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Appraising: The Difference Between Reporting And Predicting

According to the experts

In Louis Menand’s book review in the December 5th issue of the New Yorker magazine, Everybody’s An Expert [1], regarding Philip Tetlock’s new book Expert Political Judgement: How Good Is it? How Can We Know? [2]) the author

found that specialists are not significantly more reliable than non-specialists in guessing what is going to happen in the region they study.

Tetlock’s book is all about supporting this claim.

This has particular relevance for those of us who make our living appraising property because, as we all know, it is the expectation of future benefits that is one of the primary determinants of property values (remember the principle of anticipation?).

We have been especially busy this past year appraising new condo projects throughout the city, analyses which require some sort of judgment about where pricing will be when the project comes in line, usually 12 to 18 months down the road. At the end of the day, none of us really know where prices will be at that time (though I like to think that we have a pretty good idea!). The important thing though, is not what we experts thinkbut what the buyers think.

It’s easy to forget that this is our real jobnot predicting the market, but reporting the actions of the buyers.