Lars Doucet - The Somers Sytem and Appraisal History

How a 1909 valuation method reveals timeless truths about land, location, and community trust

Fellow assessors, we spend our days wrestling with CAMA systems, regression models, and market adjustments. But what if I told you that over a century ago, appraisers were achieving remarkably accurate valuations using nothing more than newspaper surveys and simple arithmetic?

Lars Doucet, CTO of ValueBase and author of Land Is a Big Deal, recently shared insights about the Somers System, a nearly forgotten valuation method from 1909 that holds surprising lessons for our profession today.

When Community Input Was the Algorithm

The Somers System, developed by W.A. Somers and popularized by the Manufacturers Appraisal Company, emerged during a critical transition in American real estate. Cities were exploding with industrial growth, and the old agricultural-based valuation methods were failing.

Their solution? Ask the community.

"They had kind of front-loaded the protest process," Doucet explains. Assessors would publish notices in newspapers, inviting residents to identify which streets held the highest values, submit transaction evidence, and essentially crowdsource market intelligence.

This wasn't random guesswork. The system used a standardized unit, one front foot with 100 feet of depth, and applied consistent formulas for corner lots, varying depths, and street-to-street value transitions. The results? Professional real estate agents of the era confirmed these community-derived values matched their own market estimates.

The Land Value Revolution We're Still Fighting

What makes the Somers System particularly relevant today is its explicit separation of land and building values. This wasn't just a technical exercise, it reflected the economic reality that location drives value.

Consider Doucet's personal example: his home has tripled in value despite requiring constant maintenance just to stay in the same condition. "I've just kept it afloat," he notes. The appreciation came entirely from increased demand for that specific location.

This mirrors what we're seeing across our jurisdictions today. When the market swings wildly, as it has recently, it's rarely because buildings suddenly became more valuable. It's the dirt underneath them, the irreplaceable, finite resource of location, that's driving these shifts.

Why "Location, Location, Location" Is More Than a Cliché

Here's a sobering statistic from Doucet's research: two-thirds of all global wealth consists of real estate. Half of that real estate value is pure land value.

This isn't some abstract economic theory. It's the daily reality we face when trying to explain to taxpayers why their 1970s ranch house is now worth $500,000. The structure didn't magically improve. The location became more desirable as population grew, incomes rose, and technology enabled remote workers to bid up previously affordable markets.

"When banks give everyone all these loans, basically they give you a nice loan so you can go and buy that house. Well, they also gave the guy who is bidding against you a big loan, too," Doucet observes. This credit-fueled competition for finite locations is what drives values skyward.

Lessons from the Pre-Computer Era

The Somers System succeeded without computers, databases, or even calculators. What it had was:

1. Transparent methodology that citizens could understand and verify
2. Community engagement that turned potential protesters into data providers
3. Standardized units that enabled consistent application across diverse properties
4. Focus on location as the primary value driver

Modern assessors might scoff at surveying citizens via newspaper. But consider this: our protest hearings often serve the same function. "The easiest way to get accurate information on the Internet is to post incorrect information because then someone will immediately come and correct you," Doucet jokes. Our preliminary values often work the same way.

The Technology Trap and the Path Forward

As our profession faces retirements and increasing complexity, the push toward automated valuation models (AVMs) seems inevitable. But Doucet warns about the "black box" problem, models so complex that neither assessors nor taxpayers can understand them.

The future he envisions combines advanced technology with the transparency and community trust that made the Somers System work. "More open technology, more transparent, explainable, auditable technology," as he puts it.

This might mean:

• Paired sales analysis that explicitly isolates location premiums
• Land-first valuation models that better capture market dynamics
• Technology that enhances rather than replaces assessor judgment
• Systems that invite community input rather than defending against it

Key Takeaways

1. Historical methods worked because they acknowledged fundamental truths about real estate, namely, that location drives value and communities understand their own markets.

2. Land value isn't some abstract concept, it's the majority of what we're actually assessing, especially in hot markets.

3. Community resistance often stems from opacity, not disagreement with values. The Somers System's radical transparency turned critics into collaborators.

4. Technology should enhance transparency, not obscure it. The best AVM is one that citizens can understand and assessors can explain.

5. "Front-loading" public input might reduce protests more effectively than defending values after the fact.

As we navigate market volatility, technological change, and public skepticism, perhaps it's worth remembering that our predecessors faced similar challenges with far fewer tools. Their success came from understanding a simple truth: accurate assessment isn't just about mathematical models, it's about capturing the community's collective wisdom about what locations are worth.

The Somers System may be a historical footnote, but its core insight remains vital: when we separate land from buildings and engage rather than dictate to our communities, we get closer to the truth that markets reveal through transactions.

After all, if they could do it with pen and paper in 1909, surely we can do better with all our modern tools, as long as we don't forget the human element that made their system work.