Author: Michael Holzheimer
Abstract: From Freddie Mac and Fannie
Mae waiving selected appraisals to advanced technology
possibly eliminating appraisers from physically inspecting
properties in the future, appraisers have been, understandably,
concerned about what lies ahead regarding the profession.
If appraisers feel pressure in one single area of evaluating a
property, it definitely comes under the category of proving your
results. Given that, the notion of reliability and validity is
bound to surface when a machine is spitting out value numbers left
Trust becomes a key factor in terms of the client's willingness
to accept these machine-driven statistics or not.
"The numbers, for the most part, are derived from two primary
sources - public records and Multiple Listing Services. Generally,
these are the same sources that appraisers use today," LRES Chief
Strategy Officer Mark Johnson told Valuation Review.
"The calculations for the machines will often have been inserted by
appraisers and mathematicians who understand the process
intimately. The source of the data and the underlying calculations
will not be the primary issue. The concern regarding the data
should fall into these categories:
- Has the data been mapped properly;
- Does the data account for the micro-market in which the
property exists; and
- Are there other extenuating circumstances that may not be
picked up by the existing data records - e.g., is there a unique
element that might otherwise impact the value such as telephone
lines or environmental problems in close proximity that might be
viewed by an appraiser but not caught within a dataset? These are
genuine concerns and are in addition to those stated earlier
regarding the quality and condition of the house that are not
easily discernible through data alone."
Johnson elaborated on AVMs and advanced technology helping or
hindering the appraiser, and whether or not automation is an
enhancement for the appraiser.
"The use of AVMs and appraisers should not be considered
mutually exclusive," he said. "I fully support appraisers
leveraging the AVM and more importantly, the data that resides
within the AVM as a primary tool in assigning a final value. The
appraiser can identify attributes in the AVM and make appropriate
transactional adjustments. If administered properly, an appraiser
can substantially increase his/her own productivity.
"You might flip the hypothetical conclusion. Computers are being
leveraged to manage the volume of available data as well as the
standard and sometimes mundane math concepts while appraisers are
elevated to focus on those key discrepancies and challenges that
are not able to be done by computers. Appraisers will spend more
time analyzing data and validating calculations and less time
driving," Johnson added.