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Let’s Do This!

It has been two years since my last blog. A blog should be updated at least monthly. I average posting a new blog about every twenty-four months. What’s up with that? Well you don’t see the work I have been doing as a business. In addition to my appraisal practice I have actively been researching, programming, and developing valuation tools for 20 years. This is far longer than any active appraiser today. I recognized the need for the appraisal profession to be involved in research early on. The excerpt below is from the book I wrote on “Due Diligence & Scope of Work” in 2003.

The real key to elevating the appraisal industry to a profession is by appraisers working together to accomplish tasks that cannot be accomplished by an individual. One method would be to create an appraiser’s task force (ATF) that would be charged with creating new tools, methodologies, and resources to enhance the effectiveness of the appraiser. This would basically be a Research and Development (R&D) for the appraisal profession.

I recently self-published the book, “The Valuation Analyst, Research in Extracting Adjustment Rates”. It is a recap of the research I did from 2015 to 2017. It is not a statistics book, but rather a book focusing on extracting adjustment rates. Nor is it a repeat of how to perform techniques that can be found in most any appraisal text book. It is more about which techniques work and which don’t work- and why. The key word in the title is “Research” as nothing in the book was simply restated from other books. The facts and concepts presented were the result of extensive scientific research. Most of the research consisted of setting up hypothetical situations and then running many thousands of monte carlo scenarios to estimate probabilities. You will be very surprised
to learn what the probability of getting the correct output is when one pair of sales is analyzed with matched pair analysis; I know I was. If you have this book or intend to purchase a copy- there are several short videos on my website that cover the math calculations in the book. They are listed by page numbers.

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What have I been doing these past three years?

You may have read my two previous blogs; “Long and Winding Road…..” and “If it was easy, everyone would do it.” Three years have gone by since I last updated these blogs. You might be wondering, what took so long? That is what I want to tell you about now. My company, AVT, was created to provide support to appraisers. In addition to a number of timely articles on topics ranging from the potential impact of hold harmless clauses in contracts, to market delineation, I have put a lot of automated technologies in the hands of appraisers. Some of these I have charged a fee for and some of these I have provided at no cost. For example, my book, “Appraising in the new Millennium; Due Diligence and scope of Work” was first offered as a free download from the Working RE website. My friend David Brauner, who is often confused with myself (David A. Braun, MAI, SRA, AI-GRS) reported that around 10,000 copies were downloaded. As a practicing appraiser who started and managed a 15 person appraisal company I have a good handle on what obstacles are faced by the appraisers in the trenches. However, like most appraisers, I did not have as good of a handle on analysis methods and techniques as I thought I did.

BTW: I have recently made the “USL Documenter” a free download from this web site. It is a product that has been very popular and has received excellent reviews. Take a minute and research it to see if it would be of help to you.

From 2006 to my last blog in 2013 my focus was on making the analysis tool of regression analysis available to appraisers. In that endeavor I developed a very good traditional regression application called the Regression Plus. In addition, I developed some educational material on statistics and regression seminars. Since 2013 I have been researching all sorts of topics that relate to the types of decisions appraisers make in every appraisal. It seems, no it is a fact that the appraiser profession is trying to evolve in terms of analysis- but simply doesn’t know how. The catalyst has been the accessibility of market data to the appraiser. Other professions have successfully used statistical methods to extract information from large amounts of data; so why can’t appraisers? This is where the train jumps the tracks and the users of appraisals begin to dictate to appraisers how they should be doing their jobs, and well-meaning but ignorant appraisal experts begin professing methods that simply are not correct. This is the dilemma I have been diligently trying to correct since 2013. To this end, I have literally run millions of mathematical scenarios on methods and techniques to identify the proper way to perform the sales comparison approach. This empirical research is imperative to our evolution. Greg Opelka, who played a large role in developing the traditional comparison grid took the time to send me everything he wrote on the topic. Greg’s influence goes all the way back to the layout of the “Green Hornet” form and continued to the URAR form. In addition, I have studied the laws of probability (and yes that is an oxymoron). I soon found out there is a lot more to forming opinions that just mathematical analysis of data. In addition to “mathematical decision making” I have been researching topics like: “experience and reason”, “behavioral economics”, “human behavior”, “critical decision making”, etc.

I am now assembling the information from these sources that relates to performing the sales comparison approach into a concise and easy to read book. I don’t have room to tell you everything I have learned here, but I will share a few truths and myths:
1. Truth: Appraisers are not adequately trained in decision making.
2. Myth: Appraisers deal in “big data”- no not even close.
3. Truth: Appraisers must seek to be better, but not to be perfect.
4. Myth: Adjustments can be statistically proven with certainty.
5. Truth: Credibility comes from education, training, and experience.  It is conveyed by communicating to the user of the report the process employed to reach the conclusion.
6. Myth: There is always one correct adjustment amount.
7. Truth: Probability (chance) is the most significant obstacle to a successful analysis.
8. Myth: Today, a good way to judge the credibility of an appraiser’s adjustments in the SCA, is to compare it to what other appraisers in the same market are doing.

These truths and myths should give you an idea of what my new book will address. I believe it will be an immediate relief to the appraisers who are currently being pulled in different directions like a Gumby toy, and help the appraisal industry make another small, but significant step in its evolution.

Please send your comments and questions to


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If it was easy, everyone would do it.

About five years ago AVT started providing some of the major pieces required for appraisers to utilize regression analysis. We have produced a fantastic regression program, produced webinars which introduced regression, and produced the best regression training material on the market. This program and training material are offered at a very reasonable price. We are about to come out with this year’s version of the All-in-One CD. The regression Plus and the Fusion applications have been greatly enhanced. I will be speaking on regression analysis at the Appraisal Institute Connect conference this year in July.

One of the issues confronting the industry is a lack of good regression analysis training seminars. Again in 2012, the Appraisal Institute turned down my request to provide them with a seminar on regression. While the AI is a very good education provider, they are not the only good provider. AVT is about to enter into an agreement to provide statistical seminar material to a major appraisal education provider. This will fill a huge void and may be the single most important catalyst to moving the neighborhood appraiser into statistical analysis this year. Watch the web site for more information on where and when these seminars will be offered.

Over the past year I have had two articles published in the Appraisal Journal. One is on market delineation and the other is on market interactions. These articles can be found in the “Activities/Articles” section of the website. The article on market delineation will help regression users understand where to search for sales.

This blog introduces the new forum which has been set up to discuss the software applications and address any questions on analysis. Also, I have begun a project called “Analyzing the Analysis”. This project consists of a proposed series of reference workbooks that discuss the pros and cons of valuation analysis techniques. I will be presenting some of the work I have done at the AI Connect convention this year. Over the years, I have received more questions from appraisers on analysis methods than anything else. Frankly, I have been quite surprised by what I have learned about the various old and new analysis techniques appraisers utilize in their work.



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Long and Winding Road………

The Long and Winding Road…

Many lenders who rely heavily on AVMs and BPOs have stated, “AVMs and BPOs have improved significantly over the past five years, but appraisals (more specifically appraisers) have not evolved during that same time period.” From the lender’s standpoint AVMs and BPOs make a lot of economic sense. But, is their statement correct? I would say, yes and no.

Individual appraisers are not rewarded for going the extra mile, it is in fact the opposite. Appraisers are more often than not reprimanded by lenders when they attempt to evolve and improve their work. First, they are not paid for any “extra” work; so their first reward for evolution is to make less money per hour. Second, the lender is required to review the appraisal, so new techniques by the appraiser means the reviewer has to understand and take time to review these new techniques. The bottom line is that these same lenders who criticize appraisals for not evolving are the very force that retards appraisal evolution and promotes the status quo. Appraisers have been slowly learning more about statistical techniques, and a lot about market cycles. I expect that this will translate into more reliable and more useful appraisals in the near future.

I personally believe that about 25% of appraisers are movers and shakers and would like to elevate their game. This number may seem low, but you have to consider that over half of the profession is above 50 years old. In addition, appraisal fees have been too low for appraisers to invest any time in “research & development”. This means that guys like me are relied on to provide new automated products. A third problem is that none of the appraisal associations are fostering an environment for appraisal evolution to occur at a pace that is rapid enough. For example, while the Appraisal Institute is still the prominent appraisal organization in terms of advancing new technics and methods for valuing properties, they have turned down all of my attempts to work with them to promote regression analysis. Their reasoning is that I would be promoting my own appraisal product, the Regression Plus. The fact is that I created the Regression Plus because no one else was working on a regression product that would enable appraisers to move in that direction. It is like we are all trapped in a 15 foot pit and I gathered some tree limbs and constructed a ladder (as no one else was doing it). However, when I produced it for us to be able to climb out of the pit, those in charge said that we cannot use my ladder as I would be promoting my own product. So, here we continue to sit trapped in this pit while I have a ladder in my lap. Now, keep in mind that while I am critical of the AI in this situation, I am a member (MAI and SRA) and a promoter of this association. I encourage all of you to join and earn a designation as well.

This leads Automated Valuation Technologies, Inc. (AVT) to it continued goal of elevating the appraisal profession in terms of new valuation techniques and methods via automated tools. These tools have to be automated so that they are efficient, enabling a better value opinion in the same amount of time as traditional appraisals. AVT maintains that having the best regression related products possible is the main goal. However, because the phrase, “build it and they will come” has not proven to be true AVT is now trying to identify and market directly to the 25% percent of appraisers identified above. So, look for more advertisements and marketing. The first stop in marketing is the site. We have introduced a new media for explaining what our products are. This medial is the Xtranormal platform which allows us to use a cartoon format to present the product information. It is very engaging, but still a cartoon, which may not appeal to everyone. Take a few minutes and watch these presentations called “Frequently Asked Questions”. In addition we have opened out forums to a public format. We hope to make this the premiere forum for discussing regression and other statistical methods.

The 2013 product editions will be ready some time before the end of the year. There are some significant updates:

All of the products have been updated to run on Windows 8. They now require version 4.0 of Microsoft’s DotNetFramework where they required version 3.5 to be loaded before.
The Regression Plus:
An automated system for scrubbing data has been built in. No matter how good and fast you are at scrubbing data with Excel you will now be able to scrub the data several times faster.
Many statistical outputs have been added; standard errors, confidence intervals, Variation inflation factors, and more.
The Fusion:
A qualitative sales adjustment grid has been added.
i. Comp selection is aided by the Fusion identifying the most recent sales, closest sales, most similar sales, and the sales that sold at a price consistent with the market model.

Improved mapping features have been added.
Improved narrative margin controls have been added.
The USL has been updated to meet the 2012-2013 USPAP.

As always I appreciate your patronage to AVT and I commend your dedication to self-improvement.



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