Working with Appraisers – Humans vs. Computers in Real Estate Appraisals
Working with appraisers is a big part of any real estate professional’s job, and while we’re always talking about how to leverage the resources available through an automated valuation model (AVM), appraisers can play an important role in the process.
AVM reports can be used to mitigate risk by confirming value, ownership and other factors quickly and efficiently. However, that doesn’t mean the appraiser is out of the picture! What are the key differences with automated valuation model vs appraisal? How does each one work? Better yet, how do they work together?
Let’s take a look at each and how combining both an appraisal and an AVM can maximize potential and minimize risk.
First, an AVM is just that – it’s automated and does not involve an on-site property inspection. AVMs estimate property value by comparing and analyzing property characteristics against public record data. While an AVM can’t review interior and exterior property conditions, some include street view imagery that can help identify issues with exterior conditions, such as property boundary discrepancies. It’s great to leverage automation and historical data analysis to generate the latest information on pricing and ownership and create a big picture report.
The main difference between an automated valuation model versus an appraiser is that an appraiser can look at both the interior and exterior condition in greater detail than any AVM. They also have a more intimate knowledge about sales of comparable properties in close proximity to the property in question.
What are some of the things working with appraisers can bring to the table that you can’t get with an automated valuation report? An appraiser can…
- Tell you if the house is really there! A computer can’t drive by a house to see if it’s actually located where it’s supposed to be, is the actual house it claims to be, or even if it has a roof.
- Advise if unique property features might add to or detract from market value. An AVM can only provide an estimated value; it can’t account for nearby amenities that may impact value, such as schools or railroad tracks, for example.
- Clarify what makes the comparables comparable. A computer can’t find out why a property is on the market, for example.
- Provide more info on the local sales market trends than an AVM can.
- Find out if there is a conflict of interest.
Finally, an appraisal is completed by a human, which can make all the difference in closing a deal.
Sure, AVMs are less expensive than on-site appraisals, and saving money is one key factor in their appeal. Plus with the resources an AVM has to offer immediately available at the click of a mouse, they also save busy real estate sales professionals time
Appraisals are based on the knowledge and opinions of a trusted, professional appraiser who has experience on their side. While the objectivity of AVMs aren’t prone to human error or bias, they can’t provide the level of detail and experience that an appraiser can bring to the transaction. Instead, they offer you the ability to get accurate, objective, data-driven numbers, something you can’t get from an appraiser.
At the end of the day, the convenience of AVMs is great, but they become even more powerful when coupled with an onsite appraisal. When the deal looks viable, you can’t go wrong by combining the resources and information provided by both an appraisal and an AVM.
With an AVM, you can quickly confirm basics such as financing challenges, property value and property title issues. Once you feel confident enough to proceed, you can then call in an appraisal to confirm the details and raise any issues on the property conditions an AVM cannot perform.
Coupling the powerful resources of a program that uses AVM technology, such as GeoWarehouse, with working with appraisers can help you mitigate significant risk on deals. By beginning with an AVM report you can quickly determine if an in-person, on-site appraisal is even required.
Haven’t you heard about GeoWarehouse? It’s a powerful program that thousands of real estate sales professionals are using to help mitigate risk. You can learn more at www.geowarehouse.ca.