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There’s some evidence that appraisal as a marketable service is finished.  Several things point in this direction.

First, we must clarify what is an appraisal for purposes of this blog. It’s an opinion of value.

An appraisal is a valuation service provided by an appraiser in an appraisal practice, representing that he/she complies with USPAP (“when obligated by law or regulation or by agreement with the client or intended users”).  (USPAP Ethics Rule)

There are ‘musts’ in the other integrity rules (such as record-keeping, competency, and work scope).  But what are the musts in the performance standards?  In Standard 1-1, we find the appraiser must:

  • identify the problem, scope, research, and analysis necessary to produce a credible appraisal;
  • be aware of, understand, and correctly employ recognized methods and techniques;
  • don’t make any big mistakes or a bunch of small mistakes;
  • don’t be careless or negligent

In Standard 1-2, musts are: identify the client and other users, use, definition of value, effective date, property characteristics, assumptions (extraordinary and hypothetical), and determine scope of work.

Standard 1-3 applies only when necessary for believable (credible) results.

Standard 1-4 requires the use of “all information necessary” for believability (credibility).

Standard 1-5 applies only to “market” value opinions and subject property buyer/seller agreements.

Standard 1-6 requires harmonizing unpleasant differences and incongruities, and checking for accuracies.  (Shortened from the Merriam Webster dictionary).

Standard 2 is simple:  Do not be misleading, provide sufficient information and disclose assumptions and conditions.

It appears that USPAP performance standards do not prevent you from doing a whole lot of other things.  Just make sure you do not provide an opinion.

To sum up.  An appraiser provides an opinion.  So, if you avoid stating “this is my opinion” it appears — maybe, just maybe — you can do a whole lot of other things.  Here is a list:

  • Result of an analysis
  • A predicted market price
  • A forecast market price
  • An insurable value
  • A reliability score
  • An investment/collateral recommendation
  • A market analysis
  • A risk analysis
  • A list price recommendation
  • A reproducible analysis

In the Valuemetrics curriculum, we develop the needed data science skills, applying the modern technology — needed to provide the above services and products, and more.

Yes, in the near future an appraisal — an opinion of value — will likely be fully obsolete.  What will be needed are reproducible, transparent, data-stream products.  What will be needed are people competent and knowledgeable in computation and critical thinking with subject matter expertise.

In the Stats, Graphs, and Data Science1 classes, we build on valuation and market expertise to build a better future:  For valuers, for those we service, and for society.

We hope, in some small way, to help prevent the next economic meltdown.