I’m not even sure how I come about logical conclusions sometimes. Just keep hitting the wall, reviewing more market data, until it makes sense.

Sometimes I’m aware of things rather interesting. The likely probability of improper motivations. Noticing how LLC sellers and shell companies interject and influence the market. Watching how Corelogic suite products, mismo and reso seek to redefine value and definition as we know it.

I don’t know. Some call it progress. I call it a hoodwink. If you can’t figure out market data without analytical assistance, hang it up and go home. It’s a people business and in the midst of all this back patting, somehow the appraiser is tasked with making sure the deal is fair. Value definitions aside, the appraisers primary task is just keeping everyone honest, keeping the playing field fair, and understanding who’s patting who’s back, and who is not.

They can keep all that technology, I’d be sending these reports fed ex from a word processor or even hand written, if that would be an option. My technical product overhead costs remain limited to the bare bones software for appraisal form filling, and nothing more. The guys who cheat the system get all the love though, outsourcing everything, auto tagging every figure via ancillary software, flipping through discounts at a breath taking pace. The technology has a time and place but as the big box tech companies instantly promoted a rather irresponsible application of it’s use to infinity, I just can’t bring myself to go with it.

I think I’m supposed to be working right now. Hard to stay motivated after you’ve looked behind the curtains for long enough. None of it matters, the borrowers are qualified on factors other than the actual home value anyways. Value is relative as the FED just rolled another 7 trillion greenbacks hot off the press. The number literally no longer matters. It’s all funny money with nothing backing it. I’m a puppet, filling forms, waiting to hit the wall on a wild rollercoaster ride. The lending industry no longer wants appraisers, they want advocates to assist in volume fulfillment and nothing short of that will bring an appraiser success these days.

You are 100 percent correct on Covid and current economic conditions. Every analyses has been incorrect because this event is random with no historical perspective. My whole point you can’t predict Randomness.

I do have a Data Science degree. But I got it to understand the process at 58 years old and 38 years as an appraiser because I got tired of appraisal coursework and software that said just trust me, we are right.

Well I learned it’s far more complicated than it appears and nothing can predict the price a buyer and seller negotiate, but we can measure it’s reliability compared to what everyone else is paying. Isn’t that what appraisers do, use data and interpret the market. Shouldn’t we be allowed to use what ever tools we want vs guidelines and rules applied by others.

I do not think the residential Appraiser is Dead. I think the profession is ripe for efficiency gains so we can make more money.

Take AVMs out of the discussion. I agree with all the counterpoints on an AVM. They are nothing more than a statical opinion of what statics think it should have sold for. I would never buy or sell home on what Zillow or any competing product thought I should pay. But Zillow is with their I-buyer program after the analytics are reviewed by a staff of appraisers to reconcile an offer price.

I love the idea of the prelisting appraisal as long as we can get past the interested party ordering scenario nonsense.

At the end of the day every value point can have a probability, list price, assessed value, appraisal, and they could all be wrong because it is still a random event.

Sale Price becomes fact and a data point when the transaction closes assuming it was arms length. But people can still under or over pay because the price negotiation is Random. No one can predict what buyers and sellers will negotiate. but it’s still data point requiring a Qualitative or Quantatative adjustment.

Most probable sale price like an appraisal is a random event, but still has a probability of occurrence, appraisers confirm that probability by agreeing with the sale price.

The Indy 500 auto race has a probability of every participant, it’s called odds probability expressed differently. The actual winner is random which bookies handicap the race and make money based on some one thinking they can pick a random winner by probabilities.
/Odds

Great discussion.

My bad? Could have sworn you sent me emails in the past promoting data science. Apoliges if I misremembered.

https://www.linkedin.com/in/kwolfconsulting/

Anyway, in answer to your question re past couple hundred years. I only look that old, but what I CAN attest to is an excessive number of purported “data science” driven conclusions have regularly and repeatedly proven themselves to be wrong over the past five + years. Starting with CU. Next AVMs and most recently almost every single daily statistical analysis performed on behalf of the federal government for COVID 19 “probabilities”.

Keith they weren’t off by “just a smidge”. They haven’t been right yet. Not evening with hindsight.

Read his numbers and work ‘plan’. He’d have to be inspecting nearly 40 properties every single weekend to do that kind of volume at $450 (avg) per pop. He’s also a broker or agent and there isn’t way he is earning that kind of money as an appraiser doing what he claims is his volume and fee structure.

His ‘story’ has been extensively discussed on 100% Appraisers Group. Conclusion “Not very likely” (by those few being polite).

Keith, you just looked in the box again, ahead of the predetermined time to cast an observation. You have thereby effected the experiment with your own bias of perception.

I’ll answer your question with certainty. You have to actually list it on the open market to see if on the consumer side, there is acceptance of that price. If the buyer is outside of value, they’ll have to pony up some cash to set a new value peramiter if they’re relying on traditional mortgage lending. Notions and proclamations of acceptable deviance thresh holds are arbitrary opinions as well. The act of interpretation effects results.

There is always the pre listing appraisal option. Then the box stays open the whole time and the experimental phase of wondering what results will be is quickly managed. Define value. Define analysis. Define market valuation. That’s easy. Bonafide verified closed sales. Truth is nobody knows for any particular property with certainty, until that property becomes another data point for future observation. Right or wrong, accurate or not, it is only confirmed after the fact and not all data points are equal. Art not a science. The human factor can never be entirely quantified by way of predictive interpretation in a free market. Avm’s tend to be more reliable on the upward swing. Shake something up with environmental variables ahead of the measurement, and some of these analytics are about as valuable as a dead cat.

It’s a true independent, industry focused website with no specific content control, managed by a currently active practicing appraiser. You could push a similar article yourself, or could just free write and push a theory or point. Just submit to moderator and if it’s acceptable being something that can be published, and is industry specific, chances are it will be published. Over the years many have written one off’s, or like this author, have provided a series continually highlighting their choice of topic focus. George is the tech software analysis theory guy, so that’s what he writes about. This site can be accessed without facebook just through a regular web browser. FYI. I like Milton’s articles, where is Milton lately?

That’s great Keith. Two thumbs up. As if there is anywhere near the scrutiny applied to the science and logic of representing an interested selling party, and forming a price they can agree with, to land the listing agreement on the agency side. But if the appraiser departs from their preconceived notions, we’ve ‘missed value’, or if we agree, we’ve ‘made value’. It can be difficult to explain the tenets of valuation theory to people whom use price and value interchangeably, not even recognizing the difference in the first place. Not to mention the infinite choices for instant bpo fulfillment software which can form the price for a wide range of small to larger scale property management interests, only to have the winning listing selected on the managers own bias for a more well rounded balance of the books. Or even a less rounded balance as they sometimes want liquidation or to stall in order to balance quarterlies and such, take advantage of write offs. The whole it has to be a strictly science based approach falls by the wayside when one gets familiar with, and considers the bigger picture of total real estate. Myopia in this industry is the rule not the exception, as excess bureaucracy keeps people focused on their own compartmentalized room of participation. As the red tape falls away via automation, one effective method to continue the myopic views which are oh so profitable to some and do limit market competition to the benefit of others, is to limit access and keep everyone running on the treadmill, struggling to keep up with an infinite stream of technical and coding changes. Appraisers lost control of this segment of the housing industry a very long time ago. When they abandoned manually orientated and paper based methods if you ask me. It looks random. It is random. But there is an underlying current which does influence the proverbial degradation state of the atom. Someone is always peeking into the box to see if the cat is alive or not when nobody is looking. That person is the software developer. The fact they have looked, influences results. I think we’re going to need a universally applicable coefficient or something…

Well stated from a mathematician or statisticians perspective.

On the other hand, real estate price is a random event taking place in a highly structured definition of market value for specific (in a myriad of variable) real property interests being appraised. That price is also influenced by financing availability and variable lending inducements. Not until all facets are known and analyzed by an appraiser can a market value opinion be developed and rendered.

Our profession is more akin to that of a doctor or diagnostician than an engineer or attorney. Our ‘opinions’ (necessarily unexpressed) can run completely contrary to data probabilities. The degree that we allow these (currently repressed) life experience opinions or living tissue neural networks to influence our stated opinions depends on the totality of information available to the appraiser. Both subjective and objective.

The argument that we must never be subjective was a fallacy the first time it was expressed. We try to be objective, however the ART portion of our profession will necessarily include subjective interpretations of both ‘scientific’ data and human emotions.

COVID ‘data analyses’ come to mind. Statistical probabilities said one thing. The reality was something else altogether.

You’re possibly having a totally different conversation than he is.

https://www.breappraiser.com/Services

The philosopher appraiser realty sales agent trifecta? Well, that’s interesting and likely beneficial when dealing with the service at hand. I often like to say; Most people don’t really need a sales agent, as much as they need a life counselor when considering such a major investment. Not one, not two, but three hats.

Do you ever consider the moral and ethical implications of the amc’s selecting based on fee, and not returning cost savings to borrowing consumers, but rather perceiving that as a thing of value being provided to make that particular vendor selection? It would be interesting to get an actual philosophers opinion on that. It’s my and many other appraisers primary hold up to amc’s. It’s not fair or ethical in our opinion. Appraisers nationally rallied circa 2008 to 2010 and beyond to get DF RegZ C&R passed, mailing tens of thousands of letters, actually getting politically active, only to have that necessary relief pulled out via tavma and other major lender’s whom owned amc’s and their lobbyists. Whom pushed a safe harbor rule through cfpb nullifying the intention of fee surveys, kept amc’s from having their own properly separated line item disclosure on hud1 forms, and were dedicated to pushing back in whatever individual states tried to protect the free appraiser market. FDIC also has clear guidance the appraiser selection is to be based on merit, not fee. The spirit of the C&R rule was to eliminate this inappropriate financial incentive to drive appraisers fees down, drive consumers fees up, and pocket the difference. If anyone else did that it would clearly be a junk fee. FHA tried to push back with the unearned fee rule but it was never practically enforced. Individual states took some of the edge off with a mish mash rule set but the only one to directly face the issue got hit by the FTC for price fixing as they attempted to stop forced parity pricing upon appraisers by management companies, and actually enforce a minimum fee rule. Even HUD had previously issued a memorandum to all national appraisers and lenders, indicating a bottom floor fee, if I recall that was $350 or $400 from sometime in the early to mid 1990’s. Now long forgotten.

There was a day in this country, prior to monopolization of the appraisal distribution market by corporations, that appraisers actually enjoyed fair free market pricing and were not held to artificial parity. “Bursting at the seams”, with a 30 year old appraisal fee. The good old days when a quality pizza was only 5 dollars out the door, a new American made truck rolled out not too far over 10, and Fed monetary policies had not flooded us with discounted cash, homes were a third of the price they are now. Can you really believe appraisers are getting a fair shake when on the agency side you’re seeing tripling of income via rising pricing but the appraisal fee is forced into parity, frozen in time?

Agree Opinions can be supported using Qualitative and Quantative methods and both are covered in The Appraisal of Real Estate 14th Edition Chapter 14, 18 through 20 and appendix B.

An appraiser can use data analysis to support a Qualitative opinion and it can have a probability of reliability but it is still an opinion and a Random event.

Nothing can predict a random event like an opinion. Sale Price is a Random event determined by the participants to that event and their Opinion.

All randomness has a Probability. Like an appraisal report some are convincing and others are not.

It’s a good thing nobody enforced the C&R rule, cost plus billing practices, or appropriate separation of fees for distinctly different services. Otherwise discounters would not have be able to cut to the head of the line, getting assignments based on fee and not qualifications. aka; ‘the lions share’.

https://www.clearforkappraisals.com/xSites/Appraisers/ClearForkAppraisals/Content/UploadedFiles/Resume%20Terrence%20Bilodeau%20Website.pdf

You’re promoting a Clear Capitol appraisal hero.

Thanks Mike. For full disclosure I don’t market anything other than thought provoking discussion. I gain nothing by voicing my opinion other than getting appraisers to think outside the box our profession is trapped inside.

I’m in the camp where appraisers should be enabled to use all tools in the tool box at their discretion.

Data driven solutions are of no value unless they are useful to the analyst determined by the analyst in developing their opinion.

Probabilities are the base line for all statics and scientific analysis. Are you saying it has been wrong for the last several hundred years.?

You never answered the question, which is more reliable if they all have the same probability of happening? Flip a coin Mike. The probability iof drawing heads or tails is 50 percent. We can estimate the probability of drawing a High Straight Flush when playing poker. In either scenario it is a Random event. The only way to remove randomness is with a Human that is trained to interpret and apply analytics.

How can we have a definition of value that uses the term of most probable sale price if there is no probability? Every appraisers opinion is a random event and each has its own probability of occuring based on the sales in the market.

Read the stated PLAN of MISMO sometime. We are not merely ‘alarmists’ so much as we are very well informed about what the specifically stated plans of MISMO are long term. They put them in writing. Each year shows more and more steps in the direction of their end goal (full automated mortgage processing including both commercial and residential appraisal).

TAF keeps facilitating them by changing the rules. ALL it takes is official acceptance of a very few fundamental assumptions, and commercial real estate could be done by AVM right now. Personally I think the results would be so assumptive as to be closer to hypotheticals, BUT at whatever point regulators agree that is ‘close enough’ is where we are in real trouble (except for derivative follow on litigation work).

Scott, George is a highly regarded expert in real estate appraisal (nationally). I don’t always agree with his individual conclusions about the business, but he has earned my ongoing respect (whatever that’s worth). I had the pleasure of appearing on the speakers’ dais with George at Appraiserfest 2018 in San Antonio; along with several others and a federal ‘regulator’ from ASC.

While he IS selling a product or service, in my heart I believe he is truly concerned with appraiser and appraisal integrity. He simply offers another tool in the appraiser’s toolbox.

Keith, How do we KNOW the confidence rating is accurate?

The only definitive way to know is to review the actual appraisal in accordance with USPAP SR3/4 and separately try to confirm the other two UNDEFINED values. Though that may be more than just a fun exercise since no value has been defined so much as assumed.

(Disclosure folks-Keith markets data driven solutions).