Adding Value to Valuation with Confidence

摘要

Appraisers develop a level of confidence in their opinions as they move through the appraisal process. Rummerow notes, "Making clients aware of the inherent variability of prices could reduce professional indemnity exposures."10 How to measure and report confidence is still subjective. This article suggests a possible method: assume a normal distribution and the indication range divided by two is one standard deviation. This assumption should be stated before confidence intervals are presented. Expect the development of new methods of measuring confidence as the probabilistic nature of valuation is more deeply understood. Appraisers need to evolve a new species of statistics. This process will better serve the needs of our clients while improving communication and reducing liability.