Data collection

For this specific research it is extremely important to interview people that have a wide experience with the Special Act for Real Estate Assessment and the use of mass appraisal methods within it. As this research tries to get insight in the whole development of mass appraisal methods over more than 20 years from the start of the Act till now. Therefore there was decided to approach people in senior and leading positions in organizations because it was expected that they would have the best ‘helicopter view’ of the field and already worked for the longest period of time in the sector. So, this was an important condition to be met. To be ensured of a good representivity of the interviewed people over the different parts of the research field there was decided to divide the group in four sides: user, developer/researcher, interest group and supervising authority. For the specific hypothesis on the size of the municipalities it was important to speak with employees from organizations that handle more than 50.000 objects. It was thereby also important to speak at least with one provider of CAMA as well as at least one provider of an AVM. By doing this, all possible different opinions on the research topic where encapsulated. The different groups are now shortly introduced.

User

This group contains employees from municipalities or municipal organizations with more than 50.000 properties within their municipal borders and it need to be persons that use or did use a CAMA or AVM in practice. This group can provide information on the experiences around the practical use of mass appraisal methods and are an important source when it comes

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to gathering information on the internal characteristics that influence the adoption of mass appraisal methods by municipalities.

Developer/researcher

The reason why this group both contains developers as researchers is that AVM’s are mostly developed by the expertise of academics. In the field of CAMA it are mainly software developers who developed the CAMA’s. So this are two different sorts of people related to the production of mass appraisal methods in the Netherlands. Encapsulating this group helps in receiving specific information on the differences between the different mass appraisal methods in the Netherlands.

Interest group

In chapter 2 there was spoken of a hybrid valuation which is used by Dutch municipalities. One side of this hybrid valuation is the mass appraisal method. But this is still seen as a helping hand to a manual valuation, the other side of the hybrid valuation. This makes it extremely important to speak with interest groups of professional appraisers in order to get for example their opinion on the use of mass appraisal methods.

Supervising authority

The last group is the Netherlands Council for Real Estate Assessment, this is the supervising authority related to the Special Act for Real Estate Assessment. Their main task is the quality control of mass valuation (Kathmann, 2014:2). This organization exists since the beginning of the Act in 1995 and the people from this organization have enormous expertise on this research topic. They are able view the topic from an independent helicopter viewing point.

In planning the interviews there where, per side, invited a minimum of three persons with as goal to have at least two interviews per side. With at least two viewing points from every side there was ensured that the answers could be checked on possible weird differences within a side. There was made a short list with names of people that were falling within all the research criteria mentioned in this paragraph. This resulted in 16 persons that where emailed with the request for an interview. Out of these 16 requests there were 13 reactions in total. This resulted in interviews with three users, five delopers/researchers, two persons from interest groups and three persons from the supervising authority. The first two introductory questions of the interview guide were used to get some specific background information on the working experiences of the interviewees which could be used to shortly introduce the interviewees in the analysis of the next chapter and thereby give some context to their

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opinion. Another important source of information for this research was the publicly available data set on the specific mass appraisal methods used by municipalities between 2005 and 2007.6 This contributed in answering the more descriptive question on the diffusion of mass appraisal methods over time.

4.3 Limitations

The sources for this research are interviews, the review of (news) articles, publicly available data sources and in limited extent the experiences of myself, the researcher. Using multiple sources is not necessarily improving the research. Multiple views can be irreconcilable to a certain extent which makes it harder to come to validate and generalise results (Kincheloe & McLaren, 2005:319). However, as Roulston (2010:84-86) argues, this possible downside is outweighed by the fact that differing world views and multiple sources give the researcher the possibility to highlight contradictions and inconsistencies. This contributes to more plausible explanations to the research question.

To wrap this all up, alternative explanations/confounding variables; reverse causality and randomness are dangers that can occur in this research. You can never be a 100% what caused the diffusion and adoption of CAMA’s and AVM’s. There are several actors involved in this field. But by using multiple sources the threat of wrong inference is lowered to the biggest extent. If this different methods lead to the same result, there can be stated with more confidence that the results are valid (Toshkov, 2016:313). Furthermore, the research material was relatively heterogeneous, the researcher was in the beginning of his professional career and there was only carried out one round of interviews. This may have had impact on the reliability of the research to a certain extent. Carrying out multiple rounds of interviews could help reducing potential reliability issues. However, this research nevertheless adds valuable knowledge to the relatively novel area of mass appraisal methods within the Netherlands and it may help any future research that rolls out of this one.

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Chapter 5./ Analysis

The research sources are analyzed in two sections in this chapter. In the first section, mainly the interview results and quantitative data on diffusion of mass appraisal methods in municipalities between 2005 and 2017 are used to give a description of the diffusion of mass appraisal methods from the perspective of the three concepts related to time. The conclusions of the first section forms the indispensable starting point of the second section. Because as in the introduction of this research was mentioned. In order to understand adoption it is necessary to trace back historical events as these led to the current organizational dilemma’s on adoption (Lyytinen & Damsgaard, 2001:185). In the explenatory section the results on the influence of internal organizational characteristics on the decision of municipalities to make full use of CAMA’s and AVM’s as the best course of action available are presented. The main concepts that are used to do this, as came out of the chapter on theory, are organizational size, culture, infrastructure, learning and interorganzational relations. In chapter 6 the concluding remarks on the research are stated down.

5.1 Descriptive part

In this descriptive part of the research there is asked how the use of mass appraisal methods by Dutch municipal organizations is diffused over time. Or as it was formulated in the literature of this research; how a new technology is spread across the social system over time. In order to give an answer to this question, we need to go all the way back to the implementation of the Special Act for Real Estate Assessment on the first of January in 1995. One of the interviewees from the side of supervising authority, who was involved in the Act from the beginning, told that it didn’t all just start from out of this date (Interview 11, personal communication, May 22, 2018). Already in the years before they had been busy with preparing execution arrangements and also with helping to think about how to write the Act itself. There were conducted researches on how the process of valuation should be planned in order to get every municipality able to revaluate on the same valuation date. This resulted in a four year based revaluation scheme, which was legally recorded in the Act of 1995. In execution arrangements was written down how the work should be carried out by municipalities in order to meet the deadlines. For example how the market analysis and data management should take place. This should make the municipalities able to spread their work over time.

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However, this period of 4 years was more seen as a large project than really as a process. This was argued by one of the model developers that is working within the Act since the end of the 90’s. You had, and you still have, two sorts of municipalities. Those who do the work themselves and those that outsource the work. In that period, the majority of municipalities had outsourced the work to the company of the interviewee or other companies that were active at that time (Interview 6, personal communication, May 23, 2018). Other big companies in these services between 1995 and 2003 were Grontmij, Kafi, Oranjewoud and Taxon. In the year 2002, valuations from 430 of the 489 municipalities in the Netherlands were done by these four companies. ‘Their’ municipalities were concerned with approximately 4.3 million of the approximately 7.9 million WOZ objects. The other 60 municipalities with approximately 3.6 million WOZ objects carried the WOZ activities entirely or largely out in their own organization. These municipalities were on average

considerably larger and more urbanized than the 'outsourcing' municipalities (ONRI, 2003:11-

12).

These ‘outsource’ companies did this work mostly on paper and manually. This means that the valuer of the company went from door to door to write the property values manually on a piece of paper. Back in the office these values were filled into the computer by other employees (Interview 6, personal communication, May 23, 2018). An employee of the supervising authority, that before also worked on the side of the user and developer, stated that this type of work was just carried out in Excel (interview 12, personal communication, May 24, 2018). There was used a kind of price index to convert the old value and you then try to make it dependent on a property type, in one way or the other this were the first forms of

CAMA (Interview 11, personal communication, May 22, 2018). In the beginning of 2000

some companies started with the further development of mass appraisal methods in order to be in control of the massiveness of the data (interview 12, personal communication, May 24, 2018).

It was around 2002 that the more CAMA based approach started to take its entrance in Dutch municipalities (interview 1, personal communication, May 29, 2018). The just mentioned model developer argued that for his company the only drive for developing came out of the financial consideration of being the cheapest and through this being able to win tenders. At that time there was no big demand from municipalities for these kind of systems. So basically the shift from completely manual to a hybrid valuation took off because of economic effect which actually escorted municipalities into using mass appraisal methods. In the beginning,

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municipalities were reluctant to this change as they didn’t see any need yet. Municipalities that revaluated by themselves also didn’t really want to switch to mass appraisal methods because they had professional appraisers within their municipal organization that were not willing to use these kind of models, as the interviewee argued (Interview 6, personal communication, May 23, 2018).

In the same period of time also the other method of mass appraisal within the Special Act for Real Estate Assessment, the AVM, came to the foreground. The municipality of Amsterdam already started in the beginning of the 90’s with using this method as a way to control the manual appraisals. As argued by an interviewee, who started his professional career within this municipality and later developed his own AVM as a researcher. The control work was done by the section of model development and market analysis that was situated within the municipal organization of Amsterdam. In the beginning the econometrists and technicians were set aside as ‘models’ boys, were in a separate section and did not have much in common with appraisers. Nor was that much faith attached to the method and people were pretty skeptical about the possibilities. But however, this made Amsterdam a forerunner for a long time and alone. A lot of other municipalities visited the section to see what was being done. Amsterdam is one of the few municipalities that could afford it, in terms of costs, having such a section within their organization. This statement is in line with the literature on the size of a municipality in chapter 3. Larger organizations adopt new technologies earlier because they are better able to invest in a new technology than smaller organizations (Hall & Kahn, 2002:22). The control work of the section was done till the end of the 90’s, got through the time more and more accepted and gained a bigger role in the valuation process. In 2001,

Ortax was founded out of here (Interview 4, personal communication, May 30, 2018). This is

the only big AVM provider within the Special Act for Real Estate Assessment (figure 5).

As another interviewee, who can be placed in the part of researchers, argued in a similar sense that it was just the development of IT. You got computers that could handle large data files and that you also got statistical methods and techniques that were made possible out of IT.

Ultimately it is cheaper and faster. In the late 90s universities were sometimes also asked to

help with the valuation of properties within some municipalities. Thereby, the implementing of the annual revaluation by municipalities certainly plays an important role in the growing

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Before the Special Act for Real Estate Assessment in 1995, most municipalities had revaluation every 5 years. The Act started, as already mentioned, with a nationwide revaluation every four years. The valuation of 1995 was used for taxation between 1997-2000. The revaluation of 1999 was used for taxation between 2001-2004 and the revaluation of 2003 was used for taxation between 2005-2006. Due to a legislative amendment of November 2005, this period was further shortened. The revaluation of 2005 was used for taxation in 2007 and the revaluation of 2007 for taxation in 2008. Hereafter every year a new revaluation was done. This means that since 2008 the valuation date is one year before the start of the tax year for which the WOZ value is determined. The goal of this amendment was to be better able to explain the value to the taxpayer, reduce the number of appeals and higher the efficiency and lower costs for municipalities (Kathmann, 2014:15).

Also the from the side of the interest groups of professional appraisers there was understanding for the fact that it is almost impossible to do yearly manual revaluations by professional appraisers for the whole of the Netherlands, so you had to look for a model somewhere. If you have to have every house in the Netherlands valued every year by an appraiser, that can simply not be paid. However these interest groups would stay critical on the use of the models and the effects of it on the WOZ values, even to the present day (Interview 9, personal communication, May 24, 2018 & interview 10, personal communication, May 23, 2018).

Already some time before the amendment there was, by the supervising authority, promoted that municipalities should do the revaluations themselves instead of outsourcing it. With doing this the municipalities could make sure they got a lot more grip on the process of revaluation instead of letting it be an enormous project. This made that there came many more municipalities that did the revaluations themselves and the firms like Grontmij, Kafi, Oranjewoud and Taxon lost parts of their market share. This was all around the year of 2004 (Interview 6, personal communication, May 23, 2018). The development of these mass appraisal methods of CAMA and AVM and the change to annual revaluation cannot be seen separately. Because you could not go to an annual revaluation if there had not been any

methods to do so. There was simply not enough capacity within the municipalities. This was a

clear interplay, providers of mass appraisal methods pre anticipated on the upcoming

amendment which was informal introduced in the years before by the authorities (Interview 11, personal communication, May 22, 2018).

38 It is possible to distinguish a few currents within the overview of providers of mass appraisal methods from the beginning of 2005 (fig. 5). Since 6 years there are five municipalities using

SPSS, this is also something similar to statistical valuation of an AVM (Interview 4, personal

communication, May 30, 2018). Also ABF Calcasa was once active but they don’t provide their AVM anymore within the Special Act for Real Estate Assessment, as can be observed in the figure. But they are active in other markets. The AVM of Ortex is still a large market force within the Special Act for Real Estate Assessment. Those three were the examples of statistical models. The rest, CAMA’s were focusing on automating the valuation process with making similar groups of properties and let this lead to a value through entering key numbers in the CAMA system (Boumeester et al. 2011:6).

Fig. 5 Indication of the different used mass appraisal methods by municipalities over time

All this information brings us to form an answer on the hypothesis of the descriptive part. When it comes to the diffusion of mass appraisal methods you can clearly speak of an authority innovation-decision. The choice for yearly revaluation was made by relatively few individuals who did possess power, status and technical expertise. The annual valuation made it inevitable to use mass appraisal methods. But it was also a decision based on a decision making process wherein was determined that it is was technically possible. Ten or fifteen years earlier it would not have been possible. However, there were of course people from

0 20 40 60 80 100 120 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Am o u n t o f m u n icip a li ties Years

Indication of the different used mass appraisal methods by

municipalities over time

Ortax (AVM) ABF Calcasa (AVM) IBM (SPSS) Own model

Tog Nederland (CAMA) Geotax (CAMA) Centric (CAMA) Gouw IT (CAMA) 4value (CAMA) Thorbecke TAX-it (CAMA) Kondar Taccent (CAMA) SMQ (CAMA) ATMP (CAMA)

Taxon WOZ-Consultants (CAMA) Grontmij (CAMA)

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municipalities who disagreed on the possibilities. They really had the idea that this transition