Appraisal data is becoming a bigger and bigger part of our lives. In 2017 alone we will create more data than in the previous history of the world. With that much data, it’s more important than ever for us to know how to understand and use data, especially for appraisers.
The term Data is used 261 times in the 2016-2017 edition of USPAP (we counted).
There are three main ways for you to access the data available from your MLS:
- Internet Data Exchange (IDX)
- Export Files (CSV file)
- Real Estate Transaction Standard (RETS) data
General data or macro-level data consists of many data points related to the four forces that affect real property values (social, economic, governmental and environmental).
Specific data applies or relates to the subject property.
Specific data is detail about the property being appraised, comparable sale and rental properties, and relevant local market conditions.
Primary data is the result of first-hand experience.
Primary data is usually the most reliable data. The primary observer collects the data for the purpose of the subject. However, primary data is time- and cost-intensive.
Secondary data is at least one step away from the primary observer or user.
Secondary data is easier and cheaper to gather than primary data. It is not as reliable as primary data. the trade-off comes because even though it’s faster and cheaper it may require more verification and knowledge of the limits of use.
Appraisers often use at least three kinds of data in an appraisal report.
- Market Area Data – general characteristics of the region, city, and neighborhood.
- Subject Property Data – specific characteristics of land use and improvements, personal property, business assets, etc.
- Comparable Property Data – sales, listings, offerings, vacancies, cost and depreciation, income and expenses, capitalization, etc.
Multiple types or sets of data may be applicable in the valuation process for the same property.
Appraisers are responsible to know the source, limitations and applicability of the data set they use. For example, the following situations may call for different appraisal data sets.
- Sales Comparison Approach, you use the primary set of data
- Market Analysis, you use a different set of data, e.g. supply and demand studies, absorption rate, exposure and market time
- Highest and Best Use, you use another set of data
- For the impact of the effect of an adverse condition or unusual feature the subject may have, and an income analysis you use yet another set of data
All MLS Isn’t Data is Created Equal
- Internet Data Exchange Feeds (IDX Feeds) include about 20 – 50 pieces of data
- Export files include up to about 150 data fields
- RETS data typically includes 300 – 900 fields.
- Real Estate Transaction Standard (RETS) data is information from the back-end database of an MLS. RETS data requires an agreement between an MLS and the software provider and takes more time and effort than using free data resources. Some advantages of RETS data are that the data is insulated from changes to files and/or interpretation from brokers and other individuals who utilize data for their own purposes.
Which kind of appraisal data do you rely on?
*BONUS: “Data is” vs “Data are”
I had a professor who was adamant that data is plural. Well, it technically is, it’s the plural form of datum, however, we generally don’t use it that way and it has become acceptable to use data as a mass noun (“data is”). So go wild: use data as singular or plural, just make sure you’re okay being corrected. And for Professor Griffin, I use data as a singular noun, but I do always feel conflicted about it.