Knowledge losses over time

[George Hatch]

Many who cite their experience in their market as a necessary "skill" in appraisal are actually defending their reliance on preconceived ideas, which allow them to skip significant aspects of the appraisal process. A more useful skill is to be self-aware enough to avoid those presumptions and do the work, and that is much easier when working across different geographies and property types.

Where lies the hazard for the appraiser who says they have their finger on the pulse at the outset is they are establishing an unrealistic expectation. It only takes a single mistake or change in opinion later on to undermine their own credibility. Whereas "I don't know yet but I'll find out" is a more realistic expectation.

I think a lot of SFR brokers would be horrified if they understood how far the avg CGs area of operation covered.

 

[J Grant]

The main thing I learned during the 2008 crisis is that crime does pay.

 

[J Grant]

Another example is the use of online databases. When I started we were using MLS books, CMDC compilations and hardcopies of COMPS Inc data sheets. With the latter we would get an envelope with however many comps they published that month and then we'd file each of them in the area-specific binders. Then when we went to use them we would manually flip through all of them before selecting the ones we were going to use in our reports. It was that process of manually going through the many in order to get to the few that provided the context for better understanding those few.

Now it's all online and query based. So appraisers basically only see what they are looking for, not everything else. That's how we get an appraiser doing a 3min MLS query, picking the top 3 transactions by price and not even looking at anything else in that market area. Sure, you get a number at the end but it isn't because you actually have any understanding of what that market is doing.

That's also how brokers and borrowers get to thinking that if they can persuade the appraiser to swap in a couple different sales into their SC they can get a higher value. That's much more of a possibility when the appraiser actually doesn't know of those other sales because they never looked at them to begin with. Not a possibility when the appraiser saw everything first before narrowing to the ones they thought were most applicable "Yeah, I already saw all those. I just didn't think any of them were MORE SIMILAR to my subject than the sales I presented in my report"

That's not to suggest that query-based MLS runs are inherently a problem, but just a comment that how the appraiser structures their research makes a difference in the utility of the MLS queries they use.

Many good observations..I started right when they were phasing out the MLS books ( I hated them, though I liked going to the MLS library to look up plat maps and listen to the gossip). About a year after I started, online came on and computers took on the MLS listings, and public records came online.

An appraiser simply doing a quick query is a lazy appraiser. The fact that there is a wealth of MLS and public records online means we can do multiple searches, from a narrow filter to a wide filter. Imo the enemy to doing good research is tight deadlines and, in some cases, low fees. The deadlines in Res RE are horrible - whether private lender or AMC, it is similar-usually 7 days to complete an assignmen, but the clients expect the appraisal back 48 hours after inspection. That rushes things, especially if one is juggling multiple assignments and has other inspections to do . One can ask for more time, but ask too often, and they look elsewhere.

It takes me as much or more time now to finish an assignment as when I first started! The struggle on each assignment to uncover the MV is the same. A difference now is that the work is more time-consuming after the appraisal is handed in, with steps or an ROV. In the old days, one rarely heard back after it was delivered. Back the , 10 days -2 weeks was a normal turn time - true, there were messengers or drop off photos to print, but the time windows and deadlines were more forgiving.

 

[George Hatch]

I just went through an ROV situation a few weeks back. On an SFR, of course. I was doing a date of death appraisal on several properties and they included this one to maintain continuity. It was in original condition as of the prvious effective date but the family was doing a remodel to get the high value upon resale. No problem. Yes, that remodel probably will add another $700k when they go to sell. I never suggested otherwise, but that wasn't what I was appraising.

They didn't understand that my subject in 06/2025 had to be valued in that condition, not in the 05/2026 remodeled condition. So they sent me their selection - all remodeled, of course. They had a couple more issues (I valued the lot based on usable lot area and not gross lot area and I didn't attribute a view amenity to what amounted to a natural drainage course w/ trees to the rear of the lot. Then they characterized it as a "Technical Data Reconciliation and ROV" which annoyed me because I didn't make any factual errors.

Meanwhile I'm appraising all sorts of non-standard properties and I virtually never get hassled for those. My theory is that the simpler the appraisal problem the more critics there are for the solutions. Everyone and their dog has an opinion about the SFR values but nobody has anything to say about the solution to a 10,000sf preschool or a 1300sf live/work remodel that was originally built in 1960.

 

[Sadie]

While not wrong, and the search function has been useful at times, this was more to ask those that have lived through prior downturns as appraisers what their experience was at either watching certain thing that were important before the crash that the profession moved on from or “forgot” (wether because the legal changes put in place by the federal level or just the wheels of time kept spinning).

An example that I’ll take from my grandad when he started appraising: When was the last time any of y’all were able to send in a report on an index card or similar with printed photos/polaroids of your comps attached? What made that inert and out of fashion outside of better tech?

Were there tricks that are actually good that your supervisors taught you that you don’t see being taught now?

Well, today you don't have to drive all over to deliver your (3 copies) reports. Or stick them in an envelope and mail them. After you have glued all your photos on and used the rub off Forms and Worm arrows. And hand signed the reports. Electronic delivery has been a god send. The last client I delivered my 3 copies to finally went electronic during the pandemic.

 

[Sadie]

The main thing I learned during the 2008 crisis is that crime does pay.

Only for a while and only if you are too big to fail.

 

[Sadie]

Another example is the use of online databases. When I started we were using MLS books, CMDC compilations and hardcopies of COMPS Inc data sheets. With the latter we would get an envelope with however many comps they published that month and then we'd file each of them in the area-specific binders. Then when we went to use them we would manually flip through all of them before selecting the ones we were going to use in our reports. It was that process of manually going through the many in order to get to the few that provided the context for better understanding those few.

Now it's all online and query based. So appraisers basically only see what they are looking for, not everything else. That's how we get an appraiser doing a 3min MLS query, picking the top 3 transactions by price and not even looking at anything else in that market area. Sure, you get a number at the end but it isn't because you actually have any understanding of what that market is doing.

That's also how brokers and borrowers get to thinking that if they can persuade the appraiser to swap in a couple different sales into their SC they can get a higher value. That's much more of a possibility when the appraiser actually doesn't know of those other sales because they never looked at them to begin with. Not a possibility when the appraiser saw everything first before narrowing to the ones they thought were most applicable "Yeah, I already saw all those. I just didn't think any of them were MORE SIMILAR to my subject than the sales I presented in my report"

That's not to suggest that query-based MLS runs are inherently a problem, but just a comment that how the appraiser structures their research makes a difference in the utility of the MLS queries they use.

I do not miss those books. I was so excited when MLS went online. But it was only installed on one computer in our office so while you waited your turn, you looked at the books.

 

[George Hatch]

Dial up modems
DAMAR was charging $1/minute (back when $1 actually meant something). That was so long ago that I had forgotten

 

[gregb]

I think a lot of SFR brokers would be horrified if they understood how far the avg CGs area of operation covered.

Simi Valley to Paso Robles for multi family. Three MLS's but no Costar!

 

[Carnivore]

So how does PAREA fit into in this discussion?