The response to recent election results on social media websites has made it obvious that Americans are deeply divided, politically. Two opposing sides are firmly convinced that their convictions are ‘right’ and that those who voted differently are ‘wrong.’ From my perspective, this polarization of views is the result of a false dichotomy.
The appraisal industry has also grappled with views that result from a false dichotomy. Consider the question of whether one should use ‘qualitative vs. quantitative’ adjustments to comparable sales in the sales comparison approach to value. The question doesn’t just apply to adjustments to comparable sales but to many aspects of the appraisal process. As with politics, I propose that this view represents a false dichotomy. Both tools are useful for analyzing a market and we need not limit our analysis to one or the other.
In my own experience, simple linear regression is a powerful tool to demonstrate and explain to the reader how the market responds to different property characteristics. By the same token, I would be mistaken if I believed that the question of value could be reduced to a mathematical equation. I’m no mathematician, but if the ‘indication of value’ for various properties available on the web is based on algorithms produced by the smartest of mathematicians, we’re still a long way from eliminating errors.
The fact is that judgment and experience still matter. In my opinion, good judgment is most often the product of years and years of experience. The value of an opinion from someone who has encountered theoretical valuation challenges over the course of a lifetime would be hard, if not impossible, to quantify. But I digress.
The point is that we appraisers and the users of our services should avoid the mistakes we’re now seeing played out in the political arena. It isn’t ‘qualitative vs. quantitive.’ It’s ‘qualitative & quantitative.’