Scope Creep – Head’em Off at the Pass!

Why do we have scope creep?

Possible answers include:

  • The reviewer or clerk has to justify their existence;
  • There is genuine concern about something;
  • The work should’ve been there in the first place;

It’s important to remember that our entire system of appraisal production and review is belief-based.  It must be “worthy of belief.”  We have no objective standards.  Your work must be subjectively “credible” in the mind of the reader.

If an administrative reviewer clerk is to appear necessary – the clerk has to at least keep the appearance of reading and judging the report.  (Remember our belief-based “credibility” system.)  To look good, the reviewer clerk must hit a “quota” of appraisals for more explanation, or more comps, or other “why didn’t ya?”

The second possibility is that although you wrote a good report, the reader feels the need for explanation (again, based on belief and some competence in traditional appraisal).  This could be because:  you inadvertently didn’t cover something, the reader lacks understanding of the particular area, the reader simply missed it, or failed to read what you wrote.

Genuine concern is closer to the ideal professional relationship.  You do the work and communicate what you have done.  The client may need additional explanation or understanding of the subject, or market dynamics, or — the original scope of work somehow did not have a meeting of the minds, or the client miss-stated what they needed, or (darn), you may have not picked up on something the client should have become aware of right in the beginning.

The third possibility of scope creep is that the work should have been there in the first place.  An example is where the client asks for a “CMA” (data list) of your search.  If we note that USPAP (Uniform Standards of Professional Appraisal Practice) require (SR 1-4) that an appraiser “must collect, verify, and analyze all information necessary.”  For the sales comparison approach “an appraiser must analyze such comparable sales data as are available.”

It does not say discard all but the best 4 or 5 comps.  It does say analyze all available.  While the practice of not providing a complete listing of all directly competitive sales is common, and accepted by peers, it is not what the standards say.  We can easily “head them off at the pass!” by simply following standards.

Our peers, our education, and our habits seem to disregard this simple fact.  More information provides better results.  More sureness (precision), and more trueness (accuracy).

The better model follows this USPAP requirement.  The better model follows core data science principles.  The better model (use all the relevant data), is technologically straightforward.  The software is available to implement the better model.

The better model provides a competent professional service.  The better model helps “promote and maintain a high level of public trust.”

Someone must take the lead:  state regulators, The ASA, the Appraisal Foundation, the AI, or perhaps a major bank, GSE, or loan aggregator.  Unsure scope creep can be replaced with a simple, but effective “new valuation modeling paradigm.”  Evidence Based Valuation.©

At Valuemetrics.info, we regularly train appraisers in these methods, leading to an auditable, reproducible work product.  The test is reproducibility, not belief.