Tag Archives: subjective

Subjective decisions can affect home appraisals

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The final appraisal price for a home can be influenced by numerous subjective factors:

A massive, first-of-its-kind study of 1.3 million individual appraisal reports from 2012 through this year conducted by real estate analytics firm CoreLogic offers a suggestion: You should look at what are called adjustments to appraisals that involve relatively subjective estimations — the appraiser’s opinions on the overall quality level of your house, its condition, location and view — rather than more objectively determinable items such as living space square footage, lot size, number of baths and bedrooms, etc…

Adjustments are made in 99.8 percent of all appraisals, according to the CoreLogic study. The most frequent adjustments involve objective features of houses: Living area, rooms, car storage, porch and deck were all adjusted in more than 50 percent of the study’s 1.3 million appraisals, according to CoreLogic. (As a rule, the adjustments on objective features were not large in dollar terms. For example, room adjustments were made in nearly three-quarters of all appraisals but averaged only $2,246 and did not affect the final appraised value dramatically.)

Adjustments involving more-subjective matters — the overall quality or condition of the house — were less common, but they typically triggered much bigger dollar changes. The average adjustment based on quality was nearly $15,000, which is more than enough to complicate a home sale. Some subjective adjustments on the view or location of high-cost homes ran into the hundreds of thousands or even millions of dollars…

Research released last week by Platinum Data Solutions, which reviewed 300,000 appraisals made between July and September, found that fully 39 percent of “quality” or “condition” ratings conflicted with previous ratings on the same property. That inevitably invites controversy.

In other words, appraisals are an inexact science. What makes it particularly frustrating is that the stakes can be big as sellers and buyers are dealing with one of the biggest financial investments of their lives.

Two more thoughts about these findings:

  1. In order to cut down on the variation in findings, would it be better to regularly have multiple appraisers for the same property or some sort of blinded review?
  2. Here is how an example of big data can help reveal patterns across numerous properties and appraisers. But it would be particularly interesting – and perhaps some money could be made – if research identified individual appraisers who consistently had high or low findings.

Meteorologists debate whether recent Chicago snowstorm was 3rd or 4th largest on record

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Headlines after the recent Chicago blizzard suggested that the storm had the third largest amount of snow in Chicago history. But when this was later changed to the 4th largest storm, an argument erupted among meteorologists about what exactly counted as part of this particular storm:

After a brief drop to No. 4, the Blizzard of 2011 has now been put back in its rightful spot as the No. 3 worst blizzard in Chicago history.

Earlier in the day, the National Weather Service downgraded the Ground Hog Day Blizzard to 20 inches, taking away .2 inches of snow they say fell hours before the actual blizzard hit. At the same time, they decided that the 1979 storm lasted three days, not the two generally cited. That upped the storm’s total to 20.3 from the 18.8 inches generally credited to the storm…

But during a teleconference with meteorologists from Chicago area media outlets, there was such outcry over the weather service’s decision to lower the total snowfall from this year’s blizzard that the decision was reversed.

“You really are getting into hazardous territory,” WGN meteorologist Tom Skilling warned National Weather Service officials during the teleconference. “To downgrade this storm in any way shape or form is highly subjective. You guys are the arbiters of this, but I don’t agree with it.”…

Allsopp emphasized that these storm totals are more for the public’s benefit than for the record books. The official snow records are listed by calendar days.

Even the weather, data we might consider “hard data,” is open to different interpretations. It is interesting that the final decision went the way of the local forecasters. While Skilling is right to suggest that the decision to downgrade the storm was subjective, wasn’t ranking the storm 3rd also subjective?

Perhaps the key is the final statement in the article: this is for the public, not the record books. In the long run, does it make Chicago area residents feel better or more proud to know that the recent storm was the 3rd largest? If we went by the official snowfall by calendar day, this website suggests the record was 18.6 inches on January 2, 1999.