Beware the trap of over-precision

Valuators love adjustments. You see it all the time in appraisals - this street is 3.5% better than that street, this warehouse is 152 square feet bigger than the subject - you get the picture.

The problem is - do buyers really think of purchases this way? Look at the stack of cookies below. There could be a whole series of reasons why one is superior to another. The top one might dry out a little more. The one just below looks much thicker - more cookie for your money! The one on the bottom might be accidentally touched by people taking other cookies - a definite negative. 

In reality though - if you like cookies, you would be happy with any of them. The tendency to make valuation look like quantum physics is real, but it is a mistake. Time an again valuators take some factor (especially financial metrics when dealing with complex properties) without asking the most important question: "Would any buyer or seller consider this?"

More and more I am finding that the most convincing expert isn't the one with the most initials after their name, or the one with the most complex model. It's the one whose approach makes sense.

Photo by Eiliv Aceron on Unsplash