Art or science

Chicago Real Estate Blog just posted an article posing the question about whether appraisal is a science or an art. I think it is both.

The art comes in as you search for sales and rents. You have to put yourself in the mind of the buyers and sellers in the market. If it is a downtown loft, you have to become a 20 something professional with money to burn. If it is an office building, you have to become an investor. If it is an auto shop, you have to become a grease monkey. You have to be creative and to think differently.

The science of appraisal is how you treat the sales and rents. You need to make adjustments to the comparable's sales price to account for how it is different from the subject. The amount of the adjustment is sometimes a science, ie something you can well establish. Sometimes it is an art, and you have to be creative in determining how to adjust for a feature. Regardless of how you determine the size of the adjustments, the method of adjusting the comparables is the science being real estate appraisal.

The art part of real estate appraisal is the reason that computer aided appraisals will never take over the appraiser's job completely. A computer can't "think like a buyer" or make judgments based on a physical inspection of a property.