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
Meta"s Developing and "Ethical Framework" for the Use of Virtual Influencers
1/16/2022 1:00 AM
With the use of digital characters on the rise, regulations are needed to limit potential harm and misuse.Read More
Meta Publishes New Guide to the Various Security and Control Options in its Apps
1/16/2022 1:00 AM
The guide covers all of the various security and safety tools on Facebook, Messenger, Instagram and WhatsApp.Read More
YouTube Previews New Tools to Help Creators Showcase the Value of their Channel for Brand Promotions
1/14/2022 2:59 PM
The new listing will enable YouTube creators to better showcase their unique audience value to potential ad partners.Read More
Twitter Launches New Program to Help Healthcare Providers Stay Up to Date on Latest Industry Announcements
1/14/2022 2:23 PM
The new partnership with PHM looks to capitalize on the use of Twitter as a connective platform around healthcare conferences.Read More
Twitter Tests New Column Creation Tools in TweetDeck
1/14/2022 2:01 PM
The new updates could make it easier to set up a social listening dashboard in the app.Read More
Mr. Beast Takes the Top Spot in Forbes" 2021 YouTube Earners List
1/14/2022 1:20 PM
Jimmy Donaldson takes the crown for 2021, beating out long-running champ Ryan Kaji of 'Ryan's World'.Read More
Meta"s NPE Team Continues to Shift Focus with the Shutdown of Another Experimental App
1/13/2022 6:03 PM
The NPE team, which has launched a range of app experiments, is evolving into a new, metaverse-aligned entity.Read More
Twitter Rolls Out Spaces Recording for All Users
1/13/2022 4:41 PM
The option will provide more functionality for your Spaces chats.Read More
Instagram Is the Platform of Focus for Marketers in 2022, According to New Research
1/13/2022 1:29 PM
Marketers say that they'll be prioritizing Instagram in 2022, according to our recent survey results.Read More
The Anatomy of Content Marketing: 12 Types of Content to Add to Your Arsenal [Infographic]
1/13/2022 12:55 PM
Looking to up your content game in 2022? Some key tips and notes in this infographic.Read More