional appraisal process is a science. Created and solidified mostly in the 1930’s and 1940’s. A valuation science designed for sparse, difficult data; no calculators; and no inkling of market analysis. Just pick comps, compare, opine. The science was good in its day.
Then things changed. We got public records and even plat maps on microfiche. No more trips to the county assessor. We got printed MLS “solds” books – every quarter! Listing books – every month! And “hot sheets” every week! It was heaven. Commercial appraisers regularly helped each other. Who you knew was more important than what you knew.
Then things changed some more. And things stayed the same . . .