The Effect of Expertise on the Quality of Appraisal Services

This article examines the quality of appraisals as a function of expertise. In paraticular, we compare novices (beginning real estate students) to experts (practicing certified and/or designated appraisers) on three performance criteria. First, we examine differences in the values that these two groups attach to various property features. Second, we investigate the variation between their final market value estimates. The last task studied is whether appraisers can reliably provide a range about their market value that includes the actual sale price of the property. The results are based on a controlled experiment involving seventy-two novices and sixty-nine experts, where each participant was asked to determine a fair market value of a single-family home. Findings indicate that experienced appraisers do in fact exhibit less variation in their valuation of property characteristics, hence there is greater agreement in their market value estimates than is the case with novices. However, more experienced decision-makers tend to be overconfident of their ability: they are less likely to specify a range that includes the sale price than are novices.