Dixie Phair was planning meet friends at a nearby restaurant for dinner. Looking forward to a pleasant evening, she started to organize her desk and was struck by the parallel between the regional produce used by her favorite chef and how her income modeling uses data that are locally sourced.
Just as she was ready to leave for the day, Darrin Hyer, Counsel for the Any Municipality County School Board, strode unannounced (characteristically) into Dixie’s workspace with a challenge.
|Hyer:||My brother-in-law, Deputy Assessor from Other County, just told me about the income template in the real property CAMA system they bought. It sounds like it will easily produce higher values than you are assigning!|
|Phair:||Ah Darrin, still refreshingly impetuous. How can we help you today?|
|Hyer:||You can explain to me why your model is better than theirs. I have long thought your values on retail chain properties are too low.|
|Phair:||I am familiar with Other County’s model. It is a one-size-fits-all template that relies on aggregated regional data for rents, vacancy, expenses, and overall cap rates. The data include Capitol City in their region, which surely you know skews the numbers.|
|Hyer:||Here’s what I know… your values are consistently lower than Other County on retail chain stores. I want you to tell me why.|
|Phair:||Other County has a generic template that assumes almost no stratification according to important elements of the properties modeled. What we use is completely different. Our income program contains: 1) property model categories appropriate to local content, 2) rents, vacancy, expenses and cap rates that have been locally sourced, 3) stratification of local metrics according to property type, tenant design, size, condition and location, and 4) extraction of leased fee interest in model rate selection.|
|Hyer:||But my brother-in-law says his is based on Big Data, which is good, isn’t it?|
|Phair:||If Big Data doesn’t stratify to local relevance, it’s Dumb Data. You don’t want us to use Dumb Data, do you, Darrin?|
Darrin was already out the door.
It took Dixie just a few minutes to explain. She wasn’t even late for dinner.