Important Foundational Concepts.

Author:Crosson, Stephen T.

Dear Readers:

Welcome to the 2020 Appraisal Journal. Although events continue to unfold, we know a challenging and unpredictable year lies ahead of us. Appraisal professionals will be called upon to use their in-depth understanding of valuation theory and markets to provide clients with the best information possible. We urge you to consult Appraisal Journal articles as well as other Appraisal Institute materials to aid in developing solid responses to complex situations.

In the current issue, you will find discussions that dig into concepts that underpin valuation methodologies: reliable comparable analysis and the nature of market rent.

The first feature article, "Principles for Calculating AVM Performance Metrics," looks at automated valuation models (AVMs), their analysis of comparables, and how AVM performance metrics are calculated. These performance metrics are important indicators of the accuracy and reliability of AVMs. The study demonstrates that the calculation of performance metrics is not standardized and tends to overstate AVM reliability. The article suggests best-practice principles to improve calculation of performance metrics as well as the performance of AVMs.

The second...

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