Another pet peeve

[CGinMN]

Experience is just the sum of one’s practice up to that point in time, which includes developing adjustments and approaches many, many times over. Developing something you already know the answer to is often unnecessary, so instead, the appraiser relies on experience. I don’t see anything wrong with it as long as you are constantly refining and updating your professional knowledge. You can usually tell by the balance of the work product whether that experience is worth anything or not.

 

[George Hatch]

The buyers and sellers in the market are working off THEIR cumulative exposure to the data, and they are backing their opinions with their own money. The brokers are working off of their cumulative exposure to the data. How does that become a problem when appraiser who is doing nothing but analyzing sales data for the value attributes?

I've said this for years: A busy SFR appraiser who is working to specs is analyzing for value attributes more sales transactions in 2 weeks than the average broker is actively analyzing in a year. 5x more than a repeat property buyer is analyzing in their entire lives.

Show some respect for that.

What is our judgement comprised of if not the result of all the analyses we have ever performed on these problems?

Strictly speaking "show your work" is an SR2 related question. If I'm reviewing a report that is omitting something I need to say it that way (report doesn't mention) as opposed to saying the appraiser didn't perform that analysis. All I can actually see is what the report contains, not what was actually going into the appraiser's SR1 analysis.

 

[sputnam]

I assume you're referring primarily to the reporting requirements of the GSE conduits and their variants. Those user-driven requirements are spelled out in writing, so an appraiser who isn't following instructions is causing problems for their users. A requirement or expectation that isn't spelled out somewhere is only a wish.

Meanwhile, "experience" has been considered so significant to what we do that meeting that (up until PAREA) the requirement to accrue thousands of hours of experience (and obtaining exposure to all that data and analysis and judgement) has functioned as the primary barrier to entry for obtaining a license. Or getting on a lender's approval list.

Zooming out a little, my interpretation of the issue is that one aspect of your peeve is the appraiser is doing one thing (operating off "the list" or by rote) but saying another (I did paired sales or interviewed a dozen brokers). Basically, you're peeve is about the dishonesty.

No... I'm referring to the fact that your.. or any appraiser's... experience is not verifiable or repeatable. It's not objective. Experience is important and valuable. Its place is in reconciliation and in understanding, choosing, and correctly applying the various valuation analyses. It isn't support. Support is from the market.

 

[sputnam]

Experience is just the sum of one’s practice up to that point in time, which includes developing adjustments and approaches many, many times over. Developing something you already know the answer to is often unnecessary, so instead, the appraiser relies on experience. I don’t see anything wrong with it as long as you are constantly refining and updating your professional knowledge. You can usually tell by the balance of the work product whether that experience is worth anything or not.

Maybe. The point though is... it's an appraisal report. You are required to support your opinions and conclusions. Citing your experience isn't support.

Another way to put it is: citing appraiser experience is arguing from authority. It's saying... pay no attention to the man behind the curtain. I'm the appraiser. I know. I don't have to tell you how I got there. Don't ask. That is contrary to USPAP.

 

[Tom D]

Sorry... but 'Appraiser's experience' is not valid support for anything. Yet, I regularly see that offered as support... especially in the Cost Approach.

I'm sorry to. I have never had an doctor, lawyer, car mechanic, or any person i've interacted with give me a detailed page and paragraph explanation of what they looked at, all the concepts they used to determine the problem, what options did they look at in the final answer. But you think we need to be the only profession that gives the minutia of how we determined anything.

By the way do you read any appraisal book's
The Appraising Residential Properties, 4th Edition, Appraisal Institute, "Other Quantitative Adjustment Techniques”, Page 344 further states: “…In instances where paired sales analysis is not conclusive, the appraiser may apply judgment to resolve the problem." The adjustments resulting from the appraiser's judgment is based on a study and understanding of historic or past buyer preferences. It further suggests that cost and depreciated cost data may be used with the appraiser arriving at the value contribution (not cost new) of certain features. The process of supporting the contribution of individual variables (features) is limited and often difficult to quantify, with adjustment deemed to be qualitatively supported unless otherwise addressed. All methods of supporting adjustments are usually limited by inherent uncertainties within the applications themselves.

Adjustments, in this report, are based on a combination of Paired Analysis with Sensitivity and/or Trend Analysis & on a study and understanding of historic or past buyer preferences. Support for adjustments may be based on multiple applications and rarely do two methods return identical results with a high degree of accuracy. While not always 'strongly' independently supported, collectively, the adjustments serve to narrow the adjusted value range of the comparables in support of the subject's 'most probable selling price' commensurate with the definition of Market Value set forth herein.

However, i do not disagree with you Sputman as that only saying 'appraiser experience' being the only support stated probable means a bad appraiser job.

 

[sputnam]

I'm sorry to. I have never had an doctor, lawyer, car mechanic, or any person i've interacted with give me a detailed page and paragraph explanation of what they looked at, all the concepts they used to determine the problem, what options did they look at in the final answer. But you think we need to be the only profession that gives the minutia of how we determined anything.

By the way do you read any appraisal book's
The Appraising Residential Properties, 4th Edition, Appraisal Institute, "Other Quantitative Adjustment Techniques”, Page 344 further states: “…In instances where paired sales analysis is not conclusive, the appraiser may apply judgment to resolve the problem." The adjustments resulting from the appraiser's judgment is based on a study and understanding of historic or past buyer preferences. It further suggests that cost and depreciated cost data may be used with the appraiser arriving at the value contribution (not cost new) of certain features. The process of supporting the contribution of individual variables (features) is limited and often difficult to quantify, with adjustment deemed to be qualitatively supported unless otherwise addressed. All methods of supporting adjustments are usually limited by inherent uncertainties within the applications themselves.

Adjustments, in this report, are based on a combination of Paired Analysis with Sensitivity and/or Trend Analysis & on a study and understanding of historic or past buyer preferences. Support for adjustments may be based on multiple applications and rarely do two methods return identical results with a high degree of accuracy. While not always 'strongly' independently supported, collectively, the adjustments serve to narrow the adjusted value range of the comparables in support of the subject's 'most probable selling price' commensurate with the definition of Market Value set forth herein.

However, i do not disagree with you Sputman as that only saying 'appraiser experience' being the only support stated probable means a bad appraiser job.

That's completely true... however, doctors, lawyers, and auto mechanics aren't bound by USPAP. Appraisers are... and one of the things USPAP requires us to do is to support our opinions and conclusions... which includes adjustments. We are also required to be objective. Appraiser experience is not objective. No one can replicate it or verify it.

That doesn't mean that appraisers have to 'show their work'. It means that, depending on the nature of the assignment, that they have to summarize how an adjustment was derived. What data was considered? What method was used? Saying, for example that the 'subject's site value was determined using allocation' works. Saying that the 'subject's site value was based on the appraisers experience and knowledge of the area', doesn't.

 

[CGinMN]

An inexperienced appraiser is going to have to rely more heavily on data analysis to develop their opinions and conclusions. This is purely out of necessity because they don’t have the experience yet. For example, the subject requires analyzing sales in competing neighborhoods. Determining what is similar requires comparing data from different neighborhoods.

An experienced appraiser won’t have to rely as much on data to develop their opinions and conclusions because they have already done so many times and have accumulated that market knowledge. They know which neighborhoods are considered similar without having to analyze new data for every assignment. Unlike the inexperienced appraiser, if the data is telling them that two competing neighborhoods have substantially different median pricing, their experience will tell them there are other issues at play that need to be controlled for, such as the age or size of the housing stock.

Inexperienced appraisers equipped with reams of data can be more dangerous than experienced appraisers who rely on their experience to form the support for their opinions and conclusions. There are definitely appraisers who overemphasize experience over data analysis, but I think it’s important to recognize the best approach is having both.

 

[Surf Cat]

Sorry... but 'Appraiser's experience' is not valid support for anything. Yet, I regularly see that offered as support... especially in the Cost Approach.

Because it's a failure of the educational institutions that teach the stuff. I was taught to "back into it" by one of my mentors.... so he was no road map.

So I take a "live" class for $195 to really understand it plus, I get some continuing education credit. Not once during the eight hour class did the Whiteboard come out where the instructor went through the process step by step. There was no bringing out a cost manual such as Marshall and Swift showing how to multiply your base cost by the current cost multiplier first, and then by the local multiplier.

The class was the same old tired "first we take the reproduction cost of the building, subtract out any depreciation blah blah blah.....no practical educational guidance.

But hey, when you point your finger at someone you have three fingers pointing back at you.... I tried the easy, quick and dirty way to get it done and it was just a money grab. I went to the wrong appraisal school.

 

[sputnam]

An experienced appraiser won’t have to rely as much on data to develop their opinions and conclusions because they have already done so many times and have accumulated that market knowledge. They know which neighborhoods are considered similar without having to analyze new data for every assignment. Unlike the inexperienced appraiser, if the data is telling them that two competing neighborhoods have substantially different median pricing, their experience will tell them there are other issues at play that need to be controlled for, such as the age or size of the housing stock.

Sure... but no where in USPAP does it say anything about a more experienced appraiser not being required to support his/her opinions and conclusions. It is a reporting requirement. It's not really optional.

 

[TerryRohrer]

Change is a constant. Too often, I have seen experienced appraisers (some I highly respect and rank above most), when focused on a fixed geographic area, begin to assume things they used to measure and analyze. No matter the experience level, if you don't look, you can't support a conclusion under current conditions. Being correct then becomes coincidence rather than competent.