Knowledge losses over time

[meatsandbounds]

One of the things I thought a lot about during Covid era as I was starting in this profession, is a worry for older appraisers who might get sick easier than I could cause of age. At the time, it stemmed from learning as much as I could from classes and my supervisor, but also from the knowledge that any of us are only as good as the instruction and wisdom passed onto us. So at its core, I was curious and worried for the future of appraisers because I was trying to understand how us younger folk would be able to learn from the wisdom of our elders if they were dying or retiring before we could learn from them.

In this current time of economic downturn in most of our areas of geographic competence (hey, maybe your area is doing better than AZ), it has made me wonder since I didn’t live last one as an appraiser:

What collective or institutional knowledge about appraising was lost during the 2008 crises when large swaths of staff appraisers were let go or independent appraisers couldn’t keep their business running? Did anyone notice at that point, or would it only have been apparent later?

To further ponder, was there any similar or different shifts in collective appraisal knowledge after the savings and loans crisis of the 80s (if we still have anyone on here that was paying attention in that type of way at the time)?


I guess I’m asking cause I worry for the profession, and that as we lose more appraisers to retirement and death that it feels like we have lost collective knowledge more and more.

 

[Carnivore]

This web site has a lot of knowledge already here in numerous appraisal topic post'

The search function should work well. but I get your point though

 

[meatsandbounds]

While not wrong, and the search function has been useful at times, this was more to ask those that have lived through prior downturns as appraisers what their experience was at either watching certain thing that were important before the crash that the profession moved on from or “forgot” (wether because the legal changes put in place by the federal level or just the wheels of time kept spinning).

An example that I’ll take from my grandad when he started appraising: When was the last time any of y’all were able to send in a report on an index card or similar with printed photos/polaroids of your comps attached? What made that inert and out of fashion outside of better tech?

Were there tricks that are actually good that your supervisors taught you that you don’t see being taught now?

 

[Joe Flacco]

Most of the knowledge an appraiser gains over the course of a career comes from learning from the data.

 

[Sadie]

Most of the knowledge an appraiser gains over the course of a career comes from learning from the data.

And seeing every kind of property imaginable and having to figure it out.

My tidbit of knowledge to pass on is when you've got something weird, unusual, unique, go back to your basics and use all of the tools in your tool box. There will be times when you have dredge up your algebra to solve for the unknown. But every time you get one of these, you add to your experience.

And when the experienced appraisers quit, they take all of that knowledge and ability out of the appraisal environment. Ideally, there should be people in the pipeline figuring it out, but because of the changes in compensation, the industry is not real conducive to younger people wanting to start. And it is harder to have trainees than in the old day. It shows in the numbers of appraisers with active licenses.

 

[George Hatch]

The topic "automation rendering skills redundant" isnt specific to AI.

I learned to perform various processes in income cap by use of a calculator and performing each calc by hand. Cap rate buildups, PV/$1, DCF analyses, mortgage payments, etc. Having learned to do it longhand enabled my transition to using spreadsheets including building my own models. I understand what I'm doing when I'm building one of these models and what each assumption means.

That's why I object to the idea of handing models of various types out to people who don't understand how they work. The Solar caclulators being an example of that, and appraisers buying analytic solutions for adjustment factors and such. I don't think appraisers should be using modeling that is using methodology the appraiser doesn't understand. "You can trust the results because it's a product that Alamode sells" is not a persuasive argument.

IMO.

I don't know that the way an appraiser would use an AI would even involve methodology the appraiser doesn't understand. If an AI agent summarizes the information an appraiser would compile if they did the research themself that isn't an example of the AI being smarter than the appraiser who is using it or is performing analyses the appraiser can't understand.

 

[J Grant]

One of the things I thought a lot about during Covid era as I was starting in this profession, is a worry for older appraisers who might get sick easier than I could cause of age. At the time, it stemmed from learning as much as I could from classes and my supervisor, but also from the knowledge that any of us are only as good as the instruction and wisdom passed onto us. So at its core, I was curious and worried for the future of appraisers because I was trying to understand how us younger folk would be able to learn from the wisdom of our elders if they were dying or retiring before we could learn from them.

In this current time of economic downturn in most of our areas of geographic competence (hey, maybe your area is doing better than AZ), it has made me wonder since I didn’t live last one as an appraiser:

What collective or institutional knowledge about appraising was lost during the 2008 crises when large swaths of staff appraisers were let go or independent appraisers couldn’t keep their business running? Did anyone notice at that point, or would it only have been apparent later?

To further ponder, was there any similar or different shifts in collective appraisal knowledge after the savings and loans crisis of the 80s (if we still have anyone on here that was paying attention in that type of way at the time)?


I guess I’m asking cause I worry for the profession, and that as we lose more appraisers to retirement and death that it feels like we have lost collective knowledge more and more.

Great post !! In the past, the collective knowledge was passed on from an experienced appraiser mentoring a newer one as a trainee, and sometimes beyond. But the AMCs, with their low fees have made that difficult- and now the GSE's (shame on them ) are further erasing the knowledge base with their hybrids and PDR collections - appraisers get their knoweldge from going out in the field and seeing many different properties and neighborhoods, not just from sitting at a desk and analyzing data.

I was appraising before, during, and after the 2008 crisis ( as many others here have ) , and I reviewed a lot of the bad, inflated appraisals done during the run-up. Appraisers who lived through that did a lot of REOs and during the run-up saw property flips, and bad actors on all sides. It made many of us a bit cynical. I do not think the financial crisis put many appraisers out of business - that happened later, after the HVCC and AMC fee predation which starved a number of appraisers out, or saw them turn away from lender work.

Feel free to ask questions here on the board of course.

 

[George Hatch]

In my view, the difference between the veteran and the rookie isn't so much what the veteran already knows and has already seen, but in their practice of the appraisal process itself. How many iterations of working through the new-to-them appraisal problem. How comfortable they are in identifying the questions which arise and then hunting down the answers to those questions.

It's not what you already know of this situation at the beginning that counts, but what you learn of it by the time you finish. I don't work one specific property type in one specific neighborhood. I never know who the local PTA president is or who the top 3 brokers are who farm this subdivision. I don't shop in your grocery store or get my car serviced at this specific auto service joint. I get around so much that I basically have to start my research from scratch most of the time. I can't afford to start with any pre conceived ideas; I have to develop them as I go. I don't think that's a bad thing insofar as appraising goes.

 

[George Hatch]

Another example is the use of online databases. When I started we were using MLS books, CMDC compilations and hardcopies of COMPS Inc data sheets. With the latter we would get an envelope with however many comps they published that month and then we'd file each of them in the area-specific binders. Then when we went to use them we would manually flip through all of them before selecting the ones we were going to use in our reports. It was that process of manually going through the many in order to get to the few that provided the context for better understanding those few.

Now it's all online and query based. So appraisers basically only see what they are looking for, not everything else. That's how we get an appraiser doing a 3min MLS query, picking the top 3 transactions by price and not even looking at anything else in that market area. Sure, you get a number at the end but it isn't because you actually have any understanding of what that market is doing.

That's also how brokers and borrowers get to thinking that if they can persuade the appraiser to swap in a couple different sales into their SC they can get a higher value. That's much more of a possibility when the appraiser actually doesn't know of those other sales because they never looked at them to begin with. Not a possibility when the appraiser saw everything first before narrowing to the ones they thought were most applicable "Yeah, I already saw all those. I just didn't think any of them were MORE SIMILAR to my subject than the sales I presented in my report"

That's not to suggest that query-based MLS runs are inherently a problem, but just a comment that how the appraiser structures their research makes a difference in the utility of the MLS queries they use.

 

[TerryRohrer]

I can't afford to start with any pre conceived ideas; I have to develop them as I go.

Many who cite their experience in their market as a necessary "skill" in appraisal are actually defending their reliance on preconceived ideas, which allow them to skip significant aspects of the appraisal process. A more useful skill is to be self-aware enough to avoid those presumptions and do the work, and that is much easier when working across different geographies and property types.