|Automated Valuation Models Useful But Won't Replace Professional Appraisers, Appraisal Institute VP Says
WASHINGTON, D.C., April 26 -- Appraisal Institute Vice President Alan E. Hummel, SRA, today told an assembly of the nation's leading housing experts that while computerized Automated Valuation Models (AVMs) can be useful in the home buying process, AVMs cannot replace the experience and expertise a professional real estate appraiser provides both buyers and sellers. Mr. Hummel's remarks were presented during the 2001 Conference on Housing Opportunity, sponsored by the Research Institute for Housing America.
Interest in AVMs within the real estate industry has surged due to a desire to reduce costs and the time required to perform many property appraisals. While AVMs can be faster and less expensive than the traditional appraisal, they cannot be used for every property. According to Mr. Hummel, AVMs are best suited for refinancing and home equity loans for which many financial institutions seek a defensible estimate of value that is relatively accurate.
``AVMs will certainly change the work of appraisers,'' noted Mr. Hummel. ``Routine jobs, such as refinancing or home equity loans in which there is little doubt that the property will carry the debt may allow the appraiser to deliver a more narrow scope of service. However, for every opportunity to use an AVM, many other situations will call for the professional appraiser's full breadth of experience and expertise.''
Mr. Hummel, CEO of Iowa Residential Appraisal Company of Des Moines, Iowa, appeared as a featured panelist for a roundtable discussion titled, ``Can Automated Appraisals Reach Underserved Markets?'', held during the Conference. The panel discussed and debated recent developments in automated valuation models for home mortgages and their implications for borrowers living in underserved areas. A key issue was how the advent of AVMs will affect borrowers whose collateral is located in markets where transaction volume is thin and ``non standard,'' or in areas where lenders typically do not lend in volume.
``AVMs can generally reduce the time it takes to complete a value estimate,'' commented Hummel, ``and occasionally can be useful in spotting trends before they become discernible by traditional appraisal methods. However, care must be taken regarding how much reliance should be placed on an AVM in any particular market. The professional appraiser is the best source to provide that necessary guidance.''
Today and throughout its nearly 70-year history, the Appraisal Institute is the leading organization for professional real estate appraisers. Through its extensive educational programs, the Appraisal Institute's more than 18,000 members are skilled in the up-to-date methods of real estate valuation for commercial and/or residential properties. Reflecting their unbiased and objective approach to real property appraisal and analysis, members of the Appraisal Institute adhere to a strictly enforced Code of Professional Ethics and Standards of Professional Appraisal Practice. The Appraisal Institute currently confers the prestigious MAI and SRA designations.
SOURCE: Appraisal Institute