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How Many Have Figured Out

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I think it would be more accurate to say that some types of statistical analysis have been recognized as valid appraisal techniques. It would be improper to say/claim that all types of statistical analysis have been recognized as valid methods for use in appraisal. For example, I could use statistical methods to derive a Gross Bathroom Multiplier (GBM), and I could then use that multiplier to project values based solely on bathroom count - the math behind that might be well established and accepted, but that would not mean that the GBM was an accepted appraisal method. :)

As I have posted before, my formal education is in math/physics, and I was working at an appraisal firm during my college days. In my Experimental Design class I almost always used real estate data as the basis for my projects, because it was so readily available to me. I have used modeling techniques in appraisal since the early 1980s. So, I am not opposed in any way to the application of statistical analysis. I was just being honest in stating that I did not understand the nature of the OP. Is it a quiz to see if anyone has the math background to accurately describe the methods being used? Or is it the opening salvo to presentation of novel methodology? It was/is not clear to me.

Yea, the problem is largely that when all is said in done, a strictly logical argument, supported by data, reason and some common sense is going to be fairly complex. Many appraisers are not that good at math, they are not good at long intricate procedures that discuss cleaning and preparation of the data, details about the subject market area, details about the statistical method, details about presentation.

Peer review breaks down, if you don't have qualified peers to begin with.

Now if you have good comps, and that means for every important feature in the subject you can find a couple of decent matches in recent sales in the subject market, you shouldn't have any problem. The problems start to occur, when the comps are not very comparable, when there are absolutely no comps for some of the important features of the subject.

And our old friend "The Peer" maybe says: "Well we can use the Cost Approach for the things that aren't covered by comparables". If the items under question are relatively new, we can make the extraordinary assumption that there is some relationship between what the market would pay and their depreciated value, at least if they are commonly used items. But what if it is not just the individuals items, but the configuration in the context of the property? What if some items are rather old, some moderately old and some maybe new? View issues, Style issues, functional utility issues, aesthetics, ..... You have so many intangibles, and of course tangibles, and some things that are a mixture of both. In your comps and in your subject. You loose control of the adjustments. They are all floating in some kind of hyperspace based on your secluded "historical records" alluded to in your reports.

Well I tell you what, appraisers dance around these issues when they have to. And, who can blame them? No one - because no one, absolutely no one has figured it out yet. Except maybe me, in at least certain cases (Even I can't really get very far if I'm in a neighborhood where the best R2 I can get is only 0.40).

And the funny thing is that some of the most complex properties to appraise, are right under your nose. It is not always evident they are complex, that they lack comps, until you do the inspection and start looking for them.
 
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What you present is a way to model prices but not necessarily values, or should I say not value in the way that is accepted for appraising. You should try promoting the idea to non appraisers, I personally don't see it as viable though. There are a plethora of AVM's and instant valuations including RPR from our own MLS service that work fairly well , or not well, depending... any of these programs are subject to the same issues.

Appraisal as a methodology does not need to be "fixed". Its a time tested method of establishing a market value model. The issues around training appraisers , client ordering and selection of appraisers overly influenced by turn time and fees do need to be fixed. THAT is what hurts appraising, not the methodology. Everyone wants to make $ with ways to make appraising "more efficient" or to "support adjustments", but nobody has a way to fix the real problems at hand.


You have things mixed up. A BPO, Broker Price Opinion, is for estimating the price a home should be listed for. This may in fact be much less than what the broker, agent and /or owner things they will actually be able to sell for.

The appraisers opinion of value as a certain date, is the fair market price he believes the house would sell for under all the usual assumptions. We typically adjust actual sales prices of the comps to remove concessions and so on, to turn them in to fair market prices and then proceed with the analysis. Brokers don't always base their decisions on an appraisers opinion of value, even if it is available. They can have other motives.

Now a statistician can market a technique one way or the other. What really is the difference, appraisers at the top commercial appraisal companies get loads of statistics from CAR sales reports and the like. They use actual sales prices all the time, and often without adjustment. It just depends on the degree of accuracy needed.
 
Commercial appraising can and should rely more on "math", the income approach and cap rates since that is the driving motivator of buyers. Though am sure those assignments can be very challenging, the fact that the buyers share a numbers based and income based motivation makes that aspect more straight forward.

Residential buyers don't all share the same motivation, and the properties are not compared using the common denominator of how much income they return. Which makes judgement of appraiser and pulse on market activity/trends a key ingredient.

One can base an adjustment on statics, the question then is it a "better" adjustment than an adjustment based on less quantity, but higher quality data? A problem with statistics a larger data sample is needed, thus results become based on a number of properties that are only marginally competitive to subject,.In addition, lots of raw data is "off" from MLS or public records. Is the appraiser going to verify and correct the data on 50 or 100 properties ? No. Still, Statistics might shine for some adjustments such as market appreciation but be "tone deaf" for others.

An appraiser has a built up knowledge bank from being in the market every day and analyzing sales, over a period of years. So they never "just" analyze 3 or 4 sold comps in a vacuum. I might pull 20 sales to consider, narrow them down to 8 possibles, research them, then eliminate 4 and use 4 as my sold comps. So more sales were analyzed than just those 4 comps.

Imo, the ideal adjustment is comprised from a number of sources: the sales comps themselves, right there on the grid, adjusted from paired sales and line item sensitivity to the subject. Then one can compare an adjustment to cost approach/depreciated cost. One can get feedback from surveying RE agents and other parties. One can look at market activity of listings and pending sales and apply that perspective. One can use statistics or RA as well. In some assignments, certain methods are more reliable or credible or possible than others.

Perhaps in future appraisals can include an AVM or stats as part of the report. The biggest problem is getting clients to allow enough time/ pay to better develop /support adjustments .

Selling your method by calling appraisers too stupid to understand it... when did that sales pitch ever work? The best inventions are simple to use. Electrical grids are complex but any idiot can turn on a light bulb / power up with a switch, which is why everybody is willing to pay for electricity.

Do a few sample appraisals with your method perhaps and post results.

We are aware appraisals are not 100% "accurate" in the value estimate, that is an accepted premise of appraising due to the nature of properties and buyers/sellers. Appraising is about solving a marketability problem, not solving a math problem. Math can be used as part of the SOW but we do not set out to solve a math problem, that is why the human perspective in integrating the various parts of the SOW drives assignment results.
 
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To be successful ( accepted, in demand) a system does not merely have to work ( because plenty of stat programs work), the system has to be easy to use, and for appraisal, easy to understand and thus explain to others reading a report.

I don't understand fully how my car works (other than a general idea ), but I dont have to, I press the ignition and put foot on accelerator and go. That is why hundreds of millions of people drive cars, because they are (relatively) simple to operate. Safe driving is up to the driver of course). Smart phones have complex inner computer but easy to use, swipe a finger, that's why they sell out world wide, my 2 year niece does it.

In appraisal if an RA or stat program is to succeed, it should be simple enough to use so that "stupid" appraisers can use. Bill Gates and Steve Jobs became billionaires because they designed complex systems but made them extremely simple to use. I bet thousands of brilliant programmers exist who designed great systems but lacked the easy to use consumer part.

In appraisals, it not only has to be simple to use, but simple to understand, aka how to isolate for a variable . While we don't have to understand how our car works to drive it, we do need to understand at least fundamentally, how an RA or stat program works to use it (per USPAP on AVM's ) Therefore the program needs to be able to be explained in those terms , allowing for appraisers to comment in narrative about how the results were derived/or can be replicated with the program, and then it is up to appraiser to make sure the results/adjustments jibe with market trends and other research.
 
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"Meaningful to intended users".

"The credibility of assignment results is always measured in the context of the intended use".

The 2-part test for acceptable SOW decisions includes the appraiser's peers (which is a defined term) for that assignment and the expectations of parties who are regularly intended users for similar assignments"

--------------------------

The foundation of the public trust in the appraisal profession starts with the appraiser-client relationship and it immediately extends to the intended users of those appraisal services.

The buyers and sellers who participate in the different market segments out there have varying levels of sophistication and they employ different methods and techniques in making their decisions. The buyer of a house operates on one level and the buyers of a 50-story office building or a hospital or a business park will operate on a completely different level and employ additional valuation tools and methodology. Same for the users of the appraisals of such properties. That much is self evident.

When an appraiser uses tools that their intended users don't understand and don't have the expertise to follow or check as a means of developing their own opinion of credibility then how is that outcome meaningful to those intended users?

The whole "you don't need to understand this, just trust me because I'm an appraiser", or "you don't need to understand this just trust this analysis because it's math" is the blatant appeal to authority; it is not the appeal to reason that enables the reader to develop their own confidence in the results. It's not instructional or informative to the reader.

Now obviously when you're dealing with market participants and intended users of the appraisals for market segments where everyone involved is that savvy then you're no longer pulling out the black box and saying "trust me". Those users can and do use the same tools in their own analyses - but that level of sophistication simply doesn't exist across all asset types.

Moreover, I *really* oppose handing appraisers labor-saving tools that are performing labor the appraiser doesn't understand and isn't capable of doing themselves without that tool. That's not what I call competency. When I built that freebie 1004MC worksheet tool for the SFR appraisers I also wrote an instructional PDF that explained exactly what it was doing and I spent hours answering email queries, and taught large groups of appraisers in live training sessions - not only how to operate it competently but explaining what it was doing. I didn't simply hand them the tool and tell them to trust the magic EASY button.

As appraisers we don't TELL our users what will be meaningful to their decision making. We INQUIRE as to what it will take to meet that objective and then we proceed accordingly. Luv it or hate it, appraisers didn't tell the users they needed the 1004MC; the users told the appraisers the 1004mc was what they needed in their appraisals. Which is still happening with many of the lenders other than Fannie.

There's no virtue - and we have not met our professional obligations - in writing the perfect appraisal report in French if your users don't speak French.
 
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... A problem with statistics a larger data sample is needed, thus results become based on a number of properties that are only marginally competitive to subject,.

It sounds like you are talking about parametric statistics, which is sensitive to the size of the data sample. In parametric statistics we are always concerned with how well the sample size REPRESENTS the underlying population, which is assumed to have the same usually normal distribution. Real estate data is lumpy, non-parametric. Use median, not average. We have different measures of spread. With non-parametric methods, the size of the sample really depends on the number of features you want to analyze. MARS typically requires 15 rows of data to get started; but you can duplicate some rows to get around that. I've built MARS models with 12 home sales. It creates an explanation for why there are differences in the sales, such as GLA or lot size, and provides estimates (adjustments) of their various contributions to value.


In addition, lots of raw data is "off" from MLS or public records. Is the appraiser going to verify and correct the data on 50 or 100 properties ? No.
Actually we do. You can put these and more into a database and write a script that goes through and makes changes to hundreds of rows. I go out and get GPS data for the addresses and merge that in. Also Census data. And create new columns off old ones that can't be analyzed directly. In fact, I have about 6 million sales in my database - and sometimes make changes to all of them at once.


Still, Statistics might shine for some adjustments such as market appreciation but be "tone deaf" for others.
Yes, that is a major point I make. But you have to remember, that on sales comps, the value impact of all features is "captured" by the sale price. That is your key to opening up the secrets to every sale. The Sale Price is absolutely critical.

An appraiser has a built up knowledge bank from being in the market every day and analyzing sales, over a period of years. So they never "just" analyze 3 or 4 sold comps in a vacuum. I might pull 20 sales to consider, narrow them down to 8 possibles, research them, then eliminate 4 and use 4 as my sold comps. So more sales were analyzed than just those 4 comps.
Well, it can be a lot worse than that.

Imo, the ideal adjustment is comprised from a number of sources: the sales comps themselves, right there on the grid, adjusted from paired sales and line item sensitivity to the subject.
Appraisers argue against paired sales. They are often hard to find, if they even exist. They mostly exist in text books and homogenous subdivisions. That is why the move to statistics.

Then one can compare an adjustment to cost approach/depreciated cost. One can get feedback from surveying RE agents and other parties. One can look at market activity of listings and pending sales and apply that perspective. One can use statistics or RA as well. In some assignments, certain methods are more reliable or credible or possible than others.
But watch out. It is easy to go off on a tangent on this stuff. Take your logic and apply it to some other sale to create a beautiful contradiction. The real problem is that calculating the depreciation for something in the subject is easy ... but exactly how do you do the same thing and be fair to the comps, for which you probably don't have detailed information. You can take depreciated cost and make an extraordinary assumption about market reaction, but that doesn't mean it is legit. Gas ranges cost from about $250 to over $25,000. For example, a high end 60" Thermador is $19K+. Some buyers don't like the maintenance costs associated with high end ranges. Many could care less. You in fact, can't just "assume" that market reaction reflects depreciated cost. (aka functional obsolescence) And so much of it depends on context. In a high end kitchen in a high end home, you just expect a high end range. But of course, some people are crazy enough to stick one of these in their run of the mill homes. And certainly expect an appraiser will add its depreciated value to the value of their home, without regard to "market reaction". And if you think you are going to find a $20K range in an average home in an average neighborhood, good luck on that. .... Of course this sounds like an impossible assignment. An experienced appraiser, would probably take 30% of the depreciated value and most appraisers would probably agree with that (I'm guessing). If the owner complains you have to tell him: "Well, when you move, take it with you. Or sell it." That's a clue. If someone buys the home, they could turn around and sell the damn thing. --- Yea but if they have to go to the trouble to sell it, that's a hassle, they don't have time to deal with .....

Perhaps in future appraisals can include an AVM or stats as part of the report. The biggest problem is getting clients to allow enough time/ pay to better develop /support adjustments .
Exactly WHY would they do that? AVMs have no intrinsic value, because you don't know how they came up with the vallue.

Selling your method by calling appraisers too stupid to understand it... when did that sales pitch ever work?

Unfortunately, a software company that wants to sell software to appraisers, may moe or less come to that conclusion in testing the options before massive investment. If "someone" asks them why they didn't take a more advanced approach that is EXACTLY the response you are likely to hear, whether justified or not.

The best inventions are simple to use.
God is or can be merciless. What is is what is. To some people something may seem ultra simple. To others, they don't get it no matter how much you explain. It's like Eratosthenes calculation of the circumference of the earth in 200BC. It was another 2000 years before most people understood it. And it is damn simple. The geometry you had in high school. Run a line through two parallel lines and the opposing angles are equal. Two parallel rays emanating from the sun. One hits Syene (Aswan), lighting the bottom of a deep well 100%, one day a year. At the same time the other hits any vertical object in Alexandria, 516 miles to the north and throws a shadow that is 1/50 the arc of a circle. Thus the arc from the center of the earth to Alexandria and Syene is 1/50 of a circle and the earths circumference is 50 times the distance from Syene to Alexandria.

To someone who can mentally create abstract representations of reality this is simple. But many people simply cannot create such abstract representations.

Electrical grids are complex but any idiot can turn on a light bulb / power up with a switch, which is why everybody is willing to pay for electricity.

But USPAP says you have to UNDERSTAND the statistical methods you use. If you want to use an AVM, you need to understand its internals - at least to some nebulous extent.

Do a few sample appraisals with your method perhaps and post results.
I can do that. But it is work, to do it good.

We are aware appraisals are not 100% "accurate" in the value estimate, that is an accepted premise of appraising due to the nature of properties and buyers/sellers. Appraising is about solving a marketability problem, not solving a math problem. Math can be used as part of the SOW but we do not set out to solve a math problem, that is why the human perspective in integrating the various parts of the SOW drives assignment results.

Of course. Although there are many reasons for valuation and measurement - not just marketing.
 
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"Meaningful to intended users".

"The credibility of assignment results is always measured in the context of the intended use".

The 2-part test for acceptable SOW decisions includes the appraiser's peers (which is a defined term) for that assignment and the expectations of parties who are regularly intended users for similar assignments"

--------------------------

The foundation of the public trust in the appraisal profession starts with the appraiser-client relationship and it immediately extends to the intended users of those appraisal services.

The buyers and sellers who participate in the different market segments out there have varying levels of sophistication and they employ different methods and techniques in making their decisions. The buyer of a house operates on one level and the buyers of a 50-story office building or a hospital or a business park will operate on a completely different level and employ additional valuation tools and methodology. Same for the users of the appraisals of such properties. That much is self evident.

When an appraiser uses tools that their intended users don't understand and don't have the expertise to follow or check as a means of developing their own opinion of credibility then how is that outcome meaningful to those intended users?

The whole "you don't need to understand this, just trust me because I'm an appraiser", or "you don't need to understand this just trust this analysis because it's math" is the blatant appeal to authority; it is not the appeal to reason that enables the reader to develop their own confidence in the results. It's not instructional or informative to the reader.

Now obviously when you're dealing with market participants and intended users of the appraisals for market segments where everyone involved is that savvy then you're no longer pulling out the black box and saying "trust me". Those users can and do use the same tools in their own analyses - but that level of sophistication simply doesn't exist across all asset types.

Moreover, I *really* oppose handing appraisers labor-saving tools that are performing labor the appraiser doesn't understand and isn't capable of doing themselves without that tool. That's not what I call competency. When I built that freebie 1004MC worksheet tool for the SFR appraisers I also wrote an instructional PDF that explained exactly what it was doing and I spent hours answering email queries, and taught large groups of appraisers in live training sessions - not only how to operate it competently but explaining what it was doing. I didn't simply hand them the tool and tell them to trust the magic EASY button.

As appraisers we don't TELL our users what will be meaningful to their decision making. We INQUIRE as to what it will take to meet that objective and then we proceed accordingly. Luv it or hate it, appraisers didn't tell the users they needed the 1004MC; the users told the appraisers the 1004mc was what they needed in their appraisals. Which is still happening with many of the lenders other than Fannie.

There's no virtue - and we have not met our professional obligations - in writing the perfect appraisal report in French if your users don't speak French.

There are various solutions to this problem. You may not agree with.

1. For difficult appraisals that require advanced methodology, we may need an additional license or designation that points to someone with competence to handle certain kinds of appraisals. We are nowhere near that point, because the industry at this point has absolutely no clue what is dealing with. Proof: The widespread use of parametric statistics. At the very top, we don't have competence. We need to pull in some highly qualified applied statisticians to work out the kinks and design a licensing and education program. Actuaries with good experience in non-parametric statistics would be good choices.

http://www.variancejournal.org/issues/10-01/145.pdf

2. Any appraiser should be able to assign the statistical part of his appraisal to another appraiser expert in the methods; and that appraiser could take on responsibility for defending that part of the appraisal. This seems very much like a doable solution. Things wold run a LOT more smoothly with this approach. I like the term "Valuation Engineer". He should be able to work off the inspections of the "Principle Appraiser" and take care of data preparation, analysis and construction of the statistical model. The Valuation Engineer may have his own extensive database of sales and property information. In fact, by pairing the Principle Appraiser with the Valuation Engineer, the Principle Appraiser may at the same time obtain access to the data, because they are both signing the appraisal. Legally, we need to check with MLSs on this but it seems doable.
 
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It looks like you're getting there - you develop the black box program, sell geographic franchises and provide training to a small cadre of super quants so they can sell the valumetrics reports to the unwashed masses of SFR appraisers operating in their zones. Then you sell the company to Corelogic as the exit strategy.

Cool story, bro. Tell it again.
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All joking aside, IMO we still have the problem that what can be considered "meaningful" is effectively a pull from the user, not a push from the appraiser.

Appraisers CAN do a lot more than we've been doing so far. Our problem with that is that we're capable and even willing to do a lot more than what our clients are willing to pay for. IRL the lenders have a natural aversion to paying appraisal fees that start with a "5" regardless of how much content is involved. The hybrids where they're choosing the lower fee over the more comprehensive SOW by the appraiser is a trend that's moving in exactly the opposite direction of bigger is better.

Then there's the point of diminishing returns to consider. If I do a Fannie grid using well-qualified and most comparable data and simply rank the subject in the range based on its attributes I wind up with a value conclusion. If I do a Fannie grid using well-qualified and most comparable data and simply use "the list' for adjustments I wind up with a value conclusion. If I do a Fannie grid and use a simple sensitivity analysis about the more comparable data to develop certain adjustments I wind up with a value conclusion. If I do a Fannie grid and use any of the off-the-shelf RAs with the more comparable data to develop certain adjustments I wind up with a value conclusion - and some kewl charts and graphs that nobody ever even looks at.

And lastly (for the sake of this discussion), If I do a Fannie grid and buy one a valumetrics analysis from Corelogic and incorporate that into my appraisal I also wind up with a value conclusion.

The question is, how much more useful to a lender is the appraisal report that has the heroic measures? Enough so to pay for it? Enough so to require it? I think it's safe to say that the answers will vary among these users. And inasmuch as they compete with each other - partly on the basis of costs and turn time - how much of an advantage is there for a lender to exploit between what they deem to be the "reasonable workproduct" that was the result of a well applied list vs the very best "reasonable workproduct" that was the result of the extra day delay in the turn time and the extra $25 cost to the original appraiser to produce?

Enough to show a profit above that $25 and the extra day delay because that's how long it took for your quant franchise to respond to the request? Maybe so, maybe not.

The illustration is in no way limited to this one type of innovation but figures in to one degree or another into every technology or methodoloy innovation that gets pitched to appraisers. Was it economically feasible and profitable to move from the handwritten drafts and IBM selectic typed appraisal reports on hard copy forms we bought from Forms and Worms? (yes) Was it worthwhile to switch from 35mm film to digital imagery and color printers? (yes) Was it worthwhile to switch from snail mail of 3 hard copies to emailing PDFs? (yes) etc., etc. Appraisers have a demonstrated track record for buying tech solutions to enhance their business *when it is profitable to do so*. But apart from that we are the most miserly consumers of gadgetry and "solutions" you'll ever deal with.

So, I guess what I'm saying is that it might work better for you to demonstrate the value of what you're advocating before you hit us with the sales pitch.
 
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It looks like you're getting there - you develop the black box program, sell geographic franchises and provide training to a small cadre of super quants so they can sell the valumetrics reports to the unwashed masses of SFR appraisers operating in their zones. Then you sell the company to Corelogic as the exit strategy.

Cool story, bro. Tell it again.
----------------------------

All joking aside, IMO we still have the problem that what can be considered "meaningful" is effectively a pull from the user, not a push from the appraiser.

Appraisers CAN do a lot more than we've been doing so far. Our problem with that is that we're capable and even willing to do a lot more than what our clients are willing to pay for. IRL the lenders have a natural aversion to paying appraisal fees that start with a "5" regardless of how much content is involved. The hybrids where they're choosing the lower fee over the more comprehensive SOW by the appraiser is a trend that's moving in exactly the opposite direction of bigger is better.

Then there's the point of diminishing returns to consider. If I do a Fannie grid using well-qualified and most comparable data and simply rank the subject in the range based on its attributes I wind up with a value conclusion. If I do a Fannie grid using well-qualified and most comparable data and simply use "the list' for adjustments I wind up with a value conclusion. If I do a Fannie grid and use a simple sensitivity analysis about the more comparable data to develop certain adjustments I wind up with a value conclusion. If I do a Fannie grid and use any of the off-the-shelf RAs with the more comparable data to develop certain adjustments I wind up with a value conclusion - and some kewl charts and graphs that nobody ever even looks at.

And lastly (for the sake of this discussion), If I do a Fannie grid and buy one a valumetrics analysis from Corelogic and incorporate that into my appraisal I also wind up with a value conclusion.

The question is, how much more useful to a lender is the appraisal report that has the heroic measures? Enough so to pay for it? Enough so to require it? I think it's safe to say that the answers will vary among these users. And inasmuch as they compete with each other - partly on the basis of costs and turn time - how much of an advantage is there for a lender to exploit between what they deem to be the "reasonable workproduct" that was the result of a well applied list vs the very best "reasonable workproduct" that was the result of the extra day delay in the turn time and the extra $25 cost to the original appraiser to produce?

Enough to show a profit above that $25 and the extra day delay because that's how long it took for your quant franchise to respond to the request? Maybe so, maybe not.

The illustration is in no way limited to this one type of innovation but figures in to one degree or another into every technology or methodoloy innovation that gets pitched to appraisers. Was it economically feasible and profitable to move from the handwritten drafts and IBM selectic typed appraisal reports on hard copy forms we bought from Forms and Worms? (yes) Was it worthwhile to switch from 35mm film to digital imagery and color printers? (yes) Was it worthwhile to switch from snail mail of 3 hard copies to emailing PDFs? (yes) etc., etc. Appraisers have a demonstrated track record for buying tech solutions to enhance their business *when it is profitable to do so*. But apart from that we are the most miserly consumers of gadgetry and "solutions" you'll ever deal with.

So, I guess what I'm saying is that it might work better for you to demonstrate the value of what you're advocating before you hit us with the sales pitch.

I have to keep repeating, that what I am concerned with are the difficult appraisals.

But let's just suppose what I am really concerned with is perfection. Appraisal for the sake of appraisal. Appraisal like pure mathematics, without regard to sales. Just as a discipline in itself to work towards a future that doesn't exist yet.

The lenders are a different story. You all should know that. They don't want just the cheapest appraisal they can get that satisfies regulatory requirements. They want a rubber stamp that does that.

So, "pure appraisal" like "pure mathematics" is without concern for application in the real world, as in, making money by selling a service that someone wants.

But studying "pure appraisal" helps you develop a better understanding of the issues involved, rather than just pushing them to the side.

The lack of understanding keeps building up, the markets become more complex at an accelerated pace with the advance in technology. No one is doing much about this. The Tower of Babel eventually collapses on itself. What does that mean: An appraiser is brought into court or before some board or before executives or wherever to explain just how it was he came to his value conclusion. And "they" really want to understand the logic. He explains. They drill him on the where and why and In the end, all he can do is say, "based on my experience". The whatever board is not satisfied and they go out and try to find someone who can prove it's all BS, only they can't find anyone. Everyone goes home with "based on my experience" ringing in their ears.

"Meaningful" is an interesting term that is distinct from truthful, relevant, logical and supported. You need to consider all issues here. If your audience lack competence, you can probably deceive them into thinking your arguments are meaningful, even if they are built on sand.

We are not going to get at the truth here any time soon. Looks like a slow painful process.

Read that book: https://www-bcf.usc.edu/~gareth/ISL/ISLR Seventh Printing.pdf. Section 8.2.3 and 8.3.1 are interesting and have to do with building a regression model, getting the residuals and then analyzing the residuals further. This is the BEST book by far I have come across on modern statistics for appraisers. It gets into all the latest techniques used by companies like Salford Systems (Minitab), bagging, random forests, boosting, ..... If there is one book to try to understand, this is your best bet. AND it has a lot of R examples/scripts using the good old Boston Housing Data Set.
 
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Read that book: https://www-bcf.usc.edu/~gareth/ISL/ISLR Seventh Printing.pdf. Section 8.2.3 and 8.3.1 are interesting and have to do with building a regression model, getting the residuals and then analyzing the residuals further. This is the BEST book by far I have come across on modern statistics for appraisers. It gets into all the latest techniques used by companies like Salford Systems (Minitab), bagging, random forests, boosting, ..... If there is one book to try to understand, this is your best bet. AND it has a lot of R examples/scripts using the good old Boston Housing Data Set.

Section 8.2.3.gif

Lets see if you do this by hand (calculator), how long will that take? :)
 
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