Is It Possible to “Prove” an Adjustment?
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We read articles and advertisements on how to prove an adjustment. Is this possible?
How wonderful it would be. To prove an adjustment, just push a button and bam! Out comes the correct answer. How could we have we missed this?
…prove an adjustment, just push a button…Of course, if such a simplistic and exact answer was possible – anyone could push that button. An AVM run, a BPO agent, an “evaluator”, or anyone else. Who needs all that USPAP competence and integrity stuff? Even a lender-appointed hybridized “field inspector” could just push the button.
The whole process could even skip working with the licensed appraiser completely! Except there’s sometimes still a need for a signed certificate attesting to the believability, trueness, correctness, unbiasedness, and independence of the “opinion.” Would this be a problem?
How hard is it to find a licensed appraiser to sign? In recent years we saw a surge of new appraisers with little training, but able to fill out the form and sign. Now the Appraisal Qualifications Board (AQB) has reduced the requirements for licensing. This is reasoned as a way to better provide for our “public trust” with the speed, low price, and client expectations. What could be better?
And best of all, we checked – they have the required “Errors and Omissions” insurance. A number, a guarantee, and speedy service. No need to deal with those slow appraisers who claim they need time to provide good work and a truly independent, impartial, and objective opinion. Good or bad, they all certify to their competence and ethics. Heck, it’s just an opinion anyway. And there’s no opinion or measure of reliability. Just credibility – trust me, please believe me. Don’t ask, don’t tell. Shhhh!
Just an opinion. But prove the adjustments. No problem – just push the button.
What is a possible truth? In data science, we estimate adjustments. We can contrast or associate quantities from “comparables”. We can sometimes get a hard number. But it will always, always have a level of reliability – sureness, variation, or uncertainty.
Appraisal is the only discipline or profession I know of that does not provide a level of certainty around a point value, or even a range of value. This is the core downfall of the profession.
In Valuemetrics.info classes we consider this fallacy and weakness. We build the scientific foundations of the art and science of valuation. The results are “predictive models” of value. (Just as it specifies in The Appraisal of Real estate, p.736, 14th ed). Predictive models inherently recognize uncertainty.
In Stats, Graphs, and Data Science classes, we specify three analytic adjustment results:
- Deterministic, where given the data set and model, the result is exact.
- Estimated, where the result is probabilistic, with a measure of sureness.
- Asymptotic, where we know the result is biased, but useful.
If we understand these three types of estimation models, we can fit any situation, any property type: residential and amenity, investment and speculative, agricultural and land. The data science tools and techniques are universal.
The future of the valuation profession depends on realizing one fact: The world no longer has much use for a point value of unmeasured reliability of two weeks ago. The world and the public trust need much, more. Much more can best be provided by appraisers competent in the art and the science, and an understanding of the interface of computation and human brain, and how to seamlessly integrate the modified data stream into client software and business systems.
Will our GSEs, professional organizations, clients, regulators, and legislators encourage this progress, or stay with the old system, where the appraiser says: “Trust me, I know a good comp when I see it!”
Article QUOTE “Appraisal is the only discipline or profession I know of that does not provide a level of certainty around a point value or even a range of value. This is the core downfall of the profession. Fact-‘Truth’ as you put in in this context is not absolute my friend. The appraisal industry is not the only discipline/profession that does not provide a singular (binary) truth. Ask five Real Estate Agents to define a singular Listing Price value, or ask five Medical Doctors on a diagnosis. While you’re at it; ask five Attorney’s their legal opinions on a specific law or case. I could go on but I’m busy. Happy Holidays!
Amen, changing neighborhoods, the ultimate rule is CHANGE.
George, you’re preaching to the choir. However, maybe someone will hear the sermon and choose to convert. Keep the sermon going, George! This choir has your back!
We can only defend our opinion.