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Meeting Thursday on Bias

May 22, 2022 10:43 AM | David Stone

Excellent and interesting meeting the other evening (5/19/22). Both speakers offered interesting comments and data.

I have an opinion on Bias!

I believe I have a unique perspective on Bias in appraising and real estate sales due to my 50 years in the real estate/appraising professions. I've been a real estate Broker in three states and a Designated licensed Certified General appraiser in two states (Designations earned pre-licensing). My appraising focused on commercial and industrial until 1986, when I transitioned to primarily residential appraising. I served on the Institutional Review Appraisers Organization of New England (major lending banks) and have served on the Board of Directors at one of the country's largest All Realtor real estate boards (12,000 members in 1972).  I've experienced two riots, the end of Red Lining and buyer steering.

I take significant exception to the claim of pervasive negative Bias in the appraisal profession. Sure, there are a few bad apples in all disciplines, but the Appraisal Profession has to be the least (negative) Bias among real estate related divisions. Suppose the appraiser selects comparable sales and listings exposed to the market from the same or similar neighborhood as the subject. In that case, Bias is towards the most likely value for the subject property! There isn't much room for subjective adjusting if the appraiser has considered all the available analytical tools and methodologies.

I submit that if two appraisers appraise the same property, the values will be within about 10% if they have developed the report according to USPAP. Cherry-picking a few appraisals in an attempt to make a case for Negative Bias appears to be what the Federal Complaint suggests, not an in-depth and random selection of residential appraisals  

I don't believe we need more laws or rules allowing less work and effort to determine value. The appraiser viewing a property inside and out offers a unique ability to photograph and annotate value issues not possible with desktop or drive-by appraising.

 I do think some appraisers need to return to "higher education" to brush up on the various methods of selecting and analyzing data.

My thoughts!


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