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
Pinterest Provides Additional Insights into its Pin Classification Process
8/18/2019 7:00 AM
Pinterest has provided some new insights into its content classification systems, which could help you better optimize your content for discovery on the platform.Read More
Facebook Stories: An Introduction for Content Creators [Infographic]
8/18/2019 7:00 AM
Facebook has provided a new set of tips and notes on how to maximize your Facebook Stories.Read More
The Evolution of PR - 1999 to 2019 [Infographic]
8/18/2019 7:00 AM
The PR and communications game has changed significantly in the last two decades. This infographic underlines that evolution.Read More
Facebook is Removing its Group Chats Feature to Limit Spammers
8/17/2019 7:00 AM
Facebook has announced that it will roll back its group chat option, which will impact communication across a range of Facebook groups.Read More
Twitter Updates Permissions to Clarify Which Third-Party Apps You Approve for DM Access
8/17/2019 7:00 AM
Twitter is moving to better clarify what third-party apps can do with your account when you grant them access.Read More
Facebook"s Looking to Prompt More Sharing to Your Personal and Page Stories
8/17/2019 7:00 AM
Facebook is testing a new Stories option which would display a split Stories updater at the top of your feed, enabling faster posting to personal and Page stories.Read More
Twitter"s Testing a New Content Filtering System for Message Requests
8/16/2019 7:00 AM
Twitter is testing a new filter option for direct message requests to help protect users from unwanted offensive material.Read More
YouTube Updates Content ID Claim Policies to Better Protect Creators
8/16/2019 7:00 AM
After months of complaints from creators, YouTube is updating its Content ID policy, which has seen many claims for minor infringements.Read More
Facebook Will Open Several Pop-Up Cafes in London to Assist Users with Privacy Settings
8/16/2019 7:00 AM
Facebook's launching a new initiative to better ingratiate itself with the public, by opening cafes where users can meet with Facebook representatives face-to-face.Read More
Facebook Adds New Booking and Reminder Prompts to Movie Ads
8/16/2019 7:00 AM
Facebook is rolling out new updates for its movie ads, including reminder prompts in-app and direct booking options.Read More