Marcia Langley
Senior Member
- Joined
- Aug 26, 2005
- Professional Status
- Certified Residential Appraiser
- State
- Missouri
This directive is another example of a client taking a credible concept and distorting it into a non-credible demand.
Appraisers should analyse broad statistics, submarket stastics, and micromarket statistics and take into consideration the relative credibility/value of the statistical data for each.
The credibility of the data will be different in each macro market and in each micro market.
For example, my MLS has absolutely worthless market area-wide statistics regarding size of dwelling, days on market, and SP/LP ratios. In this case the concept that a large sample size will deminish the effects of bad data is not true. In some markets the local MLS has controls in place to minimize this type of error in their broad statistics.
Credible data regarding the above, in my market can only be obtained by tedious property by property analysis so one must limit that research to the small number of actually comparable properties. Granular, if you like.
On the other hand, my MLS has some control on the reported sales prices which, in a broad statistic, would be a large enough sample size to minimize error.
However, the analysis of sales price statistics are better for some submarkets here than for others because agents are more inclined to use allowed exceptions to reporting actual sales prices in certain submarkets.
My point is, that the client's directive should have been more general as to the appraiser's responsibility in analyzing market trends with some examples on how to avoid the pitfalls.
Instead, they are trying to make a specific requirement that could ultimately have the outcome of distorting the data analysis performed by the appraiser.
Appraisers should analyse broad statistics, submarket stastics, and micromarket statistics and take into consideration the relative credibility/value of the statistical data for each.
The credibility of the data will be different in each macro market and in each micro market.
For example, my MLS has absolutely worthless market area-wide statistics regarding size of dwelling, days on market, and SP/LP ratios. In this case the concept that a large sample size will deminish the effects of bad data is not true. In some markets the local MLS has controls in place to minimize this type of error in their broad statistics.
Credible data regarding the above, in my market can only be obtained by tedious property by property analysis so one must limit that research to the small number of actually comparable properties. Granular, if you like.
On the other hand, my MLS has some control on the reported sales prices which, in a broad statistic, would be a large enough sample size to minimize error.
However, the analysis of sales price statistics are better for some submarkets here than for others because agents are more inclined to use allowed exceptions to reporting actual sales prices in certain submarkets.
My point is, that the client's directive should have been more general as to the appraiser's responsibility in analyzing market trends with some examples on how to avoid the pitfalls.
Instead, they are trying to make a specific requirement that could ultimately have the outcome of distorting the data analysis performed by the appraiser.
