Falling Out - More Appraisers Quit

[J Grant]

Terrel, you have a point that res apprasiers can and so use statistics.

When commercial appraisers appraise a new subdivision, they do so as mass apprasials for financing purposes or zoning subdivision purposes or perhaps future value as improved to the builder so the developer can anticpate profits...I would imagine what profits and how long it takes to sell can end up quite a bit differently, but even if it lines up with what the builder anticpates, the value of the new subdivision changes over time, and certainly the individual homesites once sold and built on , the value can change dramatically for each one depending on competition and market conditions etc.

 

[Blueprint]

And some commercial mainly do res work with an occasional commercial job on the side.

Agreed. My mentor has been a certified general for 20+ years. He specializes in all types of complex residential across the state of Oregon.

 

[Terrel L. Shields]

they do so as mass apprasials

Mass appraisal is something else - it is not subdivision development. Subdivision analysis has to weight the future purpose and demographic of the subdivision. It has to predict the demand and absorption at a fair market price. It is the same forces of residential demand that drives development.

My argument has nothing to do with CR v CG. It is that we are all subject to the heuristic of property. What are the forces driving value? But when we have insufficient data, there are only two reasons why analysis fails outside flawed judgment
A - there is too little data
B - your sample of the total data is too small

If you are blinded to the limitations of your data, then your judgment becomes skewed - misled into making fatal errors, including drawing correlations that do not exist and declaring certitude in the face of uncertainty (randomness.)

Too many appraisers limit their demographic to an area that is too small to be statistically significant. When you do that you can get wild swings, statistical noise, or only by random luck, are the factors correctly reflective of the "market". Three sales tell you very little. Three truly REPRESENTATIVE sales mean much more.

----from Taleb

They tend to explain random outcomes as non-random.
Human beings:

1. overestimate causality, e.g., they see elephants in the clouds instead of understanding that they are in fact randomly shaped clouds that appear to our eyes as elephants (or something else);
2. tend to view the world as more explainable than it really is. So they look for explanations even when there are none.

from Huff

Themes of the book include "Correlation does not imply causation" and "Using Random Sampling". It also shows how statistical graphs can be used to distort reality, for example by truncating the bottom of a line