As valuation professionals, we may be missing something substantial. The gap between what we know and what we think we know may be widening. Our valuation “rules of thumb” may be becoming “old” and less meaningful.
The availability and speed of data to make real estate decisions has changed the game. The market is people, they have opinions, free will and choice.
Problem is, we’re not talking about this. Bank and fee appraisers are often stuck in silos. Typing away on their laptops but not talking. Few conversations except when there’s an issue. Collaboration isn’t a thing. We may be missing a new change in market actions driven by social change.
Be a people expert
I’m super thankful that Victor Calanog, Ph.D., Head of CRE Economics, Moddy’s Analytics spoke at our last FIVA (Financial Institution Valuation Advisors) meeting. I loved his discussion on data, forecasting and social science. Looking beyond the dry data.
Victor mentioned we shouldn’t disregard all forecasts. “You can’t plan for everything” doesn’t mean you should stop planning. Be flexible and use scenarios. Think through options.
Let’s all admit that forecasts, however sophisticated, are imperfect. We aren’t dealing with the physical sciences. People aren’t perfectly rational decision making entities. We have feelings and different values. People have choice and free will.
We’re dealing with the social sciences with people and institutions in the real world. Forecasts are based on likely choices, but that doesn’t mean the unlikely choice won’t be made.
Data requires context
“Data-driven predictions can succeed – and they can fail. It is when we deny our role in the process that the odds of failure rise. Before we demand more of our data, we need to demand more of ourselves.” Nate Silver
Maybe we should expand our knowledge with a new multidisciplinary learning environment that teaches us to think more critically about human interactions and to apply this expanded view to our profession.
Let’s discuss the impact on the quantity and speed of data and its impact on collateral. Let’s discuss where we think the market is going, interpreting beyond dry data points. We all have opinions. Let’s share professionally with free will and choice.
Time to meet
We created FIVA to provide chief appraisers, reviewers, credit officers and valuation managers a place to start the conversation. Our goal is to provide a resource to gain professional insights, guidance and technologies through relevant educational content and networking with peers.
We’re meeting in-person in sunny Tampa, Florida on March 7, 2023. We’ll be talking a lot, professionally as well as getting to know one another. Sign up here. https://fiva1.com/events/fiva-in-person-event-1st-qtr-2023/
Did I catch you at a good time?
Great, let’s talk.
