Regression Analysis

[timd354]

I understand the idea of it and that's enough. If you are trying to determine adjustment for attached vs semi-detached is the data going to consider things like if it is semi-detached to alley, semi-detached with a 2 foot gap with the property next door or semi-detached to street? If it has windows on the detached side or not? No. because that kind of data is not even being collected.

I have never stated that regression is useful or appropriate under all circumstances.
Actually, since you obviously have no idea how it works and you have no idea when its use is appropriate, you summarily dismiss it out of ignorance. For chrissake, you obviously do not even have a basic grasp of why and how regression works under the right circumstances, yet you think you know enough about it to dismiss it as being useless. Your statements on this subject are ridiculous.

 

[timd354]

50 years ago or not it is the best way still to do it.

I know it is difficult to believe that everything your mentor told you may not be exactly true.

 

[timd354]

Well that is what the problem is with paired sales. Appraisers that claimed to use paired sales when they didn't. That is the only thing that is wrong with paired sales.

No, the biggest problem with paired sales is the fallacy among some appraisers that the trend indicated by a single data point or a very small set of data can credibly or accurately be extrapolated to the broader market in most cases. The second biggest problem with paired sales is that is really the only method that most appraisers were ever taught or ever use to derive their adjustments so they stick to the fantasy that paired sales is the be all and end all when it comes to deriving adjustments. The truth is that no one method for deriving adjustments is the best method - all the numerous different methods have their strengths and weaknesses and some methods are stronger in some circumstances while other methods are stronger in other circumstances and typically the strongest support for adjustments is the result of using multiple methods to derive the adjustments.

 

[gregb]

Maybe it's time to remember this-

http://orep.org/wp-content/uploads/...ustment-Problems-WorkingRE-Part-2_handout.pdf

 

[Joe Flacco]

We will just have to disagree. I guess I can respect your opinion. I just disagree with you.

 

[Joe Flacco]

I disagree 100%.

 

[VegasWayne]

The statistical technique of regression analysis was developed by Carl Friedrich Gauss in the year 1801. It was used to predict the orbital position of the minor planet Ceres that had recently been discovered. Ceres had a few observations before passing behind the sun. Gauss was able to accurately predict the orbit using the limited data. This was all done using paper calculations.

 

[timd354]

The statistical technique of regression analysis was developed by Carl Friedrich Gauss in the year 1801. It was used to predict the orbital position of the minor planet Ceres that had recently been discovered. Ceres had a few observations before passing behind the sun. Gauss was able to accurately predict the orbit using the limited data. This was all done using paper calculations.

Flipping idiot should have utilized paired planets analysis and saved himself from doing all that work, lol

 

[Deleted member 130081]

Econometrics is rocket science - literally. Without training we can use statistics for illustration purposes but nobody without a degree in it (or maybe if a true genius) should be using it as a primary method. That said, the more you understand the better you will be able to describe value parameters. If you like statistics and have the grades, take a couple of graduate level courses over a year... it cured me, but at least I can use the vocabulary (heteroscasticity is my go-to concept explaining why my comparables might suck under certain circumstances lol). We used Limdep, which I understand now can not only do the math but geographically determine the sample to use as well, but you would still have to know the problems inevitably present in every data set. Good luck!

Excellent post - thank you. Funny you should mention rocket scientists, because I did an appraisal for a real rocket scientist last year - works for NASA and everything. It was an estate, so I was able to speak with him candidly about the appraisal. He was intrigued about how we go about making adjustments and when I explained the truth of it, he was (mostly) relieved, because he couldn't for the life of him figure out how we did it. He commented he would pull his hair out if he had to calculate conclusions of a similar type from a data set that was so heavily influenced by erratic human behavior, not to mention the lack of isolative data, among other limitations of the source data. The take away here (for me) is that the general public in fact think we do make these types of scientific calculations, and I think we fall short of USPAP by not setting the story straight.

PS - I had to look up heteroscasticity - LOL - I am still trying to pronounce it.

 

[Deleted member 130081]

No, the biggest problem with paired sales is the fallacy among some appraisers that the trend indicated by a single data point or a very small set of data can credibly or accurately be extrapolated to the broader market in most cases. The second biggest problem with paired sales is that is really the only method that most appraisers were ever taught or ever use to derive their adjustments so they stick to the fantasy that paired sales is the be all and end all when it comes to deriving adjustments. The truth is that no one method for deriving adjustments is the best method - all the numerous different methods have their strengths and weaknesses and some methods are stronger in some circumstances while other methods are stronger in other circumstances and typically the strongest support for adjustments is the result of using multiple methods to derive the adjustments.

I think what is telling about your statement here, and many other statements in this thread, is that a reliable go-to method to extract and support dollar adjustments does not exist. True as Joe pointed out by example, there are cases when data is available for matched pairs and some conclusions can be made (condos come to mind). But when I take a step back and look at the mortgage sales grid (and almost all other "recognized" sales grid type forms), and realize the reader is going to read it as a whole, I wonder if what I have done as a whole is meaningful. I think the entire format is very misleading on multiple counts. First, by the itemized sales grid being in the report in the first place, it suggests to the reader that buyers do in fact purchase property in just such a way (through itemization), which I believe is questionable. Second, if the first point is to be assumed/over-looked, it suggests that we can in fact determine just how much buyers do pay (or not) for each individual element of comparison, which is also highly questionable. I have learned to write baby-milk statements concerning the grid and adjustments in my reports, informing the reader that they should not put too much reliance on the grid, and rather rely on the entire sale itself (actual sale price) when looking for market evidence to support the value opinion. That is how I balance the demands of the mortgage industry, which is slow and loathe to change (and is the industry meal-ticket), with the demands of USPAP.