MPI© (Market Price Indexing) is a holistic approach to market analysis and “time adjustments.” Here we look at the process, the theory, the judgment, and the benefits of this model. MPI – The process involves simple mechanics: Download the relevant competitive market data. Create a scatterplot with sale prices over time. Clean the data of […]
Why the letter R? R is a letter. It may be the most important letter to you since Sesame Street! Appraisal services as we have known them continue to decline. AVMs continue to capture a larger market share. Slowly, but surely. But the AVM industry has other issues. Traditional, judgment-based appraisal was built on your […]
Exploratory Data Analysis (EDA) is an implicit part of traditional appraisal. The appraiser invokes education, training, and market area familiarity to decide on comparables and adjustments to be made. The process takes place fully in the mind of a competent practitioner. EDA is expressed in quasi-governmental standards (USPAP) as a focus on the subject property’s: […]
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 […]
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 […]
If your work is reliable, it’s credible. If it’s credible it may not be reliable. USPAP (Uniform Standards of Professional Appraisal Practice) defines credible as “worthy of belief.” So how does one strive to be worthy? Well the automatic answers are . . . automatic: 1) have education/training; 2) have experience; 3) have integrity. Let’s […]
Appraisers provide clients a point value. From two weeks ago. An opinion. What clients need: A forecast, a risk analysis, an underlying “fundamental” value; annual and spot update revaluations. Why not? Why not us? Why not you? What are competitors providing? AVMs provide testable reliability (risk) measures BPOs are faster and cheaper Economists provide analytic […]
Simple. It’s valuation based on evidence, not belief or “good judgment.” What is “evidence”? Evidence can be anecdotal, empirical, or logical. Logical evidence is the easiest, and strongest. If A, then B must follow. We only need to agree that A is a fact, or is true, or as an assumption. Generally, there is no […]
Is Appraisal belief based? USPAP says our work should be credible: “worthy of belief.” That’s the test. What/who tests worthiness? In the Scope of Work Rule, it is “client expectations” and “peer’s actions.” In the section on “acceptability,” it goes even further, stating that an appraiser must do what “would appear relevant to the client.” […]
Can you just give me some magical software which will calculate my adjustments? I get asked questions like this often. Can you just show me how to do a graph a client wants? Can you just give me your class stuff so I don’t have to come all that way? So often, the question degrades […]
Who cares if it’s reliable? It only needs to be “credible” – believable. Credible: “Worthy of Belief” Reliable: “Repeatability of findings” Credibility comprises both trustworthiness and expertise. It has both objective and subjective elements. One can also increase credibility by being a good salesperson by convincing the reader of your viewpoint. You form an opinion, then […]
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 […]
Yes. Appraisal as we know it is dying. Can it be saved? No. So what should I do? What should “we” do? To answer these questions, we need to look at causes and conditions. Some of these are obvious. Judgment is good; Analysis is better. Human generalization is excellent; Computation is fast. Good comps are […]
I saw an article from the Washington Post, December 15, 2017, saying the administrative/enforcement branch of the U.S. government is banning the use of certain words or phrases. Two of the phrases include “science-based” and “evidence-based”. As many of you know, I am an active advocate of Evidence Based Valuation.© If valuation based on evidence […]
Which comes first? The model tells us how. The tool tells us what. The more important may be the why. Why use a model? Why use a tool? Last Friday, December 8, we gave the first ever class on R for Appraisers. R is the tool. R is too cool. It’s clearly the toolbox of […]