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KISS — Keep it Simpler Science!  What?!  How can that be?!

Einstein said “Everything should be made as simple as possible, but not simpler.”

The beauty of science is that it strives to make difficult things understandable.  Traditional appraisal uses four or five comparable sales.  The human brain can compare and understand up to six or seven pieces of information.  After that, it has cognitive overload.  It gets cranky, angry, and wants its blankie.

Appraisal:  the olden days

  1. Difficult, hard-to-collect data.
  2. Hand calculation of rates, ratios, and adjustments
  3. Back of an envelope (simple); handwritten form (orderly); typed (formal).

My first appraisals were written in pencil on one page.  Technology – I had a Polaroid camera.  Instant! pictures.  One from the front of the house, one from the street.  Glued on.

Appraisal.  The world needed better accuracy and trust.  And simplicity.  Clients needed to make decisions, to understand comps.  They could understand:

  • Point value
  • Three comps
  • Three ways to do things (3 “approaches”)
  • Numbers to explain how people think (adjustments)
  • Thinking to explain numbers with “careful good judgment”
  • Words to ‘reconcile’ numbers that don’t match up
  • Opinion (not complicated analytic estimates)
  • Good judgment

The human brain could process information about a few comparables, and arrive at an opinion.

Data Science (EBV – Evidence Based Valuation©).  The world needs accuracy and reliability.  And simplicity.  Clients need analysts to identify and analyze markets.  And the ability to understand risk.  The risk of loss.  The risk of not getting a return.  Or the risk of not being fair.

Markets make evidence.  Comps make ‘support.’  Clients need to make decisions, to understand markets.  They can use:

  • A value range, a probability density, a level of measurable reliability
  • All the relevant sales
  • One or multiple ways to do things (like people think)
  • A reliability score, in place of “worthy of trust”
  • Numbers to explain numbers
  • Visuals to explain markets
  • Consistent algorithms
  • Good results

In part 2, we will look at the three simple, consistent methods for adjustments:  Some are calculated.  Some are estimated.  Some are biased – but still useful.  Later we will look at the most important question of all:  What data is the right data ?