7 things an automated or non-appraiser valuation won't tell you

Lenders and brokers using Automated Valuation Models (AVMs) and homeowners using "free online home values" to determine the value of a property need to know what those results aren't telling them.

  1. Whether the house is really there. A computer can't so much as drive by a house to see if it's actually located where it's supposed to be, has four walls and a roof, and really is a four bedroom split level and not a one bedroom shack.

     

  2. Whether unique features of a property might add to or detract from market value. So a computer returns an estimated value of $150,000. Did it account for the sewage treatment station next door? The railroad tracks nearby with trains that blow their whistles every night? The school district? The desirability of its tree-lined street versus the next street over?

     

  3. How long ago the property was assessed. Many AVMs and free online services rely on public assessment records. In many states, for example, assessments may only be required every three years — the value may be nearly three years old in that case. Some states mandate that an assessed value not increase beyond a certain percentage, even if sales activity indicates the property has appreciated far more. When you use an AVM or free online service, you risk a lower value than reality.

     

  4. What makes the comparables comparable. A computer might compare your subject property to another property with similar square footage sold three months ago a quarter of a mile away. Even if that "comparable" property is in a different, less desirable school district, fronts a four-lane, 55 M.P.H. street, and is flood-prone. Or even if the property was sold under duress, such as in a divorce situation, or not at arm's length, such as to a family member. A computer simply does not know all the adjustments that might need to be made to a "comparable" property's sales price.

     

  5. Whether a market is declining. Automated valuations use data from recent, nearby sales. If those sales were completed at the peak of a local housing market, the computer will think the trend is going up. Even if a professional appraiser knows that the overall neighborhood is beginning to experience a downturn. As a lender, don't get stuck with a property that's been overvalued by a computer.

     

  6. Whether there is a conflict of interest. Free online home values are often farmed out to real estate agents in your area, who use the service to get your listing when you decide to sell. The best way to do that is to impress you with their confidence that they can get a higher price for your property. If they tell you your property is "worth" the high end of what they believe they can sell it for, the theory goes, you're more likely to sign a listing agreement. With most things, it's best to "under promise and over deliver" — but the opposite is true when you use a free online home value service.

     

  7. What qualifications, designations, experience and education the preparer of the value has. When you work with an appraiser, you can be confident we're highly qualified, ethical and prepared to complete your assignment professionally and with good judgment. Most of the time, you don't know the qualifications of whoever is behind those free online values, and they couldn't compare to an appraiser's if you did. And if you're relying on an automated valuation, you're cheating yourself out of an appraiser's education, experience and expertise.

 

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question
:
 
Facebook Will Lift its Temporary Ban on Political Ads Later This Week
3/3/2021 1:44 PM
With the 2020 US Presidential Election behind us, Facebook will now allow political ads on its platform once again.Read More
 
Pinterest Announces New Marketing Tools, Including "Pinterest Premiere" Video Ads
3/3/2021 1:16 PM
Pinterest has announced a range of new ad tools at its Pinterest Presents marketing and advertising summit.Read More
 
Twitter Will Remove Support for Some Timeline Embeds on Websites in June
3/3/2021 1:04 PM
Twitter is removing its Likes, Collections and Moments embeddable timeline options as of June 23rd.Read More
 
Twitter Shares Insight into Rising Discussion Around the NBA All-Star Game and NCAA March Madness [Infographic]
3/3/2021 12:48 PM
Twitter has shared some new insights into rising on-platform discussion around the NBA All-Star game and the NCAA March Madness tournament.Read More
 
Facebook Expands Access to its Community Manager Certification Courses
3/3/2021 12:46 PM
Facebook is making its Facebook Community Manager Certification course available in more languages.Read More
 
Google Says That it Will Not Provide Alternate Data Tracking Options When Third Party Cookies are Phased Out
3/3/2021 12:26 PM
Google has clarified that it will not be looking to provide cookie alternatives once the tracking option is eventually phased out.Read More
 
TikTok Announces "Ready, Set, Grow" Summit for SMBs
3/3/2021 11:49 AM
TikTok is holding a new summit to educate SMBs on their opportunities in the app.Read More
 
TikTok"s New TV-Connection Option Comes to US Homes
3/2/2021 2:27 PM
Owners of Samsung TVs in the US will soon be able to watch TikTok clips on their home TV sets.  Read More
 
Snapchat Adds New Wheelchair Animations for Bitmoji Avatars
3/2/2021 2:08 PM
Snapchat has added some new, more inclusive additions for your Bitmoji characters.Read More
 
TikTok Highlights Female Creators for Women"s History Month
3/2/2021 1:47 PM
TikTok has announced a range of events for Women's History Month.Read More