Cost Manuals

[Don Clark]

:lol:

Good God Austin! Now I know where you are coming from. You even believe the AI is in need of your post to print their books. Geesh. Sounds like a case of grandiose illusion to me. And, any time you want to show me your work, I will be glad to show maine, and my supporting data from which I derive an opinion of data. Keep it up Austin. We all need a cheer leader and you are your own best cheer leader. The Psychiatrist call that "Delusions of Grandeur".

Don

 

[Austin]

Don: As soon as I am crowned King, I want you to be my own private Witch Doctor and George will be my high priest of the voodoo arts. We will rule the world. From now on, you guys address me as "Your Hinney."

 

[Farm Gal]

8O Goodness, boys :!: Rock throwing in offense of defense of 100% use of one method versus is liable to break windows in your own house.

Art vs. science:
A bit of both I think! Have just attended the Appriasal Institute Supporting Grid Adjustments in Residential Appraising. I came away a tad disappointed that the statistical analysis portion was limited to a 'mention' ...the rest of it seems to revert to know your market... Paired sales extraction etc... which are all very nice, but usually do not work particularly well in a varied market! So are my sage adjustments based on market experience PFA (pulled from air)? Well once in a while there is opportunity to 'test' an adjustment theory: I TAKE it! Sometimes it 'proves' what I have been doing, sometimes it proves I should inch an adjustment one way or another. So be it!

Somewhere in between 'hard stats/pure number crunching' and the 'art of appraising' lies the truth and the opinion I wind up with...

Lenders get cranky when it takes me a day or two or three or four to arrive at a vlaue conclusion, but it is often my little subconscious either plugging away at a rationale for my value conclusion. Until I am comfortable that is what it takes.

IF I can get to a number that I think is supported using stats AND it makes sense in soft analysis of the subject market, I DO it, because it is so very neat and tidy! But if the numbers don't work due to lack of data, or variables beyond pure numbercruching, sometimes narative explanation and analysis after rough gridding works for me: its my OPINION that I am being paid for.

Put away your guns already!

 

[George Hatch]

Austin,

You wrote :

What I glean from your opinions is that you are saying: “Don’t look at my numbers or science, just trust me. After all I am an artists.”

So you were either not paying attention or you choose to ignore when I wrote:

Come to think of it, the feedback I get is that my readers are most impressed when they can follow along in the analysis and when it makes sense to them. That occurs mostly when I use our common experiences to communicate not only the what of my opinion, but how I got there. Believe it or not, knowledgeable users of appraisals are not primarily concerned only with the final number, alone and with no context. They want the appraiser to use the data that best illustrates the opinion as if it were their decision and their money.

I have never hidden behind "based on my experience"; nor have I ever hidden behind a bar graph or a spreadsheet. I think we can agree that both of those practices are equally heinous. Our readers should be able to follow our reports if they are actually reading them. They may either agree or disagree with our conclusions, but they should never have reason to complain about not understanding them. If they do have a problem, then we aren't doing our job properly. I realize that some appraisers like to overwhelm their readers with techno-jargon so as to stifle all questions and opposition, but that does not seem to me to be the best way to encourage confidence in the appraisal profession as a whole or the appraiser as an individual.

Incidentally, I would never call you "Your Hinney", "Your Hiney" or any other variation. I respect you too much for that, even though we disagree somewhat on this issue.


George Hatch

 

[Pamela Crowley (Florida)]

Boys, boys!!!

From reading your various posts throughout the past months, you all appear to be highly competent and ethical appraisers. Please, let's not allow differences in opinions regarding methods of practice turn this into a slam session.

Please.

 

[Austin]

Ok guys and gals: I mentioned in an above post that I just got a new copy of “The Appraisal of Real Estate 12th edition. The reason I got it was to work their problems sets with regression analysis. Well, just worked the first sales comparison problem and they over valued the property by $54,000. As a matter of fact the R-square (coefficient of multiple determination which means how much of the variance is explained by the regression) was 49% just using gross living area with simple regression and was 31% using the book solution after all their adjustments. That means they had a better answer using simple regression analysis before any adjustments than they had after all of their adjustments. If you could see the graph of the book solution vs. the simple and multiple regression solutions you can clearly see the book is solution is not as accurate. The numbers prove it. Why is the book solution wrong? Because they don’t know how to make a size adjustment and size was the dominant variable. Just thought some of you guys would be interested as one artist to another.

 

[David C. Johnson]

<span style='color:darkblue'>Hey, everybody,

Pardon me for butting in -- actually the fight was getting so good I was a little afraid a hockey game might breakout -- but be sure to see my new post in the WaterCooler titled "Please Read this Post Quick." I hope several of us will sign this "bad boy."

It is important. We have already helped this group a little maybe. I suggested a day or so ago via email to Virginia Postrel (its largely her site) that they check out the AppraisersForum petition, which they did. They have made their petition much better in the last few hours including not having to go through all the signatures to get to the most recent signers names (to see if it got your signature).

Wayne, if you happen to read this post, consider signing. A bonus is that there are quite a few writers and publishers (in addition to all the scientists) among the "signees." Never know when it might be good to "have an in" with the Wall Street Journal, or Vanity Fair, for instance. The owner of AppraisersForum (a very special form of the media) would sure fit right in.

OK, everyone is probably as lazy as I am, so here's a shortcut to it:

http://appraisersforum.com/forums/viewtopic.php?t=1809

David C. Johnson</span>

 

[Ben Vukicevich SRA]

Once again, my brain hurts. We are talking about a stupid residential appraisal, right?

I'm certainly not an artist. I'm certainly not a scientist. They all make more money than me. I'm an appraiser, you see. And to me, that means I act and re-act as a super-informed buyer. It's my job to "know" the market.

Appraising can be called a science. Like the squid, we never know where we are going but we know where we've been when we use sold data exclusively to opine. Like the portrait, appraising can be called an art because we have to "contemplate" the final result with current brush strokes (listings and under contracts).

I don't like being a "squid" and I don't like painting sissy portraits, well just because I can only fingerpaint. :roll: :roll:

I like being akin to a super-informed buyer. Damn, that Freddie Mac AVM just told me my rental condo was worth $68,668 and me acting as the super-informed buyer, not the typical owner, well I know I'd have a hard time getting $55,000 for it. Psst..It's a secret appraisal process. I looked at some sales, some listings and some pendings...don't tell anybody how I did it-all without a grid or a computer or USPAP. In my head, just like a ...... a buyer?????

Ben

 

[Austin]

Ben: You make a good point about doing it in your head and I understand what you are saying. My point is that if you can do it in your head there has to be some logical process by which you do it and to be credible you have to articulate the process or people will think you are a voodoo artists.
I was reading the 12th edition of ‘The Appraisal of Real Estate’ last night on sales comparison methods. They are using regression methods but they don’t explain it that way. For example, they say there are two kinds of adjustments in the sales comparison approach, quantitative and qualitative. Then they describe how to make qualitative adjustments by bracketing the subject with superior and inferior properties. Two things about this explanation: First: What they are doing is simple regression analysis. If you graphed this data you could clearly see that but they don’t come out and say it. That is what you like most appraisers are doing in your head but instead of demonstrating it mathematically you are calling it art. Just because you do something in your head instead of with a graph does not make it an art. Second: The comp selection process for making qualitative adjustments would be considered by most state boards to be the wrong comp selection because one comp has to be superior and one inferior.
I think what this argument boils down to is that this so called art is really regression analyis but most people don't know how to expressed it that way, so in self defense they call it an art because they are intimidated by the math and afraid of the implications.

 

[slacker]

Psst..It's a secret appraisal process. I looked at some sales, some listings and some pendings...don't tell anybody how I did it-all without a grid or a computer or USPAP. In my head, just like a ...... a buyer?????

Ben

Can we make a link back to this post? It's perfect, thanks Ben.

Here's my version:

Following is a list of things that informed buyers and sellers don’t care about:
Beta Probabilities, Binomial Distributions, Chi-Squared Distributions, Confidence Intervals, Covariance’s, Sum of Squares, F Probabilities, Fisher Transformations, Gamma Distributions, Kurtosis, T-tests, Z-tests, and last but not least the Pearson Product Moment Correlation Coefficient “R”.

Here’s what they do care about:
What did the guys house down the street sell for?


Now that's logic in action.

One more thing, there is nothing scientific about regression. It is an art. The addition, subtraction, multiplication, and division are the scientific parts.

The outcome of any regression is a prediction.

Science:

1+1=2

Regression (Art ):

1+1 will probably equal 2 at a given confidence level.



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