Appraisers: New Dogs vs Old Tricks
In any industry, those with 25 years of experience or more will express that there are tricks/insights that they have picked up over the years, and without a doubt the principle of expertise after doing something 10,000 times is true. However, there is immense potential for the logical fallacy of arguments from incredulity. To put it simply - that can't be true because that's not how I've done it.
The appraisal industry from 30 years ago to now is radically different. It is sincerely hard to overstate this point. Whereas an appraiser in 2000 may have begun their career visiting the county office weekly, searching for comps in a telephone book-like document published by local agents and using an adjustment list that their mentor taught them, now, all of those things are non-existent and the last one is blatantly forbidden.
The distribution of data is so widespread that only the most rural of counties would require a visit. The MLS and even "off-market" sites are so prevalent that sale data is available in moments. Adjustments have to be supported by market data, not "they told me to." My work files include dozens of pivot charts for nearly every feature of a home, then regression analysis of those to show support of price value. However, some appraisers, and I'm sad to say it's the 25+ variety, still express that they're using old tricks. Here are some I hear often:
The agent/builder told me so VS data.
The builder said it costs this, so I adjusted that. The agent said they spent this so I adjusted that. This has never been acceptable. "We all know Cost equals Value," is perhaps the most famous joke in appraisal circles. Your $60,000 pool didn't add value to your $75,000 house. The $40,000 deck didn't add value in a market that only expects a $10,000 deck.
I've always adjusted... VS data.
Fireplaces... I still see appraisers adjusting for these, and again it's the 25+ crowd. In the last two years out of over 1000 sales I've done, I have seen 2 where the fireplace was certified by the seller that the fireplace was functional. .2% Think about that. Do you value things that you don't use, ever? How much is that do-dad worth that you don't use ever? Again, my piles of research of regression have never indicated a value to this. "But, but, the builder says...." See point one.
Land is worth $X,xxx an acre VS data.
This is comical. Which acre? The first or 500th? This is appraisal 101 - The Law of Diminishing Returns, the more of something you have, the less each unit is worth. I see appraisers using figures that have been out of date for 20 years and are linear in nature when there is SO MUCH DATA available to an appraiser who does 5 minutes worth of research to discover that land (like everything) obeys a power curve and can be easily calculated. "But, but the assessor says..." See point one.
The median age of appraisers in America is over 55. Most appraisers were trained by a relative that told them how to do it. This is a recipe for some very lazy old dogs. The good news is there are so many options for continuing education to teach them new tricks. However, the pride of experience can stand in the way of the first step of learning... admitting we were wrong all along.