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Why “Pull From Air” (P.F.A.) Is An Appraisal Term, Pig v. Sheep Explained

[1]

This weekend I was quoted in the New York Times article “Shooting for the Moon [2]” by Alexei Barrioneuvo which explored some of the crazy prices being asked at the top of the market. Appraisers come across list prices every day that have no rhyme or reason to them.

In providing this quote, I sort of felt like I was in the movie “Babe” which I saw with my kids years ago (admittedly, I liked that movie) sharing that “secret word” that Babe used to get the sheep to talk to him [3].

I explained the PFA phenomenon as follows:

Within the appraisal industry there is a term for listings based on loose associations to reality, he said: “P.F.A.,” or “Pulled From Air.” As Mr. Miller explains it, “Take the highest sale you can find and apply some methodology in a very subjective way to talk yourself up to this bigger number.”

At the high end of the market, sometimes this approach is successful, but in reality, it is more often successful in new development than re-sales because of the concentrated marketing effort in place and that it is “new” with no benchmark bias already established.

Another name for it (and I just made this up) could be “unprecedented pricing” or UP. Buildings like 15 CPW [4] and One57 [5] in Manhattan and One Hyde Park [6] in London had no real comparable benchmarks and became their own market.


Shooting for the Moon [NYT Real Estate [7]]
Babe (1995) [IMDB [8]]