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.
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 firstname.lastname@example.org.