The body of a letter to the U.S. House Committee on Financial Services about systems reform. Appraisal reform or Appraisal industry reform? It is critical to understand that ‘appraisal’ does not equal ‘valuation’, or risk analysis, or anything else. It is a precise definition of a nebulous product. The current U.S. House Committee on Financial […]
Statistics for appraisers started to become a hot topic some 15+ years ago. I was more involved with the Appraisal Institute then, and often argued that with the changes in data sources—appraisers would have to learn to apply statistics. Around 2003, the AQB (Appraiser Qualifications Board) revised qualifying education to include the requirement for Finance, […]
An appraiser must be worthy. You must be believable. Your work must be credible. That’s what it says in USPAP (Uniform Standards of Professional Appraisal Practice). Note that the source is the Appraisal Foundation—declared therein to be “the nation’s foremost authority on the valuation profession.” It uses the word “credible” 82 times in the Standards […]
The future is here now. How can an average appraiser prepare? Some practical views. There are a lot of questions here. How are things changing? Will my knowledge be of any value? Is there any hope at all? Will clients require something different? If I am to survive, what do I need to do different […]
Things become obsolete because they fail to keep up. USPAP (Uniform Standards of Professional Appraisal Practice) has served us well. And things have changed. And times have changed. Appraisal standards go back quite a ways, primarily by the forerunners of today’s Appraisal Institute. Also, assessor groups sought and created standards or procedures for mass appraisal […]
If we had an Appraisal Inspection Standard, how would it look? To frame this question, we need to look at what we have today regarding inspections, and what is really needed in the world. Let’s look then under common United States specifications. What we have today is left entirely up to the appraiser. The only […]
I am a smart and educated, award-winning appraiser. It is not possible for me to be irrational. Of course not. You can see that. I can see that. A high IQ and education won’t necessarily protect you from highly irrational behavior—and it may sometimes amplify your errors. David Robson, in an Excerpt from The Intelligence […]
An Algorithm can leverage appraiser market knowledge and experience. Algorithm combines computer power with informed human brain power. Algorithms are the key to the future of valuation work. Let’s continue on from What is an Algorithm? Part 1. The future appraiser must own competencies in the use of models, algorithms, visualization, and the delivery of […]
In Part 1, we saw that context is important in the use of an algorithm. In Part 2 we note the role of algorithms in modern asset analytics — the data science valuation view. The “problem to be solved” is the context for the use of algorithms. But what are the benefits of algorithmic thinking? […]
If you are disrupted, you can plant your feet in fear, and not change. If you are disruptor, it’s wise to know the game and play your best position. So what do we need to understand about “data disruption”? Several things: I have seen a list of nine such general principles. So lets see each […]
How does price validation differ from your traditional appraisal opinion? One of the arguments against the value of appraisals is that appraisers almost always just land on the sale price. How does this happen? Why? There are some obvious answers. The market system works, so the sale price should be near “market value.” Pressure exists […]
Asset Analyst: More than an appraiser? It is clear that the need for personal value opinion is going away. Yet the old appraisal practices and standards require an opinion. The new way is cleaner. Show your work – Just like your third-grade teacher told you. The old standards focus on the appraiser. The new standards […]
What are the elephants in the room? The elephants are our beliefs. These are the beliefs we all assume to be true. Let’s look at the first of our herd of elephants: number 1 – judgment. We often hear it said that no machine can replace human judgment. Or that appraisal will always require someone […]
Can we compare “statistical adjustment” methods to traditional appraisal adjustment practices? ‘Adjustment’ is mentioned only once in USPAP; (Standard 5 on mass appraisal). However, in The Appraisal of Real Estate, “adjust” comes up 687 times! It must be important. Surely, it’s clearly explained. In each use, the context is critical. It states: ‘Adjustment’ builds on […]
Can we think about critical thinking? What does it have to do with appraisal? The word is used many times in USPAP (Uniform Standards of Professional Appraisal Practice) and The Appraisal of Real Estate. However, it’s only used once each in the context of thinking. In USPAP, it’s in Advisory Opinion on Scope of work, […]