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
Twitter Rolls Out Larger Image Display in Timelines to All Users on Android and iOS
5/5/2021 8:53 PM
Twitter is rolling out a new image display, which will show full-sized images within user timelines. Read More
TikTok Joins the Technology Coalition to Improve its Approaches in Protecting Young Users
5/5/2021 8:18 PM
TikTok has joined the Technology Coalition to refine its approaches to protecting younger users in the app.Read More
Clubhouse Announces the Finalists for its "Creator First" Development Support Program
5/5/2021 7:35 PM
Clubhouse has announced the finalists for its Creator Accelerator funding and support program.Read More
Twitter Launches Updated Offensive Comment Alerts on Both iOS and Android
5/5/2021 4:42 PM
Twitter has updated its process of identifying potentially offensive replies, with a view to reducing unintended angst.Read More
YouTube Announces Expansion of Shorts to All US Users, New Shorts Tab to Improve Discovery
5/5/2021 4:13 PM
YouTube is expanding its TikTok-like Shorts tool to all US users.Read More
Facebook Launches Nextdoor-Like "Neighborhoods" Tool in Canada, Plans for Broader Roll-Out
5/5/2021 3:21 PM
Facebook is launching its new 'Neighborhoods' local connection tool to all users in Canada as part of a broader expansion of the tool.Read More
Snapchat Previews New Original Shows, Creator Marketplace to Facilitate Brand/Influencer Partnerships
5/5/2021 2:43 PM
Snapchat has shared its latest slate of Snap Original programming, as well as a new Creator Marketplace platform to facilitate brand partnerships.Read More
Facebook"s Oversight Board Upholds Decision to Ban Trump, But Calls for Clearer Guidance Moving Forward
5/5/2021 2:06 PM
Facebook's independent Oversight Board has upheld the platform's suspension of former US President Donald Trump. Read More
Facebook Workplace Reaches 7 Million Paid Subscribers, Adds New Q&A and Integration Tools
5/4/2021 9:15 PM
Facebook Workplace is now up to 7 million paying business subscribers.Read More
LinkedIn Shares New Insights into Effective B2B Marketing Campaigns [Infographic]
5/4/2021 3:42 PM
LinkedIn has shared some new insights into effective, inspiring B2B campaigns, which could help to spark your thinking.Read More