Computer Generated Value vs Human Brain
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Around 1992, representatives of LSI (long before they became completely useless as an AMC) visited us in California to discuss some way to involve automation (as in AVMs) to eliminate appraisals. When I pointed out that they had JUST THANKED me for saving them from a quarter of a million dollars over valuation as a result of pressure from one of their very influential customers, and that the very same issue had arisen from that customers misapplication of data AND their potential misinterpretation of that data, they understood the connection. A KNOWLEDGEABLE human appraiser was required to resolve the difference. It was my opinion then that no technology could ever adequately replace the ARTFUL application of SOME scientific techniques as well as experienced use and application of the best computer ever built…the human brain.
Sometimes my brain literally leaps to the “right” conclusions without me even being aware of the process. It takes short cuts. Now, in fairness, we all agree that we cannot rely on our personal experiences alone to achieve proper appraisal results. We temper and quite frankly usually suppress our “personal PCs” results in favor of more traditional techniques that are becoming more and more cumbersome as time goes on. The more that academia gets involved in appraisal analyses and critiques, the further away we seem to get from reliable products (UAD & 1004MC comes to mind).
We listen to self serving morons promoting the ‘era of big data’ and how wonderful computer science & technology have become. “Why there is virtually NOTHING they cannot do!” Or, so go the claims. Yet with all this high powered computer ability and giant databases economists still cannot accurately predict stock markets, or even what the GDP, or inflation rate or unemployment rates will be more than a quarter in advance.
Why would we believe these same folks can accurately analyze the often subjective motives of real buyers reactions to specific pieces of real estate in terms of price and marketability?
‘They’ have attempted to replace the ‘art’ and experience based part of our profession with the arbitrarily purely analytical side. Analyses that fall abysmally short of even being real science since they modify or make so many assumptions to support their conclusions that the results are meaningless.
Zestimate used to publish disclaimers about how limited their product was. Most similar services don’t even do that. Most users wouldn’t understand the explanations anyway…they are not trained appraisers.
Despite most states prohibiting the use of the terms “appraisal” or “valuation” by anyone other than appraisers, it seems that these internet wizards keep getting a pass for their products. It does serious harm to Americans and the general public by offering services that are so easily confused with meaningful USPAP compliant appraisals which have been determined to be the “minimum acceptable standards” for federally regulated transactions.
Why would anyone be so willing to accept something that does not meet MINIMUM standards?