Maybe taking the other side, measure how many appraisers come out within 5% or less of each other. The Re-LOs do, the two original independent appraisals typically come within that limit or less. When they don’t they commission another, and maybe another. Download 100 closed sales and the Finale ratio of lp/sp. Thirty to 40% of the closed sales range within 97% of the final offering. Maybe that an argument for the powers of negotiating, but who are appraisers but a tool of the negotiating.

What was the old was?? Anecdotal comparison, rationing the acquisition price or cost? Comparing sales two and three years old because of a slow economy, comparing a 40 acre farm with a home to a 80 ace foam with a barn and a cow?

Banks and lenders operated as individuals. when savings would accumulate they loan. They could expand into loaning on machinery for industry, livestock or fertilizer & seed. If they decided to loan a local builder for housing, they would influence the price of housing. BoA was big into agriculture, their decisions to more on housing influenced values. These bankers could and did make value by the economies they controlled.

Appraisers can’t do it by themselves, the banker, the builder, the city planner do. And they do it with advisories from scholars, builders, politicians who rely on published information from repeatable dependable sources

Taunya, if it were only promoted s a tool I’d limit my concerns to the philosophical arguments of how its more scientific if it too relies on subjective, human opinion (scrubbing) to arrive at its science supported conclusions. (NOT the intent of this response btw). I can concede its validity as another tool in the box.

My real and immovable objection to regression and other’s data ‘science’ is all the AVM hucksters and fraud facilitators that claim their magical new whoopsiedoodle algorithms  combined with ePixie dust and fairy pharts are producing ‘credible results almost as good, or even better than real appraisals.

http://www.clarocity.com/

https://www.clearcapital.com/platform/clearcollateral/ These are by no means the only  players in the game of claiming they can do what we all know they can’t.

Mike, I’ve been in danger of thinking the stats were not just a tool. It had me absolutely hitting a brick wall. My mentor just let me hit the wall until I finally figured out how it helps my analysis…now it’s one of my favorite tools, but I don’t let it be THE only thing. After spending time scrubbing data, I know it’s not reliable enough to replace the actual appraisal process.

I have great respect for him even though I don’t always agree. It’s got to be extremely hard separating the learned academic, and nationally renowned appraisal expert from the business owner promoting a tool for our toolbox that has already been horribly abused by others.

George offers it AS a tool. Others in the lending and AMC world think it is a solution unto itself. Nuances have been lost or buried in our profession in recent years.

100% correct.

My experience with avms is a range of from $450k to over $750k on a $650k property. That’s way too big a spread for 4 avms. My FAVORITE recent one was a sale for over $3.5 million and a RealAVM same effective date as the closed sale for $1.6 on the same property.

Today in checking comps histories (and history for my subject) I saw a REDFIN “value estimate” of $1.5 for the $2.4 million apartment building 2 months after my 2017 effective date. No, I don’t regularly use redfin, but I DO check Google online by addresses to see as much as I can about my subject. In this instance, it also showed “Not for Sale” along with their unsolicited opinion of undefined value for my client’s property in an issue that may be litigated. By the way my client’s property hadn’t been offered for sale in over ten years. The morons at Redfin just arbitrarily decided to post a value on a property they have NO RIGHT to be offering. I was forced to address it in my report now to head it off at the pass before my client’s case goes to court.

The client is an attorney. Maybe I can convince him to sue them. Especially IF it is brought up in court.

I have seen FIVE with 2 the same value and the other 3 just slightly higher and slightly lower within 1% of each other. There are differences of opinion in appraisals. Data can be a tool, but it’s not any more capable of being “exact” then we are. We are not building rocket ships. We are tasked with determining what a typically motivated market participant will pay for a particular property on a specific point in time. Just because it costs XYZ to build, will the buyer pay XYZ to live in the house?

The fact that everyone is pushing for all data science and eliminate the human element in a very human process is a dangerous road.

I agree. Although there is some merit to it, I don’t think it is helpful to create division based on opinion when we are trying to unify our profession against the forces working to eliminate us.

And, from a pure writing standpoint, this lacked a point or conclusion. I’m a huge fan of George…but this one has me scratching my head.

Good luck with that

Of course not but in the last 15 years I haven’t seen any appraisals of the same property with the same opinion of value.

Have any examples of property that has had twenty different appraisers and twenty different values, Herb?

Or, as an alternative, we can go back to building our businesses and reputations on the quality of our work rather than how fast we can assemble someone else’s statistical bundles into a pretty report.

More and more I am thinking of focusing all my work on appraisal & ‘make believe valuation alternatives’ review for litigation purposes. Target clients could be those that were urged to take appraisal waivers; obtained evaluations or had local bank branch managers ‘certify’ values based on AVMs or hybrids.

It’s an advertisement piece which covertly pushes statistical analysis- he’s the owner of Valuemetrics… says it in the top of the article as his introduction. In other words, it’s sales propaganda for his software and courses

Right on the money !

On the appraiser’s side, we have the sellout review appraisers who let the bank/amc dictate policy that reduces appraisal quality, in exchange, they get a steady fat paycheck. You have appraisers who say their “money making appraisers”.

In the bank/amc climate, there is no room for “healthy profit” based on the price-controlled fees. So if their “making money” as a term that is commonly used as making an exceptional profit, then serious corners are being cut, unless there is an anomaly situation, such as minimal competition.

Finally, what baffles me most is that banks/amc’s and even many appraisers don’t acknowledge the huge variance in markets and degrees of difficulty. Banks want to pay the same fee for every market. Newer tract homes are much easier to appraise than a home built in 1920 that has gone thru five remodels and one or two additions. Banks want to only approve a fee increase if they can see additional time needed due to the physical process drive-time etc… In my market area, recent sales data is sparse. So it may be a standard type of house for the area, but because of the limited data, additional processes have to be performed, explained and exhibited. Technology can help the appraiser perform his analysis, but technology as a whole is not capable of doing the job alone – not yet. Especially when market activity is changing. I think many appraisers don’t understand this because they work in tract home areas.

And last but not least, software companies and the banks boast about the new tools available to help the appraiser do a better quality job, and they charge a fee for them and make a profit. Meanwhile, the appraiser’s profit has been cut considerably and there is no way to increase profit.

I’m not wishing for anything I’m just stating a fact. I’m sure you remember Blockbuster, dial phone and fax machines. Technology passed them by if the appraisal business doesn’t change we are going to get left out in the cold. In fact it’s already started, they say the inspection side of the business is not as important as the data side, so now someone else is doing the inspection. However I totally disagree not anybody can do a good inspection but a computer can calculate data better than most. They call us form filler’s and if you look at what we do we have become form fillers. We fill out an outdated and redundant form much of which is worthless information.