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Donovan C. S. Collins
BA, RIBC, AACI, P.App
Real Estate Appraisal – Art, Science, or Black Art?
And what are relevant comparables?
Real estate appraisal has been described as an art, a science and a black art. The question I would like to examine is into which category does appraisal fit.
According to the Canadian Uniform Standards of Appraisal Practice, an appraisal is defined as “A formal opinion of value ….” After consulting various definitions, I have concluded in general that an appraisal can be defined as the estimation of value. Art in general is an application of a subjective skill, while science is concerned with a verifiable body of knowledge. “Black art” has been defined as black magic, which is the use of the unexplainable.
It appears that the practice of real estate appraisal falls into all three categories, but recently has been tending to be much more of a science. Appraisal is an art in that it involves the application of some subjective skill, but is becoming more of a science with more clearly defined terminology and practices. Appraisal can be seen as a “black art” in that poorly founded values can be arrived at based on irrelevant methodologies and data.
In my opinion, real estate appraisal has become more scientific, with the definition of market value clarifying its dependence on the highest and best use of a property, leading to the requirement that the paramount attribute of comparables be that they have a similar highest and best use as the subject property.
In an article by Steven P. Smalley PhD “Appraisal: Science or Art?” (The Appraisal Journal, April 1995), he concluded that the appraisal process is both science and art; but that the process of finding relevant comparables was based on an appraiser’s subjective opinion (page 168). With clarification that market value is primarily dependent on the highest and best use of the subject property, and that the comparables should have the same highest and best use, the process of finding relevant comparables can be made much more objective and scientific.
Therefore I have concluded that the practice of real estate appraisal is becoming more of a science and less of an art, especially less of a black art.
If you have any questions or comments please contact me.
Yours Sincerely:
Donovan C Collins, BA, RIBC, AACI
Cell: (604)805-4791
Cell: (604)805-4791Real Estate Appraiser and Consultant Email: doncollins@shaw.ca
Email: doncollins@shaw.ca3858 Knight Street Web: donovancollinsappraisals.com
Web: donovancollinsappraisals.comVancouver, BC, V5N 3L6
