Do You Have Two Appraiser Brains?

George Dell

George Dell

Owner of Valuemetrics at Valuemetrics
George Dell is the owner of Valuemetrics and author of the Analogue Blog. He is a graduate of San Diego State University with extensive post-graduate work in Economics, Statistics, Mathematics, Finance, and Information Systems, Certificate level work in Environmental Management and Geographic Information Systems (GIS). George has earned the MAI, SRA, and ASA designations.
George Dell

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Do You Have Two Appraiser Brains? Which Brain Wins?

So, do you have two brains?

One appraiser brain says you must be “independent, impartial, and objective.” (USPAP) It wants to be good. It wants integrity and to sleep peacefully at night.

But there’s another brain. It’s primal and wants to survive. It has other responsibilities: meet the bills, feed the family, pay the mortgage, and pay government taxes/fees. And recorded in this brain is that part of the standards which say: Do what your clients expect; do what everyone else does. As paraphrased, the sole guides to an acceptable scope of work.

The two brains may not talk to each other. Each has a different job. They proceed along parallel paths. One has feelings and beliefs and automatic responses. The other swears it’s being logical, clever, and correct. Each works fine.

And then . . .

You sign a certificate that states you have no preconceptions, no personal human bias or partiality, and that your results are not contingent on meeting the client’s expectations (desired result?).

The ethics rule says you must not mislead or defraud, even as the required definition of value may tend to do exactly that: mislead or defraud. (More to come on this topic.)

Even as the stated purpose of standards and professional intents is to “promote and maintain a high level of public trust”, (USPAP Preamble) your work must meet two requirements:

  1. The expectations of the users; and
  2. What your peers would do (right or wrong).

So, do you have two brains? One brain that wants you to feel good about yourself – your integrity, honesty, and ability to provide a result you really believe in. Or the other brain, that tells you: “I need clients to like me so they give me more business to feed my family, pay the rent, and buy a nicer appraiser car.”

Which brain wins? Maslow’s hierarchy of human needs clearly places the need for food, for safety, for family/friends/sex first. These drive human decision. These drive survival.

With basic drives assured, we’re able to enjoy self-esteem, confidence, achievement, respect for others, and by others. Then are we truly free human spirits, able to demonstrate morality, creativity, and spontaneity. Critical thinking improves, bringing effective problem solving, and a real acceptance of the facts/assumptions, logic, metaphors, and the stories that we tell (our comps).

Yet appraisers are driven down in Maslow’s hierarchy; by client expectations, and the excuse that everyone does it(“our peers”).

Six years ago, I formulated a personal mission for Valuemetrics and Evidence Based Valuation©. The mission statement: “To help prevent the next economic meltdown.”

Yes, our solemn signed certification puts us into an impossible human state. A state of rules, regulations, expectations, and peer pressure. A state that psychologists might say brings on dissonance. A conflict between one of our brains and the other.

One appraiser brain says Survive. The other says Respect Yourself.

How do you do both?

George Dell

George Dell

George Dell is the owner of Valuemetrics and author of the Analogue Blog. He is a graduate of San Diego State University with extensive post-graduate work in Economics, Statistics, Mathematics, Finance, and Information Systems, Certificate level work in Environmental Management and Geographic Information Systems (GIS). George has earned the MAI, SRA, and ASA designations.

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12 Responses

  1. Jesse Ledbetter on Facebook Jesse Ledbetter on Facebook says:

    The free market is completely incapable to produce credible market wide results – as proven by various housing collapses, mortgage fraud, builder fraud, the recent lowering of appraiser standards, etc. Until the appraiser community stands up vocally to the banking industry publicly and vocally, through unions, we will continue to see housing collapses, and be blamed for them.

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    • Baggins Baggins says:

      The free market is the ultimate regulator, as consumers allow companies to fail or succeed based on their merit. We are dealing with restriction of trade and access as companies lobby and create regulatory restrictions to open market access. In the absence of taxpayer backing these companies would behave very differently. aka the moral hazard of fdic insurance for mortgage loan products.

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      • Jesse Ledbetter on Facebook Jesse Ledbetter on Facebook says:

        The past 120 years have proven this false.

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        • Baggins Baggins says:

          Save your socialist dogma for the peanut gallery. You don’t know what you’re talking about. If you love socialism so much, move to China. The FED has been in control for nearly that amount of time. You’re not as well fake news informed as you think you are.

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    • Jesse, we will never know since what passes for ‘free market’ today isn’t free. It really means “Insider’s Market.”

      As a concept, nothing has proven remotely as successful for a nation’s long term economy as a reasonably regulated ‘free market’ (not a contradiction).

      An unrestrained “free market” that is allowed to engage in criminal activity, lie, cheat, steal, defraud and misrepresent to the detriment of the society that supports, embraces, and protects it-isn’t free at all. Economists have already carried this debate to all reasonable possible conclusions. Some protection is critical.

      The biggest problem for what we refer to as our ‘free market’ is that it takes so much time; usually triggered by catastrophic events for the market to self regulate.

      Jeb Hensarling (R-TX) has a new bill before Congress. It remains to be seen if this move to reduced regulation promotes insider preferential dealing; OR eliminates taxpayer corporate welfare & promotes corporate sanity. I think it’s at best a 50/50 proposition right now.

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  2. Unfortunately, the lending industry is doing its best to steer around appraisers altogether. There are still too many pesky honest appraisers that sometimes “kill the deal” as they like to say.

    Hybrids, Evaluations, Appraisal Waivers, and AVMs will keep making inroads. The mantra is faster and cheaper. What are appraisers getting for Hybrids, $50? The talent our industry has will slowly drain away…

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  3. Baggins Baggins says:

    Two brains? Interesting concept. How about this one, we’re surrounded by crooks with no effective check or balance to stop their criminal behavior.

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  4. Baggins Baggins says:

    This just in, more mortgage department layoffs.

    Factor in a fifth volume downturn on top of the tenth volume loss in waivers, and who knows what portion lost to hybrid. Those new guys whom got into this business in the past few years are about to have a reality check. The push by ancillary companies to retain market share by eliminating the licensed appraisers comprehensive detailed role will be in full swing soon.

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    • Bill Johnson says:

      Hey Baggins, can you confirm if Housingwire still allows comments? After I made some 1,200+ posts, with 700+ up votes, they blocked me some time back. After being blocked, I was able to read other parties comments, but as of late, from my view I no longer see ANY COMMENTS. Perhaps they’ve only individually blocked me from reading comments, or have stopped allowing comments all together.

      Seek the truth.

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  5. Mike Ford Mike Ford says:

    George, brilliantly written article until I saw the “human bias” insert. Nice touch. I’ll double check but I’m pretty sure my certifications do not say human bias. You wouldn’t be fudging to create the inference of a NON HUMAN system being superior would you?

    To answer your questions George, which brain do I use? That’s easy. The one with integrity.

    Being hungry does not give one a right to steal. It does not give a right to lie or to deceive. Being hungry does not mean where Maslow’s hierarchy exists, integrity suffers.

    It means that Men and Women with integrity find other options. Hungry people to whom integrity is important can always seek different jobs.

    IF you perceive bias & dishonesty has become so commonplace in appraisal that only big data can replace it, then you need to associate with different appraisers (or clients).

    As long as American real estate itself remains an imperfect market, then the ART of professional real estate appraisal can never be replaced by science alone. Evidence takes many forms. Appraisers with integrity already know that. We can’t be bought.

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Do You Have Two Appraiser Brains?

by George Dell time to read: 2 min