In an earlier thread in this section, I quoted a section of an appraisal report. Many responses complained that it showed personal bias. It also had an adjustment based on appraiser's judgment, and everyone who responded agreed that was OK if it were properly explained.
So what's the difference between personal bias and appraiser's judgment? Both are based on the appraiser's personal impressions.
Any thoughts?
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Personal bias v. Appraiser's judgment
10 posts • Page 1 of 1
by Edd Gillespie on Fri Apr 11, 2008 9:21 am
One follows feelings the other does not. One is rational and can be documented, the other is not and cannot.
Edd “In the real estate economy, there are no guarantees that reason will prevail in a market where emotions run high and the amount of misinformation runs deep.” Jonathan Miller in The Matrix. So what’s an appraiser to do?
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by WM on Fri Apr 11, 2008 9:33 am
A blatant personal bias would be things like disliking a house for it's blue carpet or a nasty owner. Pretty easy to identify and avoid this type of bias.
A more subtle form is disliking a house for it's type or layout because it is just not your favorite. Many of us have probably succumbed to this bias on a sub-conscious level without even realizing it.
Note I use the negative above but bias can be positive too.
Judgment to me falls more into the area of knowing something is positive or negative, but not being able to quantify it with hard evidence.
Judgment of a feature to be positive or negative can usually be backed up by a simple poll of market participants. IE:No one can really say a dollar figure or if they would even pay for a feature, but they all say that they would prefer (or dislike) house A over house B because of X.
I think that judgment should almost always be qualitative and is often the more applicable adjustment than we care to acknowledge.
In my limited experience, judgment comes into play on unique and/or uncommon features.
One of the enduring problems with both bias and judgment is the tendency to confuse design elements with real features. Just because I like the 30' tall field stone fireplace does not mean the next person will.
A more subtle form is disliking a house for it's type or layout because it is just not your favorite. Many of us have probably succumbed to this bias on a sub-conscious level without even realizing it.
Note I use the negative above but bias can be positive too.
Judgment to me falls more into the area of knowing something is positive or negative, but not being able to quantify it with hard evidence.
Judgment of a feature to be positive or negative can usually be backed up by a simple poll of market participants. IE:No one can really say a dollar figure or if they would even pay for a feature, but they all say that they would prefer (or dislike) house A over house B because of X.
I think that judgment should almost always be qualitative and is often the more applicable adjustment than we care to acknowledge.
In my limited experience, judgment comes into play on unique and/or uncommon features.
One of the enduring problems with both bias and judgment is the tendency to confuse design elements with real features. Just because I like the 30' tall field stone fireplace does not mean the next person will.
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by Otis on Fri Apr 11, 2008 2:51 pm
bi·as
2. a. A preference or an inclination, especially one that inhibits impartial judgment.
b. An unfair act or policy stemming from prejudice.
judg·ment also judge·ment
1. judgment-judgement - the legal document stating the reasons for a judicial decision; "opinions are usually written by a single judge"
2. judgment-judgement - an opinion formed by judging something; "he was reluctant to make his judgment known"; "she changed her mind"
3. judgment-judgement - the cognitive process of reaching a decision or drawing conclusions
4. judgment-judgement - the mental ability to understand and discriminate between relations
5. judgment-judgement - the capacity to assess situations or circumstances shrewdly and to draw sound conclusions
6. judgment-judgement - (law) the determination by a court of competent jurisdiction on matters submitted to it
7. judgement - the act of judging or assessing a person or situation or event; "they criticized my judgment of the contestants"
Emphasis added to those two lines as I felt it was most appropriate and pertinent to the quesiton.
IMO, a bias is a preference (for or against), whereby judgment is based upon experience, information, facts and knowledge without regards to a preference. At least, that's the way I see it.
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by M L on Fri Apr 11, 2008 3:05 pm
Many years ago (early 1990's) we had a decorator put in a carpet that was somewhere between a crimson and violet. She said it needed some color, and to match the bold wall paper in the secondary bath off the hall. Dad and I hated it, and was worried about how it would affect the sale. Some loved it, some hated it... but it wasn't on the market but 60 days before it sold to an older lady who loved the bright colors. Would I do that again? No, I've found that a house sells no matter if it has custom colors or is builder white... so why pay extra for the custom colors? All buyers want is a clean house that looks and smells fresh and new. But despite that house not being of my personal taste, it fit the bill for this buyer. So I lean more towards condition than I do decor... so long as they didn't do something really stupid like painting the roof with yellow brick road oil based paint.
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by Edd Gillespie on Mon Apr 14, 2008 9:11 am
santa wrote:skibs wrote:Bias is from the heart, judgement is from the head.
I dunno....it seems most adjustments are pulled out of their ASS.
My experience is leading me to think that may just be the primary source of adjustment support for the entire industry that serves the cheaper-faster mortgage crowd. At least the guys who report their personal biases are being honest if not objectve.
Edd “In the real estate economy, there are no guarantees that reason will prevail in a market where emotions run high and the amount of misinformation runs deep.” Jonathan Miller in The Matrix. So what’s an appraiser to do?
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Re: Personal bias v. Appraiser's judgment
by Ter Shields on Thu Jan 01, 2009 1:46 pm
To revive this old thread....
When a person maps a prospect in the petroleum exploration world, they cannot do so without a bias...That bias is based in the person's judgment and experience which comes from education and years where as someone put it, "good judgment comes from bad experience."...but of course, "Practice makes perfect, only if you practice perfectly."
No one can operate an unbiased world. In appraisal to operate without a bias is to be a AVM....and even they can be skewed, though more in a mechanical or mathematical way, "artificial intelligence" not withstanding.
If all appraisers thought alike, all properties would appraise identically. That will never be the case. Failing bias, the appraiser could fall into the clueless trap....failing to understand the range of potential uses a property might be capable of. I recently appraised a small campground. It lies on a paved road. It has low rates. It is less than ¼ mile from a lake, ½ mile from a golf course. But my bias relates to the fact the paved road is not a thru road. Large boats are not allowed on the lake and it is small and shallow. The golf course, while accepting golfers on a fee basis, is not easily accessible to a large RV nor does it offer a bar or other amenity. And worst of all, it is not near a major artery, therefore will not draw overnighters. My bias relates to my knowledge of the area and my perception of the unsuitability of the site compared to other nearby potential sites or the comparables. Without a bias it would be difficult to rank the comparables as to their market appeal.
Bias is good.
The bias of no bias is a bias...to quote an old geologist I knew.So what's the difference between personal bias and appraiser's judgment? Both are based on the appraiser's personal impressions
When a person maps a prospect in the petroleum exploration world, they cannot do so without a bias...That bias is based in the person's judgment and experience which comes from education and years where as someone put it, "good judgment comes from bad experience."...but of course, "Practice makes perfect, only if you practice perfectly."
No one can operate an unbiased world. In appraisal to operate without a bias is to be a AVM....and even they can be skewed, though more in a mechanical or mathematical way, "artificial intelligence" not withstanding.
If all appraisers thought alike, all properties would appraise identically. That will never be the case. Failing bias, the appraiser could fall into the clueless trap....failing to understand the range of potential uses a property might be capable of. I recently appraised a small campground. It lies on a paved road. It has low rates. It is less than ¼ mile from a lake, ½ mile from a golf course. But my bias relates to the fact the paved road is not a thru road. Large boats are not allowed on the lake and it is small and shallow. The golf course, while accepting golfers on a fee basis, is not easily accessible to a large RV nor does it offer a bar or other amenity. And worst of all, it is not near a major artery, therefore will not draw overnighters. My bias relates to my knowledge of the area and my perception of the unsuitability of the site compared to other nearby potential sites or the comparables. Without a bias it would be difficult to rank the comparables as to their market appeal.
Bias is good.
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