In 1980 I attended a new ERA Real Estate franchisee orientation in Kansas City. In my welcome tote bag was a cardboard slide rule type device called a Home-Rule®, subtitled “Residential Real Estate Sales Price Computer.”
How did the Home-Rule work?
Back then “computer” apparently had kind of a different interpretation. It was a simple device with step-by-step instructions printed right on it. There were a couple of slide inserts with price ranges printed on the front and columns of numbers on the back, that were inserted in one end of the Home-Rule and moved back and forth so the user could expose a general price range in a window on the front.
Across the top were a number of small wheels over windows that exposed numbers printed on the wheels. The operator rotated each wheel to show the subject property’s characteristics, including number of bedrooms, bath count, dining room or area, kitchen size, presence of family room, den, basement, garage, fireplace, and a final opportunity to give condition an average + or – rating.
Once the wheels were set, the entire device was then turned over to the reverse side, and now the wheel windows on this side showed a variety of numbers, which were then totaled. That total was further processed by numbers from the back of the slides, now exposed in two windows based on one of three “Area Average Sales Price” ranges by first adding to a pre-printed “Type Number” and then multiplied by its paired “Base Number.”
The result was the indicated “Sales Price” for real estate sales folks—or, when used by appraisers, the indicated “Market Value.”
Mr. Herbert Lafferty copyrighted the Home-Rule device in 1979. The combinations he created of the numbers on the fronts and backs of the insert slides, the numbers positioned on the back side of the wheels, and the Type and Base numbers were a formula, an algorithm if you will, that works still today. Interestingly, in trials I’ve run, the level of credibility rivals many of today’s online real estate websites. He called it a “computer,” and in essence it is, even if it is cardboard.
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The Home-Rule’s credibility
In a previous blog post, I cited the two cases below:
For nearly a year, one of the top online real estate websites estimated one of my rental houses to be in the low to mid $300,000s. I paid just $48,500 for it a couple years earlier, put $6,000 into remodeling and would have been thrilled with a sale price around $100,000.
Last year another one of my rental properties was showing an estimated value of $573,500 on another popular online website. In this case, I paid just $30,000 for it and put $7,000 into remodeling, and would have taken $90,000 for it.
I’ve compared my Home-Rule’s results to the above referenced sites and others, and with the exception of extreme outliers like above, its results generally fell right in line with the ranges of the popular real estate online website figures. The primary exceptions were for those “not considered” factors. Example: The Home-Rule doesn’t have wheels for lot size, pools, porches, water frontage, views, etc. If a few more wheels were added, it might be an alternative for some of those automated valuation models (AVMs)?
From my experience the Home-Rule’s big “advantage” over the automated valuation model (AVM) types is that a human being is doing the initial research to establish that first step of what price range goes in that starting window, rather than relying on computer derived mass data analysis. Examples: The programs that obviously selected the wrong market data in the two cases cited previously.
The future of the residential appraiser
Since the 1980s I have often read and heard that the demise of the residential appraiser is near. Recently the most common cited threats to the residential appraiser are Big Data and AVMs. Stick a few more wheels on the Home-Rule, and maybe that’s the real threat—or maybe it, or something like it, could be utilized by appraisers.
Seriously, the need for appraisers in residential property valuation isn’t going away, but what and how we do what we do is changing—and will continue to change. We must adapt or we will surely be left behind.
The USPAP publication covers “Computer Assisted Valuation Tools” in Advisory Opinion 37, and Advisory Opinion 18 has addressed appraisers’ use of AVMs for many years. Some of us currently use regression and other programs on a daily basis.
Going forward, some assignments will warrant more development and reporting, but abbreviated assignments and communications will likely become more commonplace. In the not-too-distant future, technological advances will continue to increase an appraiser’s productivity, and will likely reduce the number of appraisers needed to handle market demand—just like today when we don’t need as many appraisers as we did in the early 2000s boom.
Now the bad news: You can’t get your own Home-Rule anymore (unless you can find a used one); I checked a while back, and there weren’t any more available.
If I can figure out the algorithm, add a few more wheels, and expand the slides, maybe in years to come clients can call me when I’m sitting by the pool or out on my boat. I’ll do a quick check online with my smartphone to get the subject’s characteristics and a price range, spin a few wheels on my expanded cardboard Home-Rule “computer,” and pocket $50. Let’s see, I could probably comfortably do 20 a day x $50 = $1,000 daily income…I can live on that.
Written by Steven W. Vehmeier. Steve resides in Florida where he is a state-certified general real estate appraiser, holds a general appraiser instructor permit, and is a licensed real estate broker. He has taught appraisal qualifying and continuing education courses for multiple colleges, professional appraisal organizations, his own school, and McKissock Learning since the mid-90’s, often spending over 100 days a year traveling and teaching. He has authored dozens of appraisal courses and textbooks, including several for McKissock, and has been a member or affiliate of eight national appraisal organizations, and national director of two.