TAF and USPAP - great analysis

[Joe Flacco]

I strongly believe that both Fannie Mae and Freddie Mac are composed of people at all levels who are absorbed in doing little more than keeping their jobs and making a good salary for as long as they can. They are lucky to work for such solid corporations and must be happy with themselves.

- Which is probably the best explanation for why they have their head in the sand on an almost permanent basis, see no further than necessary, learn no more than necessary, do no more than required, and basically most likely focus on only what they need to do to get along with their management hierarchy and their peers where they work.

How can anyone object to that?

Social Responsibility? --> That's a good question I have never looked into. I don't have time. But I would guess they are largely shielded by Federal Government mandates and all kinds of built-in rules and regulations.

As a result, you are wasting your time talking to them. If you could find someone at these corporations to seriously listen to your recommendations, they would not be able to do anything, even if they were high-level managers - without risking their jobs. - And that is not going to happen.

I don't know what you are observing but a lot of possible "risking their jobs" ideas are being implemented at the GSEs. GSEs are all in on data science and the kinds of solution that your are proposing. The fact that they are not listening to your idea doesn't mean it is due to bureaucracy or management hierarchy. It means they think your idea sux.

If you think DW hasn't been reading what you are saying like the rest of us for however long you have been talking about MARs then message him directly. He will reply to you. Maybe he will even get you inside to research value engineering and propose solutions.

 

[RCA]

What you are saying is your model is better than appraisers using their judgement without market evidence for adjustments.

Can you upload a sample report using MARS?

1. The most important market evidence are the sale prices, which leads to net sale prices. When appraisers can use their judgement to directly estimate adjustments, especially on variables that do not have objective measurements from external sources (which includes the appraiser's objective measurements), then this sale price evidence is effectively skirted. That is how we get these 50% differences between appraisers on property appraised with the same effective date.

2. The RCA does not allow adjustments to be directly adjusted by the appraiser. They are always calculated from the value contributions as the subject_value_contribution[for feature X] - comparable_value_contribution[for comarable N].

3. Now in fact, the appraiser has to esitmate the value contributions (not adjustments) of the unmeasured variables such as condition, quality, view, design, aesthetics, fuctional utility and so on,, --- but all of these value contribution have to add up to the residual for the associated comparable. In the case of the subject property, it does have a sale price in acutality or through hypothetical condition, so its residual has to be somewhat subjectively estimated by the appraiser. In fact, it is only this estimate of the residual for the subject that allows for any subjective judgment on the part of the appraiser that can impact value. Yet, even in this case, the subject residual depends on its ranking against ranked comparable properties, and it is pretty evident if the appraiser has ranked it too high or too low. And further, since the impact of unmeasured values on value in an area like the SF Bay Area, with a good R2 of 0.80 or 80% is about 20%, then the appraisers ranking of the subject against the comparables can be off by as much as +/-10% and only have an effect on value of +/-2%. I would argue that in most cases, getting accuracy well under 1%, is possible. OF COURSE, understand I work in a state with relatively good MLS data. Yet, what is most important is the data on the subject, for which the appraiser has complete control. Errors in. the comparable data, given enough comps, with reasonable accuracy from the MLS, should generally cancel each other out and not have that much impact on the regression model.

A complete report is possible, ... and I have put up snippets of reports here and there on this forum in the past.

But what good are such example, if you don't know how to use R/earth. Do what I did, jump in and try it yourself and apply it to your data. That's what I did when I started using it back in 2003/2004.

 

[RCA]

I don't know what you are observing but a lot of possible "risking their jobs" ideas are being implemented at the GSEs. GSEs are all in on data science and the kinds of solution that your are proposing. The fact that they are not listening to your idea doesn't mean it is due to bureaucracy or management hierarchy. It means they think your idea sux.

If you think DW hasn't been reading what you are saying like the rest of us for however long you have been talking about MARs then message him directly. He will reply to you. Maybe he will even get you inside to research value engineering and propose solutions.

I know some who have or had a Ph.D. in nuclear physics working for them. There was this one guy like that from Moscow. That's not the issue. There are hundreds of thousands of reports from all over the US, and they have to deal with 50,000+ idiot appraisers. That is their reality. They deal with, above all, the average report and the average way of doing things. They have to get work done; the banks need them to buy loans so they can, in turn, make more loans. There is politics involved. There is immense pressure to satisfy the public and, consequently, politicians. They must keep their good, stable jobs to pay their house mortgage in Ft Worth or other locations. They are busy bees whose whole objective in life is to lead the good life, i.e., keep their jobs and avoid being seen as an obstacle to getting work done. So, they are not at all interested in making waves if it impacts their organization's central goal(s).

They follow their crowd, and their crowd includes them and a bunch of other idiots who wouldn't understand anything that your average appraiser couldn't understand. It is a crowd mentality reality. And, not surprisingly, their top-level managers are sucked into that same crowd mentality and know that they must deal with said reality.

You can be sure some such people may be naturally intelligent and motivated. But they live in a twisted reality where their impact on the survival of mankind for millennia is the furthest thing on their minds. What they are concerned with is the here and now: keeping their jobs for another year and another year and another year – until they retire and are finally free of the yoke around their neck.

It's all the fault of the incompetent teachers in our schools. For about 30 years, teachers have become, for the most part, irresponsible druggies, failing to instruct their students on social responsibility, ethical behavior, and morals. It’s not like the far-distant past when I was a kid, growing up in a rural area. A time when there was time to philosophize about life in general. - When at least 20% of teachers had useful real-life experiences to share with their students.

Anyway, yes, the people at Fannie Mae are mostly just interested in keeping their jobs. To that end, they also strike alliances with business people in the private sector, I would assume, in exchange for favors that will ultimately make them a bit wealthier. That is to say, they engage in business politics with companies outside of their employers to further enhance their wealth.

It is all about (by and large) keeping their jobs and M-O-N-E-Y.

Admittedly, I have left out many things; the above is just one facet of reality.

Well, if the above is the case, then what is wrong with appraisers following the crowd?

Well, appraisers are at the bottom of this heap. And you are an appraiser. Now, some, probably most residential appraisers, have no better alternative than what they have. They may want to live in some rural area where the only job they could get is being an appraiser. And they may be able to survive on that. Others may live in extremely high-cost-of-living areas in some states like California and be looking for better alternatives. But, appraisers are at the bottom of the heap, not smart enough to rise above their status – when Fannie Mae has Ph.Ds in nuclear physics from the University of Moscow.

So, in the end, I haven’t responded to your post because that presumes “my idea sux”—because it makes no sense if you cannot comprehend MARS or the RCA method. And I don’t think you can—by a long shot.

I look at life differently than you or most of the so-called leaders in the profession: Most, even in the best cases, are Fannie Mae-type people (no coincidence) who are unscrupulous and primarily interested in M-O-N-E-Y. Well, that is the American way: Nothing is wrong with that!! Or you might say: “Not at my expense!!” Or you might ask: Where does this all lead? The better questions you will ask yourself, the more rotten the scene will look. If you are brilliant, you know you are most likely wasting your time. But, then again, some of us enjoy fighting and arguing – perhaps to the death or until we just have had enough of it and pull out a fifth of Black Label, forget reality, watch a good movie, listen to some good Gypsy/Flamenco “Apple” music and enjoy life for a while. Then maybe go for a 10km jog along the beach. Or whatever comes to mind. Maybe read a book. Maybe write useless posts to idiots on appraisers' forums;-- For some of us, that is the meaning of life.

 

[Joe Flacco]

1. The most important market evidence are the sale prices, which leads to net sale prices. When appraisers can use their judgement to directly estimate adjustments, especially on variables that do not have objective measurements from external sources (which includes the appraiser's objective measurements), then this sale price evidence is effectively skirted. That is how we get these 50% differences between appraisers on property appraised with the same effective date.

2. The RCA does not allow adjustments to be directly adjusted by the appraiser. They are always calculated from the value contributions as the subject_value_contribution[for feature X] - comparable_value_contribution[for comarable N].

3. Now in fact, the appraiser has to esitmate the value contributions (not adjustments) of the unmeasured variables such as condition, quality, view, design, aesthetics, fuctional utility and so on,, --- but all of these value contribution have to add up to the residual for the associated comparable. In the case of the subject property, it does have a sale price in acutality or through hypothetical condition, so its residual has to be somewhat subjectively estimated by the appraiser. In fact, it is only this estimate of the residual for the subject that allows for any subjective judgment on the part of the appraiser that can impact value. Yet, even in this case, the subject residual depends on its ranking against ranked comparable properties, and it is pretty evident if the appraiser has ranked it too high or too low. And further, since the impact of unmeasured values on value in an area like the SF Bay Area, with a good R2 of 0.80 or 80% is about 20%, then the appraisers ranking of the subject against the comparables can be off by as much as +/-10% and only have an effect on value of +/-2%. I would argue that in most cases, getting accuracy well under 1%, is possible. OF COURSE, understand I work in a state with relatively good MLS data. Yet, what is most important is the data on the subject, for which the appraiser has complete control. Errors in. the comparable data, given enough comps, with reasonable accuracy from the MLS, should generally cancel each other out and not have that much impact on the regression model.

A complete report is possible, ... and I have put up snippets of reports here and there on this forum in the past.

But what good are such example, if you don't know how to use R/earth. Do what I did, jump in and try it yourself and apply it to your data. That's what I did when I started using it back in 2003/2004.

A 50% difference between appraisals means at least one of the two are incompetent.

In most cases, it is one or two variable that make up like 80-90% of the differences in sale prices. And these larger adjustments are what matter. You seem to be saying the same thing and saying that all the smaller variables that don't really matter are residuals.

All of your opinions that MARs is better than traditional appraisals is based on comparison with the lowest skilled practitioners.

The right way for most to think about your methods is to lump it in with all the other methods similar to avms. Put results of your method next to results of someone like George Dell. Then that is the range for your type of valuation.

From my point of view, your method, George Dells method, core logic,.Zillow, redfin estimate, it is all in the same category. Just as you are sure you have the best method, all these other groups think they have the best method. And if you look at the range values developed by these five, the range is is most cases going to be wider than two or three traditional appraisals on the same.property.

 

[RCA]

A 50% difference between appraisals means at least one of the two are incompetent.

In most cases, it is one or two variable that make up like 80-90% of the differences in sale prices. And these larger adjustments are what matter. You seem to be saying the same thing and saying that all the smaller variables that don't really matter are residuals.

All of your opinions that MARs is better than traditional appraisals is based on comparison with the lowest skilled practitioners.

The right way for most to think about your methods is to lump it in with all the other methods similar to avms. Put results of your method next to results of someone like George Dell. Then that is the range for your type of valuation.

From my point of view, your method, George Dells method, core logic,.Zillow, redfin estimate, it is all in the same category. Just as you are sure you have the best method, all these other groups think they have the best method. And if you look at the range values developed by these five, the range is is most cases going to be wider than two or three traditional appraisals on the same.property.

In all my years on this forum, I have never had anyone ask me how to get Salford System MARS or R/earth to work. I get a ton of foolish criticism like yours from many appraisers who, as far as I can tell, have never used MARS.

On this forum, you go on and on with your biased opinions ( they don't rate as criticism because they lack detailed logic). Any time I spend responding has no other productive purpose than - like I often say - to serve as an exercise in writing for myself --- while I wait for R to finish up some long-running routing and while it is eating up 22 of the 24 cores on my Mac Studio Ultra.

Someone here could ask my advice on setting parameters for earth or problems they encounter. - But absolutely no one from the 50,000+ members. I do get indications that some are using MARS. Emails on the side. Only indications. I would bet no more than 100 appraisers in the US are using MARS at this time. Yes, it is far more time-consuming than it is worth for most, especially those trying to figure out how to use it. There is a significant time investment to developing competence with R and MARS.

But responding to your posts does not accomplish much, except to wake my mind to thinking about some real problems.

Anyway, I am not comparing myself to the lowest-skilled practitioners. As I have often stated, even the best reports I have come across only have basic math when it comes to appraisal. The best are locked into the same routines that just about everyone else uses.
You are incredibly biased in your opinions, probably because you are heart just cooking up excuses not to investigate new things like new statistical methods or R. It would be far too stressful. Why are you even concerned about posting me? What is your motivation? That is kind of interesting. Why? Why? You are a bit rare. It's a bit unique. Anyway, whatever your motivation, you seem to be just saying over and over: "This crap doesn't buy me anything. I can do a good job without it." Why do you repeat the same message over and over? You are just defending your territory as you best know how to. Nothing more than that. You don't care about changing your way of appraising, only protecting it. You have this enemy outside the gate staring at you, and you are upset. Your defensive instincts are set in motion, and you will do anything to protect your property and family. Just instinct. But little to no intelligence.


So, I may get fed up with your super defensive antics and put you on ignore. Or you could put me on ignore. I probably won’t put you on ignore for now. I am waking up, foggy mind, not ready to return to my more critical writing. I need some green tea. I need to lift weights. I need to get the blood flowing.

So, I may just get fed up with your super defensive antics and put you on ignore. Or you could put me on ignore.

=== BY THE WAY ===

If any one wants more insight into Fannie Mae, a good source are the employee reviews of the company on glassdoor.com. Examples:

"- highly political organization in terms of promotions, job changes, etc- very few job openings bc turnover is low. Best chance at a promotion is through those arguing for it on your behalf. Also pretty limited opportunities throughout the yr based on budget restrictions and they only allow the promotional process to occur twice a year at specific intervals."

"Focus on risk management and compliance limits opportunities for creativity and innovation"


"Middle level management is horrible. Lot of politics"

"- old tech stacks and code bases- salary increases are few and far between- constant feeling you *could* be laid off..."

"
Everything at FNMA is about appearances with no concern for function:
1. Managers prioritize sexy projects with questionable value rather than making sure their core products don't fall apart.
2. Cybersecurity is mostly theater and requires insane workarounds with chains of virtual machines that often break and are extremely slow when they do work.
3. Upper management's solution to everything is to create additional bureaucracy that covers things that were already covered.
4. Documentation usually exists, but it is designed by and for technically incompetent audiences. It's also stored on random confluence pages that aren't kept to date.

Advice to Management
The answer to your problems isn't more redundant systems of paperwork. Have skip-levels with actual practitioners, not their politician managers, to learn why nothing gets done. The 'town halls' where you give stump speeches and evade questions don't work. The survey results seem clear, but you need to consult with actual practitioners in designing their solutions. Their managers don't work with these systems and haven't learned any new technologies since 2000."


There are 2,600 such reviews. Make sure to choose "Fannie Mae" for the corporation and set the Location Filter to "Ft. Worth".


AS AN APPRAISER, YOU REALLY LIVE IN A WORLD OF STAGNATION, OCCASIONAL REGRESSION AND FAKE REALITY. THE GSEs GENERATE FAKE REALITY TO SUIT THEIR INNER ORGANIZATIONAL NEEDS OF THEIR INCOMPETENT MANAGERS. FOR RESIDENTIAL APPRAISAL, THE GSEs ARE THE PRIMARY SOURCE OF EVIL.

 

[Fernando]

You have a very simplistic understanding of things. Data mining was engineered to work with real world data that typically has a lot of noise. Now the petri dish is somewhere where you can find some simple patterns.

Yes, each sale has unique circumstances. But isn't that so trivial?

Even if you have several sets of objects, events, or people, they share possession of specific attributes. We can find values associated with attributes that have a certain correlation with a target variable (such as Sale Price or DOM), between 0 (no correlation) and 1 ( perfect correlation). Where there are correlations, we can use data mining (e.g., MARS) to define the relationship between the attribute values and the target variable (e.g., Sale Price). This model can be used to estimate the target variable were it does not exist. This can be done entirely objectively. It can be replicated by different people if the data is shared.

We want to avoid the appraiser's so-called judgment as much as possible to reduce the probability and degree of bias as much as possible. We can then promise those involved in the outcome of our valuation that the result is as fair as humanely possible.

So, just about everything you have stated indicates that you don't have a clue about what bias is, that it is to be avoided, why it should be avoided, and so on.

I don't think you are doing yourself any favors by posting opinions like this. ....

I grew up with smart people. I noticed smarter they are, the more arrogant they get to point of obnoxiousness and become social outcast.
They are smart but they miss the overall picture and bottom line is to make money. Not many Mensa become billionaires and best they work under the billionaires.
Your MARS thing is nice to predict and estimate home values like Zillow but its not practical for appraising purposes.
I hate to tell you but the time and effort you have invested in MARS with its many flaws will not work for appraisers.

 

[Joe Flacco]

In all my years on this forum, I have never had anyone ask me how to get Salford System MARS or R/earth to work. I get a ton of foolish criticism like yours from many appraisers who, as far as I can tell, have never used MARS.

On this forum, you go on and on with your biased opinions ( they don't rate as criticism because they lack detailed logic). Any time I spend responding has no other productive purpose than - like I often say - to serve as an exercise in writing for myself --- while I wait for R to finish up some long-running routing and while it is eating up 22 of the 24 cores on my Mac Studio Ultra.

Someone here could ask my advice on setting parameters for earth or problems they encounter. - But absolutely no one from the 50,000+ members. I do get indications that some are using MARS. Emails on the side. Only indications. I would bet no more than 100 appraisers in the US are using MARS at this time. Yes, it is far more time-consuming than it is worth for most, especially those trying to figure out how to use it. There is a significant time investment to developing competence with R and MARS.

But responding to your posts does not accomplish much, except to wake my mind to thinking about some real problems.

Anyway, I am not comparing myself to the lowest-skilled practitioners. As I have often stated, even the best reports I have come across only have basic math when it comes to appraisal. The best are locked into the same routines that just about everyone else uses.
You are incredibly biased in your opinions, probably because you are heart just cooking up excuses not to investigate new things like new statistical methods or R. It would be far too stressful. Why are you even concerned about posting me? What is your motivation? That is kind of interesting. Why? Why? You are a bit rare. It's a bit unique. Anyway, whatever your motivation, you seem to be just saying over and over: "This crap doesn't buy me anything. I can do a good job without it." Why do you repeat the same message over and over? You are just defending your territory as you best know how to. Nothing more than that. You don't care about changing your way of appraising, only protecting it. You have this enemy outside the gate staring at you, and you are upset. Your defensive instincts are set in motion, and you will do anything to protect your property and family. Just instinct. But little to no intelligence.


So, I may get fed up with your super defensive antics and put you on ignore. Or you could put me on ignore. I probably won’t put you on ignore for now. I am waking up, foggy mind, not ready to return to my more critical writing. I need some green tea. I need to lift weights. I need to get the blood flowing.

So, I may just get fed up with your super defensive antics and put you on ignore. Or you could put me on ignore.

=== BY THE WAY ===

If any one wants more insight into Fannie Mae, a good source are the employee reviews of the company on glassdoor.com. Examples:

"- highly political organization in terms of promotions, job changes, etc- very few job openings bc turnover is low. Best chance at a promotion is through those arguing for it on your behalf. Also pretty limited opportunities throughout the yr based on budget restrictions and they only allow the promotional process to occur twice a year at specific intervals."

"Focus on risk management and compliance limits opportunities for creativity and innovation"


"Middle level management is horrible. Lot of politics"

"- old tech stacks and code bases- salary increases are few and far between- constant feeling you *could* be laid off..."

"
Everything at FNMA is about appearances with no concern for function:
1. Managers prioritize sexy projects with questionable value rather than making sure their core products don't fall apart.
2. Cybersecurity is mostly theater and requires insane workarounds with chains of virtual machines that often break and are extremely slow when they do work.
3. Upper management's solution to everything is to create additional bureaucracy that covers things that were already covered.
4. Documentation usually exists, but it is designed by and for technically incompetent audiences. It's also stored on random confluence pages that aren't kept to date.

Advice to Management
The answer to your problems isn't more redundant systems of paperwork. Have skip-levels with actual practitioners, not their politician managers, to learn why nothing gets done. The 'town halls' where you give stump speeches and evade questions don't work. The survey results seem clear, but you need to consult with actual practitioners in designing their solutions. Their managers don't work with these systems and haven't learned any new technologies since 2000."


There are 2,600 such reviews. Make sure to choose "Fannie Mae" for the corporation and set the Location Filter to "Ft. Worth".

I am engaging with you because you mentioned my name and quoted me several times. Probably at the request of your minion mejaps. Don't mention my name and I won't be commenting on your nonsense.

Anyway, the way you talk about traditional appraisal methods just shows you lack traditional appraisal skills and do not understand residential real estate. It shows that you are probably one the lowest skilled practioners and that is why you think this other way is so great.

Your issues with the GSEs.. just send DW a message. He is very accessible for someone in his position. All your whining and crying about "I am so smart and everybody is so dumb" and "why is no one paying attention to me" is just sad.

 

[Fernando]

I am engaging with you because you mentioned my name and quoted me several times. Probably at the request of your minion mejaps. Don't mention my name and I won't be commenting on your nonsense.

Anyway, the way you talk about traditional appraisal methods just shows you lack traditional appraisal skills and do not understand residential real estate. It shows that you are probably one the lowest skilled practioners and that is why you think this other way is so great.

Your issues with the GSEs.. just send DW a message. He is very accessible for someone in his position. All your whining and crying about "I am so smart and everybody is so dumb" and "why is no one paying attention to me" is just sad.

Without good input data, MARS will not be accurate for appraisals.
Fannie has more reliable data like condition and quality ratings to do better computer model in predicting home values.
Best MARS can do is give less accurate estimates like Zillow.

 

[Joe Flacco]

Without good input data, MARS will not be accurate for appraisals.
Fannie has more reliable data like condition and quality ratings to do better computer model in predicting home values.
Best MARS can do is give less accurate estimates like Zillow.

I don't give a **** about MARS.

 

[RCA]

I grew up with smart people. I noticed smarter they are, the more arrogant they get to point of obnoxiousness and become social outcast.
They are smart but they miss the overall picture and bottom line is to make money. Not many Mensa become billionaires and best they work under the billionaires.
Your MARS thing is nice to predict and estimate home values like Zillow but its not practical for appraising purposes.
I hate to tell you but the time and effort you have invested in MARS with its many flaws will not work for appraisers.

There is certainly some truth in some of the above; I have stated the same. But you are indeed simplistic, and when you say you grew up around “smart” people, you imply you are aware that you are not so smart. Because, if they are as arrogant as you say - they probably made you aware of your limitations from a young age. So, you are better off than other such people as yourself, lacking in intelligence. It probably made you a better person. Your humility, which is a rare and valuable trait, is evident on this forum. Other snobs on the forum are always making fun of you because of the humbleness you show, - but you are smarter because of that, IMO.



However, although you know your place, you defend yourself in this post by acting arrogantly to those you regard as "smart" and saying they are not so smart. That is your arrogance. Although, actually, such "Arrogance of Idiots" is unfortunately quite commonplace, especially on this forum. It's a behavior that we all need to work on changing. However, making a statement of fact can easily be considered arrogant by someone on the other side of the fence.

I have been asked to review reports. But if I had to, I would use my methods, which would hardly be fair to the other appraisers. So, I don’t do reviews. To do so would mean stepping down to a level of appraisal I'm afraid I have to disagree with. I could decimate most other appraisers’ reports in this area using MARS and RCA. But like I said, that would not be fair. If other appraisers are “competent” at using the methods the Appraisal Institute taught them, they may be doing their best within the constraints of what they were taught. And even if they feel they could do better with other methods, they may decide there is nothing to be gained. And they would probably be right in the sense of financial reward.