Statistically Supported Appraisal
Lenders are convinced that a statistically supported appraisal is a more reliable valuation. Wow! Does anyone that understands the home valuation process really think a “statically supported” appraisal makes for a better quality report? This is not that hard to understand. What does “statically supported” really mean? It means you get a computerized report, similar to what Zillow or Trulia provides, based on the information in public records. Statistically speaking, the margins of error are frightening!!! Great products for entertainment, NOT for determining the value of your home.
This all comes down to the Golden Rule. Lenders are looking for new ways to make a profit and they have discovered the appraisal process makes the easiest target. At the end of the day, appraisal reform is all about the money. Appraising real estate is an art. No computer will ever replace the skill of a living, breathing, licensed appraiser. The “one new law” theory still applies. If we could create one new law to keep anyone without an appraisal license from profiting from the appraisal portion of a mortgage transaction, all this talk of appraisal reform and statistically supported appraisals would disappear overnight. Don’t fall for the hype…
“Quantity” of data will never be a reflection of “quality” of the product. When it comes to pricing real estate, there will never, ever, ever be a replacement for a licensed, experienced, local professional.Remember… all the data in the world is nothing more than dots, dashes, and meaningless numbers, without having someone with the skill to interpret and analyze the correct information and make it all make sense. “Quantity” of data will never be a reflection of “quality” of the product. When it comes to pricing real estate, there will never, ever, ever be a replacement for a licensed, experienced, local professional.
- No Appraisals Required. The End of Appraisers? - March 9, 2023
- Is ANSI for Appraisers Really the Answer? - November 18, 2021
- Statistically Supported Appraisal - June 9, 2021
A picture is worth a thousand words.
Well said Mr. Hamp
[What does “statically supported” really mean? It means you get a computerized report, similar to what Zillow or Trulia provides, based on the information in public records. Statistically speaking, the margins of error are frightening!!! Great products for entertainment, NOT for determining the value of your home.]
Lenders and others, in an effort to get the “cheap and the quick” keep promoting the so called “valuation services” that are solely based on public records which many times contain incorrect information……
The primary purpose of Property Tax Records is for ADD VALOREM purposes only.
The following disclaimer from one of the South Florida Property Appraiser web site clearly states so..!!
[DISCLAIMER:
The XXXXXXXX County Property Appraiser’s office maintains data on property within the County solely for the purpose of fulfilling its responsibility to secure a just valuation for ad valorem tax purposes of all property within the County. The XXXXXXX County Property Appraiser’s office cannot guarantee its accuracy for any other purpose. Likewise, data provided regarding one tax year may not be applicable in prior or subsequent years. By requesting such data, you hereby understand and agree that the data is intended for ad valorem tax purposes only and should not be relied on for any other purpose.
By continuing into this site you assert that you have read and agree to the above statement. ]
I use to be an Anti Statistical data kind of guy. All i can say is watch an Alamode Titan Analytic Video or contact me to show you how easy it is and I am blown away by the results i get in just a 6-10 minute download. I do nothing but the rush and turn down 99% of the work each day of my 30-40 requests a day for my services. What are my regular rates the lenders ask? I dont have any as all i do is the rush and i look for a super need for a rush assignment and deliver very expensive reports to lenders. I was a chief appraiser with 25 appraisers under my review many years ago and now simply work for myself. Richard Hagar Instructor of Hagar Institute knows my work and claims of higher fees.
Know why zillow gets a lot of clicks? High numbers! These avm’s buy into MLS services, tap into rss data feeds from assessors, re organize data, apply their proprietary algorithm to restructuring the data in new flashy visually appealing representations, offer variety but limited research filtration. They spend more time on GUI than anything else. Answer illogical results with ‘confidence scores’. As more tech people seek easy avenues to developing long term profitable softwares with minimal continued upkeep, now there are a thousands of other competitors whom rebrand this same data reorganization process as ‘proprietary avm utilities’. Many MLS services stopped even trying to prevent the re aggregation of data and just provide non member rss feeds now, more monthly subscribers. Most assessors offer an rss feed or similar too. On the horizon, RESO real estate standards organization, with avm utility integration & rss re interpretation to other languages. So that people across the world can freely speculate in American real estate.
Avm’s tend to work better on the upward swing, they’re best at forecasting under stable market conditions. Avm tech crews have backed themselves into a corner though. They all do basically the same thing, and now are unable to open up and be more flexible, because if they provided users the option to control the results by scaling preferences for data analysis, the immediate result would be; ‘call an appraiser so we can figure out how to do this properly.’, as the individual tech coordinators would not be able to field the tough specific questions on real property and value relationship conundrums. Appraisers of course would say, our services are not for free as logical interpretation of extrapolated data takes time and energy. There is no one fixed method or approach which works in every given scenario.
Avm’s have become tools for speculators and financial predators. Now the whole world can know what your LTV position is, who your lender is, if you’re late on taxes, have been served any eviction notices, rental positions, etc. This is irresponsibly implemented tech, but that seems to be the ongoing gimmick with tech people, they just pirateer off of every industry they can get a foot hold in. Like digital chameleons, pretending to be qualified and creating the illusion of substitutive service for a reduced cost. Dang right, don’t believe the hype. Next up, Win10 UI ‘Sun Valley’ update late 2021. They’re running out of tricks and are falling back on graphic reorg, incapable of furnishing a finished product. Same junk coding, new shiny package.
Misuse of statistics
Definition, limitations and context
One usable definition is: “Misuse of Statistics: Using numbers in such a manner that – either by intent or through ignorance or carelessness – the conclusions are unjustified or incorrect.”[1] The “numbers” include misleading graphics discussed elsewhere. The term is not commonly encountered in statistics texts and no authoritative definition is known. It is a generalization of lying with statistics which was richly described by examples from statisticians 60 years ago.
The definition confronts some problems (some are addressed by the source):[2]
Statistics usually produces probabilities; conclusions are provisional
The provisional conclusions have errors and error rates. Commonly 5% of the provisional conclusions of significance testing are wrong
Statisticians are not in complete agreement on ideal methods
Statistical methods are based on assumptions which are seldom fully met
Data gathering is usually limited by ethical, practical and financial constraints.
How to Lie with Statistics acknowledges that statistics can legitimately take many forms. Whether the statistics show that a product is “light and economical” or “flimsy and cheap” can be debated whatever the numbers. Some object to the substitution of statistical correctness for moral leadership (for example) as an objective. Assigning blame for misuses is often difficult because scientists, pollsters, statisticians and reporters are often employees or consultants.
An insidious misuse(?) of statistics is completed by the listener/observer/audience/juror. The supplier provides the “statistics” as numbers or graphics (or before/after photographs), allowing the consumer to draw (possibly unjustified or incorrect) conclusions. The poor state of public statistical literacy and the non-statistical nature of human intuition permits misleading without explicitly producing faulty conclusions. The definition is weak on the responsibility of the consumer of statistics.
A historian listed over 100 fallacies in a dozen categories including those of generalization and those of causation.[3] A few of the fallacies are explicitly or potentially statistical including sampling, statistical nonsense, statistical probability, false extrapolation, false interpolation and insidious generalization. All of the technical/mathematical problems of applied probability would fit in the single listed fallacy of statistical probability. Many of the fallacies could be coupled to statistical analysis, allowing the possibility of a false conclusion flowing from a blameless statistical analysis.
An example use of statistics is in the analysis of medical research. The process includes[4][5] experimental planning, the conduct of the experiment, data analysis, drawing the logical conclusions and presentation/reporting. The report is summarized by the popular press and by advertisers. Misuses of statistics can result from problems at any step in the process. The statistical standards ideally imposed on the scientific report are much different than those imposed on the popular press and advertisers; however, cases exist of advertising disguised as science. The definition of the misuse of statistics is weak on the required completeness of statistical reporting. The opinion is expressed that newspapers must provide at least the source for the statistics reported.
Dang, remind me to never go up against you on anything involving statistics! Update for 2021; Add in tech programmers pretending to be statisticians too. Probably a safe bet to add politicians as well.
Appraisers can assemble data from a reliable source, (MLS) and do various sorting of geographical of related (comparable) listing, and sales data. When this data is repeatable it can be a formidable indicator all kinds information including “value’s”.
By not calling it statistics we may avoid negative references. Remember we went to the Moon, and came back on the science of large numbers, calculated with wooden slide rules. Not all practicers are crooks
Statistically Supported Appraisals. AMC’s. Upload/portal/maintenance/technology fees. Zillow. AVM’s. Core Logic. Clear Capital. Bitcoin. No cash/no checks accepted. You must allow automatic payments from your checking account or credit card. Wide open borders. Rainbow flags everywhere. Water shortage. Gasoline shortage. Electric rates doubling.
I bloody well give up.
Appraisers need to start saying NO to lenders and AMCs passing down “upload/technology fees”.
Or maybe appraisers need to start fighting back by adding technology, gas, insurance, education fees, etc as additional line items in their invoices…
“This is the first step in taking back control of our industry.
Along with this the appraiser should also include that they will not pay for any technology fee, upload fee or any other fees (Appraisal scope fee, Mercury fee, AppraisalPort fee) imposed by the AMC or anyone else.”
From: http://appraisersblogs.com/appraisers-need-2-come-together-n-take-control
Don’t give up and become a statistic. Open your mind and check out Titan Analytics video online. For the last year since 6/2020 to the present I have used Smart Exchange and Titan Analytics. You control the data input directly in your mls search and I am able to down load 20-25 comps in the side by side view. Lenders will pay a lot more for reports with this tool.
For an appraiser to develop sound value conclusions they must understand human nature, have the knowledge to identify outliers and poses geographical competence in the market they service. The key to any statistical analysis is data and single family real estate data is not very reliable or consistent, and not enough is available in many areas. Most data originates by way of the local MLS where agents or their assistants have no stake in the accuracy of the data they aggregate. CU was the most significant attempt to get more useful data by requiring appraisers to use specific coding and criteria. However, real estate is local and a properties condition changes over time with neglect and/or extensive renovations. A focus toward statistical modeling for real estate valuation without quality data and the professionals who are skilled to interpret the data will undoubtedly produce misleading conclusions.
That’s a good one. I recall someone making the argument before that as the use of waivers and more simplified alternative appraisal products became more common, the supposedly robust modeling capabilities of the CU data would diminish with time. However, we’ll never know, because despite it being appraiser sourced data, FNMA does not share the results with the public or even most appraisers. It sure would be nice to be able to pop in a zip code or locale, and see various baselines and other entry points for all the extracted data. The question lingers on, have they monetized it? Thereby facilitating it’s resale to both appraisers and avm aggregators?
http://appraisersblogs.com/?s=fnma+cu+data
Oh wow, miss the days when Mr Ford was on this issue like every day. Why pick just one article to post, so many have come through on that topic matter.
For the last year I have been using Titan Analytics with Alamode Software. I can open a report and save it, then spend 6-10 minutes doing a 1 or 2 mile radius search of the subject property. Next i download a copy of the CMA from the MLS and then, this is the sweet part and how i make the big bucks. I download an xcel file with Titan Analytics and I am able to fully down load completed comp grids for 20-25 comparables in the side by side view. Within the 6-10 minutes I have 8 color glossy statistical charts and scatter graphs directly from the cma research i did on the MLS. I use to be a skeptic before and a Non Believer of Statistics in appraisal, but i am totally sold on this product and it is the Candy/Drug i am offering to lenders that want quality reports with statistics, etc. All i do is the rush, so i do not have regular fees. My fees are $1,800-$3,000 per one sfr urar uad report. Richard Hagar Appraisal Instructor Guru can support my claims as to the statistical graphs and scatter charts. He knows how i work is blown away by the results of what i am doing. I love Statistics and using Titan.