What does model calibration in appraisal processes determine?

Model calibration in appraisal processes is crucial as it involves adjusting the parameters of the appraisal model to improve its accuracy and reliability. Specifically, it focuses on determining the rates to be used in the model, which are essential for producing precise valuation estimates. Calibration typically involves analyzing historical data and comparing predicted values against actual market outcomes, allowing appraisers to fine-tune the model's performance.

By ensuring that the rates reflect current market conditions and trends, calibrated models can provide more accurate and defensible property valuations. This process directly impacts the integrity of the appraisal, aligning the model outputs closely with the realities of the local real estate market. Therefore, the importance of calibrating models lies primarily in establishing the correct rates, which enhances the overall effectiveness of the appraisal process.