Making Appraisal Great Again

What is greatness?

When I first decided appraisal might be a good career, a couple of things felt good.  First, appraisers were respected, even admired. Respected for their special knowledge and professional  impartiality.  Second, there appeared to be a real need for impartial service.  Service which wasn’t provided anywhere else.  There was no licensing.  It was based on reputation and designation.  Letters like SRA, MAI, ASA, ARA, IFA, SRPA, SREA, RM, meant something to aspire to.  There was a sense of value, of contribution, of intended excellence.  The Appraisal of Real Estate impressed me.  It seemed thorough, addressed multiple practical issues, emphasized care, and laid out a process for handling a difficult research question.

The research question accounted for the difficulties of gathering sales data, confirmation, and thinking processes needed to handle sparse, hidden, and even vague data.  There was no internet, no printed “comps” sheets, no spreadsheet, no word processor.  The MLS was wonderful.  It came out every three months with actual sale prices and everything!  Microfiche public records were soon a boon.  A place to start.  Whew!

The good news was that we had chapter meetings.  We appraisers exchanged ideas and data.  We needed each other, and received a sense of comradery, of belonging.

The good news was that once you had 4 or 5 ‘comps’ you were almost done.  The secretary/typist took care of most of the rest.

We were needed; and had what others didn’t.  We had connections and data and method and a sense of ethical panache.  It felt good.

What happened?

Over time, we no longer owned the data.  Now we buy it.  Over time our exalted judgment got replaced by a ‘show me’ world.  Words I remember from my demo report writing class were “Explain, Justify, Support.”  Form your opinion, then report support.  It made sense.  Show that your thinking is good.

Does this make sense today?  We have complete data in most areas.  Available in seconds.  Confirmation then focused on key basics – like the sale price, motivation, and unusual conditions.  It was important to extract deep, rich information for each of our illustrative comparable sales.  It still is.

Verification is still important.  But why do we pick 5 comps, and discard the rest of the directly competitive data?  Why?

The world changed.  We didn’t.  “Trust me; I know a good comp when I see it.”  Our literature, our education still insists:  a good comparable is similar.  A similar property is competitive.  A competitive sale is comparable.  Circular explanation.  Trust me.  Round and round.  Competitive similar comparable.

But not one word, not one formula, not one algorithm, not one explanation of — what is a comp?  Trust me.  It doesn’t exist.  Trust me.  I know.

Greatness?  We can be restored to greatness when we are respected for our analysis — not for our “trust me.”  We will be respected when we stop discarding perfectly good, easily obtained data.  We will be respected when we apply data science estimates, predictions, and results — in lieu of supporting our opinion.  There is a difference.


Why Does Regression Not Work? Published in the April, 2017 ed. of Ann O’Rourke’s