Just what is our role as appraisers? Are we statisticians or analysts? First, either of these would apply only to what I call a “Tier III appraiser,” since statistics and analytics are not for the beginner, nor the appraiser who is not comfortable around numbers, as well as the ways numbers can interact.
Of the two, I have concluded that appraisers are analysts. Analysts look at numbers, but do not necessarily make determinations of what those numbers mean. Statistics are benign; they are facts. However, analysts take those benign statistics and turn them into information the client can use. Or, they use those statistics to form opinions. Which is exactly what we do as real estate appraisers.
We start out with data, such as the sales price of a comparable. It is a fact that it sold for a specific price, say, for this example, $450,000. Now you have to analyze that sale data to determine if it is even a comparable sale. That determination is more of an analysis of the fact, rather than merely a fact in and of itself. It is your opinion whether that sale qualifies as a comparable; an opinion at which you arrive only after the analysis of the transaction.
So, what if someone asks your which are you, a statistician or an analyst? I think the answer to that question, at least for me anyway, is that I am an analyst. This is why we as appraisers have job security. A computer can crunch numbers, but a computer cannot (at least not yet) analyze them and then form an opinion about what they mean – only an appraiser can do that.
So, while we use statistics as part of what we do every day, we have an even higher calling. Our clients call on us to take those statistics and then analyze them. It is via this analysis that we convert mere facts into information. Our clients need information, which is why they hire us. They can get the facts on their own (if they want to go to the time and trouble to do so). So we are analysts – we turn mere facts into information the client can use. That’s what sets us apart from computers, algorithms, and AVMs.
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 247 Are Appraisers Statisticians or Analysts?