How Many Have Figured Out

[RCA]

Bert I appreciate and understand your reply to my post above. You said nothing that surprised me or that I don't already recognize as a factor. Intangible benefits to real property can be minimized to some degree by an individual appraiser. None the less intangible benefits may not be easily recognized and segregated due to additional noise(more intangible) and then either be discarded or accounted for in the analysis.

I chuckled a little bit when Dwily and Jgrant jumped on your use of the term accurate. What was funny about this to me was your analogy was incorrect.

Lets change this up a bit. We know what a precision shooter does before they shoot at a target. Lets go though all the same motions, except we don't have a target yet!

Input all the data, then point down range, fire, and observe where the round impacted. Walk down range with a target(subject) and place it where the data input caused the round to impact.

Lets do this in another way. Same scenario. We take a rifle to the range. A Large Piece of Blank Paper(That is our neighborhood) is set up. You fire a round with unknown weight(subject). We then fire three different rounds. One round is 150 grain. 2nd round is 165 grain and the third is a 175 Grain(comps). Maybe we could estimate the weight of the subject round by drawing some intersecting lines.

Added Comment: I change this after J grant responded below. I think I have made my point clearer. Maybe not! I can further complicate the analogy. The three rounds of known quantity(weight) were fired on three different days(months even), and different atmospheric conditions.

You are simply thinking at a more "real" level than me. I do think there is a target. It is called "fair market value", or some variation thereof. It is of course not a fixed dollar amount. It is a rule based target. Yet, quite frankly the industry does not really understand what it is dealing with. All of their presumptions are based on simple cases; and do not take in vast number of conditions and events that occur in the real world. For example, as I mention in other posts, residential house markets often are not smoothly operating. They get stuck in an inertia at times when they should be moving up or down. The inertia, the inefficiency is often caused by appraisers, - but also by agents and the market as a whole. Rick Stillman mentioned a neighborhood in Colorado where "Silicon Valley Types" are moving in and thinks they are paying far to high of a price for property - one that doesn't make sense. Yet, just the fact that you've got these high income owners moving into the area pushes the prices up, pushes the market values up. If appraisers and agents in the area don't recognize that, it creates an inefficiency in the market. In this case agents apparently have reacted correctly, and itis the appraisers that are balking at movement in price. Now - let's get back to the "appraisal system" for lack of a better term. What is the target here? Should it be past adjusted sale prices or the offer? Common Sense is that an offer in a market where prices are moving up drastically is more reasonable than old sales. You can make different kinds of arguments here. You can be conservative or aggressive. And I see both kinds of appraisers here in the SF Bay Area. But, "market value" is a bit nebulous in these kinds of situations, the target is a bit nebulous. I think you have to develop your philosophy on these things and make your own abstract target. Being conservative is a safer approach, but agents who live in the real world often cringe at having to deal with a conservative appraiser, especially when their business is very much dependent on keeping sellers and buyers happy.

So, not surprisingly, you find appraisers who have been in this market for decades .... are either very aggressive or very conservative, depending on their clientele.

 

[Digger88]

How many of you actually have figured out, i.e. understand, how I adjust comps?

I consider the method very clever, if I don't say so myself, on par with Eratosthenes indirect measurement of the circumference of the earth 2300+/- years ago.

I was discussing this with one of the statisticians over at Salford Systems, and I'm not sure he understands it yet. But, then he is not an appraiser.

The clue is I use statistics to predict the value contribution of the tangibles, subtract if from the actual sale price to get an indirect measure of the intangibles. I do this for maybe 300 recent sales in a neighborhood. I rank the residuals form lowest to highest and give them scores 0.0-10.0 in 0.5 increments reflect the percentage of residuals of lower value, using an Excel macro, then replace the macros with the actual scores (so I can re-sort and they won't change), then create a function that maps the scores to the residuals and thus, all comps in your grid have the adjustments for tangibles based on the regression model, and a total adjustment for all intangibles, based on the difference between their residual score and the score the appraiser gives the subject for percentage ranking of the subject compared to all of the sales in the neighborhood. You can split that score adjustment however you want, but it doesn't change the total adjustment for the intangibles.

The method I use, can be used as a general method for measuring the value of almost any object with both tangible and intangible features.

In other words it is an exact measure of the total worth of the intangible features of a sales comparable; but done in such a way that the appraiser has things set up to do a fairly precise and meaningful estimate of the value for the subject property's intangible features. And, simple math says, you you can split those total adjustments up however you want between the condition, quality of construction, functional utility, view, aesthetic appeal - it won't make any different on the total adjustment to the subject.

Plenty of clues. See if you can understand the method.

similar to my out of my butt method i employ and we both arrive at the same value, lol j/k

 

[RCA]

similar to my out of my butt method i employ and we both arrive at the same value, lol j/k

I'll be putting out a sample report; I have one I send to clients, 70 pages using MARS ... a real report with all the important info redacted. But to put it out in the public, requires even more caution - and that may 4 weeks off depending on how much free time I have.

And you can show us your work of course.

 

[Digger88]

I'll be putting out a sample report; I have one I send to clients, 70 pages using MARS ... a real report with all the important info redacted. But to put it out in the public, requires even more caution - and that may 4 weeks off depending on how much free time I have.

And you can show us your work of course.

dude, im kidding. i respect you and your level of detail ive seen in your work, were good. i just live in cookie cutterville and dont have to come up with a way to form adjustments like you do. i couldnt do what you do and happily admit it.

 

[Carnivore]

You are simply thinking at a more "real" level than me. I do think their is a target. It is called "fair market value", or some variation thereof. It is of course not a fixed dollar amount. It is a rule based target. .

So, not surprisingly, you find appraisers who have been in this market for decades .... are either very aggressive or very conservative, depending on their clientele.

I agree...the target point is somewhere around the array of the three rounds. Maybe we would use more rounds of differing weights and even some with similar weights in keeping with your larger number that we would find in your regression model. Then fire the single weight round and it will locate somewhere in the array along a diagonal line.

dude, im kidding. i respect you and your level of detail ive seen in your work, were good. i just live in cookie cutterville and dont have to come up with a way to form adjustments like you do. i couldnt do what you do and happily admit it.

You could do this Digger...but I don't think the time and money you would have to invest in what Bert is talking about would earn you a premium. I will say this about what Bert is doing would set you apart from your peers. Your clients may like what your able to do ...but they won't reward you at all. Why because they have your competition
they can turn to who are cheaper. The work they put out is good enough for the gubermint. ...then its good enough for the lenders who are backed by the gubermint or quasi-governmental organizations.

So its a bit of a conundrum.

 

[George Hatch]

I can easily write SFR appraisals in narrative format, but as far as I know the only types of clients that *might* consider paying for the extra time/effort are some of the attorneys.

see tagline below---->

 

[J Grant]

I'll be putting out a sample report; I have one I send to clients, 70 pages using MARS ... a real report with all the important info redacted. But to put it out in the public, requires even more caution - and that may 4 weeks off depending on how much free time I have.

And you can show us your work of course.

If it takes you 4 weeks to do a sample report using your own program , that is not a viable product for working appraisers.

 

[Carlos Danger]

I'm looking forward to seeing it. Digger's too.

 

[Digger88]

I'm looking forward to seeing it. Digger's too.

you crazy if you think im posting mine, lol. just take one of your reports and do it in 2 hours less time, LOL!!

 

[djd09]

I would like to see any stat method used during the big bank fraud days. Not gonna work. Fake numbers, Fake loans, Fake prices, equals poor analysis.