Who you knew was important when I was a trainee. What you knew was simple: compare comps.
Find some comps. Make adjustments. Or — avoid adjustments. (My expert MAI trainer said “if you make adjustments, then the other attorney will ask you how you got the number.” “Just say better, worse, or similar!)
Finding comps was the key. We needed comps, not “data”! Comps to compare, not data to adjust. Many appraisal reports had the words: “Adjustments are based on my extensive work in the area.”
Early in my career story, I had to drive to an outlying town in San Diego County – Ramona. It was mostly agricultural, and only had one established broker, with an office in a converted farmhouse.
The MLS book came out every three months plus a month to publish and deliver. My most current data was 2 to 5 months old. Listing books came out once a month, and confirming required public records, also at least a month old, unless taking a trip to the county recorders office. Good information required actual in-person or phone confirmation with the agent.
The Ramona appraisal had few comparable sales. I drove up to the broker’s office. I said hello, I’m an appraiser and I need some Ramona comps. He asked who I worked for. (It mattered.) I answered that I worked for Gerry Kibbey, MAI. He said good, I know Gerry, good guy. And the comps door came open. I got comps.
The legacy appraisal process is built around getting comps. Standards are about analyzing comps. Appraiser education is about comps. State regulations enforce on comps. Licensing emphasizes the correctly “recognized methods and techniques.”
Old, “recognized methods” are required to get a license, and to avoid losing it.
Any new-fangled data-science, statistical judgment-honing methods are frowned upon. Too hard. Too new. Not familiar. Not recognized.
Provide a “supported” opinion, not an analytical result!
And Now…
HUD and the Appraisal Foundation. We have a “conciliation agreement” between the U.S. Department of Housing and Urban Development, and the “private organization” which is the “de facto regulator of appraisers.” [HousingWire, July 11, 2024]
The Foundation’s “Appraiser Qualifications Criteria” may “have resulted in violations of the Fair Housing Act by creating disparate racial impacts on entry into the appraiser profession – mainly against Black people and other persons of color.”
The “Historic agreement will help build a class of appraisers based on what they know instead of who they know.”
So what’s the problem?! What will they know?
The problem is that the new class of trainees will continue to be taught and experience the old “established” way of doing things: 1) PICK COMPS; 2) MAKE ADJUSTMENTS.
Who you know is mostly gone (except finding a trainer/mentor). What you must know will continue to be the old, established way. No change.
Part 2 of this blog will consider how modern analytics, software, visuals, and reusable algorithms can enable and enhance the goals of diversity and fairness, while providing superior results of accuracy and reliability.