With automated valuations, you get what you pay for — and there’s a lot you don’t get. Computers, the Internet, and technology in general have made appraisal turnaround times faster than ever. But some of our clients are still interested in dipping their toes into using Automated Valuation Models (AVMs), because they’re relatively cheap and fast. You know
what they say about things that seem too good to be true? Or how they say you get what you pay for? Here are just some of the things that you don’t get from an AVM.
If 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. Many of our clients like to know these things, and not be left to wonder.
Do unique features of a property add to or detract from its 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? Short answer: No. Computers can’t know or account for such factors.
How long ago was the property assessed? Many AVMs 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, you risk a lower value than reality.
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, 65 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.
Is the market 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.
At Sactown Appraisals our appraisal professionals give you the best, most complete, most accurate service available. And we Call us at (916) 743-5219 if we can be of service. You won’t regret it!
Bart C Nathan
A “Desktop Valuation” also known as a limited appraisal. The appraiser will use all available tools online to develop an opinion of value based on assumptions that the subject property is in average condition and conforms to the neighborhood in terms of style and construction. The product is a great option for the client to receive an estimate of value for a subject property without the upfront cost of a full appraisal.
A drive-by appraisal utilizes a similar process for estimating market value as the full appraisal with interior inspection. However, the drive-by appraiser must rely on outside sources for their information. For example, the appraiser may check court records or a multiple listing service record to obtain the age, size, and other characteristics of your home. Although these records may not always be accurate, they provide some basic information to complete the appraisal.
Full appraisal designed for the valuation of one-unit residential properties. Valuation is based on an interior and exterior inspection of subject property and exterior inspection of all comparable sales by a licensed appraiser. Available for use in Construction Lending, for FHA, Manufactured Home and Jumbo loans as well as REO valuations.
Additional features include: Map of subject versus comparable properties, Building Sketch with exterior dimensions, Front Rear and Street photos of subject, and Front picture of all comparables.