Appraisers vs. AVM’s
Will computers replace appraisers when it comes to valuing homes?
That question is a subject of much debate. In some limited transactions, an Automated Valuation Model (AVM) may be used today instead of an appraisal.
According to a data scientist with the National Association of Realtors, “When it comes to online home value estimates, the number one caveat for consumers is that these estimates are not a substitute for formal appraisals, comparative market analyses and the in-depth expertise of real estate professionals.”
AVM’s are not appraisals. And, in many cases, are suspect if there is a lack of available data or property isn’t a cookie cutter. So why aren’t AVM’s more reliable in more transactions? Because computers don’t buy houses – people do. An AVM does a good job of analyzing features such as age, bedrooms, square footage and lot size. But they don’t include the human factor and characteristics.
So aren’t appraisers required to use the Uniform Standards of Professional Appraisal Practice to be “independent, impartial and objective?” Of course. Still, appraisers are not machines. They must have relevant data and logic to support their analyses, opinions and conclusions. But they also incorporate the concept of market value reflecting the interest of consumers who are typically motivated and well informed.
Appraisers remain better than AVM’s at recognizing motivations and knowledge levels of market participants. The output of an AVM is not, by itself, an appraisal. It may become a basis for one if the appraiser believes the output to be credible for use in a specific assignment.
So unless and until AVM’s can better emulate the human factor, an ethical and competent appraiser remains indispensable. I dedicate this article to all my appraiser friends who have helped me over the years.
Nancy Nelson-Embler, Coldwell Banker in Irmo, [email protected], 331-0635.