Appraisal Bias

[alebrewer]

Lol you just did in the above what you deny doing! Writing a commentary disparaging point values, right here !!

What is a "true value"?? You keep using that term. Where is it in USPAP or any appraisal literature?

We are not hired to give an opinion for the "true value" ( whatever that is supposed to mean) of a property. We are hired to provide an opinion of market value for the property, only relevant to and used in our own appraisal. . Most of those assignments the client wants the opinion of market value as a point value.

again - please find ONE SINGLE SOLITARY post where I've said I don't want to pick a point value. You are one of the most arrogant, judgmental, accusatory folks on the forum. Please stop making stuff up. What I HAVE said - and I'll say it again, as you seem to have trouble grasping the concept - (typing as slowly as possible) I don't believe point values exist as pertains to a property's true value. I believe a property will ALWAYS exhibit a range of value. The primary reason for this is the inefficiency of the real estate market. We're not valuing gold bullion - I'll stick a point value on a one ounce brick of gold ANY DAY! Real estate, however, is NOT homogeneous, the barriers to entry are HIGH, there are asymmetries of information, and there is no centralized clearinghouse for the product. In other words - it's an inefficient market, which means there is a lot of subjectivity introduced into purchase/sale decisions - subjectivity that cannot be quantitatively distilled into a single point value.

 

[glenn walker]

The most powerful regulators in the nation are on that appraisal bias hearing. The writing is on the wall.

Zoe its a hearing only and only you and 100 people have even watched it. It does not change any laws or guidelines- Please get a grip on your emotions.

 

[Zoe]

Zoe its a hearing only and only you and 100 people have even watched it. It does not change any laws or guidelines- Please get a grip on your emotions.

CFPB is asking for comments?

 

[glenn walker]

CFPB is asking for comments?

But not on this topic

 

[George Hatch]

Let's flip the script. Hypothetically speaking what if Fannie/Freddie revised their reporting requirements to include a range in addition to the point.

Would you comply and think nothing of it?​

or​

Would you comply under duress and coercion?​

or​

Would you refuse all those assignments on the basis of considering the range to be an unacceptable assignment condition?​

 

[glenn walker]

CFPB is asking for comments?

Zoe stop and read this 100 times. This is what the the CFBP Is asking for : Algorithms, artificial intelligence, and fairness in home appraisals

 

[glenn walker]

Let's flip the script. Hypothetically speaking what if Fannie/Freddie revised their reporting requirements to include a range in addition to the point.

Would you comply and think nothing of it?​

or​

Would you comply under duress and coercion?​

or​

Would you refuse all those assignments on the basis of considering the range to be an unacceptable assignment condition?​

She would comply as long as it was printed on the form

 

[glenn walker]

If the Form was Printed Price not Value She would comply. Its all about being told what to sign and the content means nothing. Anything not officially Printed is garbage and just more word salad.

 

[alebrewer]

I think J is probably allowing herself to be used as an example of folks who haven't quite come to grips with the difference between 'market value' and an 'opinion of market value'. Market value is an abstract concept that examines a property's worth as valued by 'the market'. Of course, 'the market' is - in and of itself - an abstract concept as well. We use the term 'most probable price' (along with a number of modifiers) as that is easy enough to understand, but vague enough not to pin the concept down. And even if a property DOES settle - between parties who fit the definition of market value - is that sale price the 'true' value of the property? Remember the old adage, "One sale does not a market make."?

Then we ask trained professionals to give their 'opinion' of what the market value MIGHT be. Of course we have quantitative and qualitative tools at our disposal to assist us in that pursuit, bat at the end of the day - our OMV (or EMV) is nothing more, or less, than a well supported (hopefully) OPINION. Were 10 appraisers to render valuation services on the same property, with the same effective date, we would most likely see 10 different results - ALL of which COULD be well supported. It should be easy to grasp, then, that the concept of a 'point value' as it relates to real property, is NOT reflective of the property's true value, but is simply an opinion, constrained by the needs of the users to be distilled into one point. On a theoretical basis, however, even that one point is - in reality - a range. If I call a property $500,000, I've effectively said the property is worth between $499,999.51 and $500,000.49. If we can agree that is the case, then we are in agreement properties will ALWAYS exhibit a range of value - and the more reliable and prolific the data - the tighter the range.

 

[CGinMN]

And even if a property DOES settle - between parties who fit the definition of market value - is that sale price the 'true' value of the property? Remember the old adage, "One sale does not a market make."?

If you were able to simulate the marketing and sale of property among different/distinct buyer pools on the same effective date, we would see a bell curve arrangement of the 10 different contract prices, the same as if we had 10 appraisers render an appraisal of the same property we would get 10 different results also on a bell curve.