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Avm "created" Sale Price

Discussion in 'General Appraisal Discussion' started by Restrain, Dec 23, 2004.

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  1. Restrain

    Restrain Elite Member

    7
    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Got a UW request on an appraisal:

    Is XXXXX Drive, that you reported, a valid sale?

    HUH?

    Called UW. Says that XXX Software AVM company reported the sale as $83,000 on 8/20/2004.

    No, it closed on 8/19/2004 at $72,500 per MLS and Realtor. O.K., Thanks.

    After the UW hung up, I started looking at the sale again. Seems that the AVM company took the Deed of Trust data (Loan amount, date, etc), and said that it was an 80% Loan, and created a sale at $83,000 (rounded up). So we have an inflated sale from the AVM at 115% of actual sale price.....which they will use in their next AVM in the area.

    And they wonder why appraisers are constantly complaining about AVMs.
     
  2. Mountain Man

    Mountain Man Elite Member

    12
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    According to some of the reviews I've done, they may have learned that trick from Skippy.
     
  3. Jim McGrath

    Jim McGrath Junior Member

    0
    Jan 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Here in Florida I have run across buyers who will overstamp their Deed when they register the sale. The Clerk of Court calculates the sale price based on the stamps. So now the sales price shows much higher than acutually happened. I checked with the state and found this is not illegal, they try to discourage it, but there is nothing they can do about it.

    Jim Mcgrath
     
  4. Steve Owen

    Steve Owen Elite Member

    0
    Jan 16, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Missouri
    Just goes to show that all data is suspect.

    However, a bigger issue here is one I hear often. While it is true that the AVM company may have learned that trick from Skippy, it would not be legal for Skippy to do that - USPAP would call that a violation in terms of development and reporting. On the other hand, there is probably no rule to prevent the AVM company from doing that. What we need is not to eliminate AVM's but to have regulation that makes them play by the same rules as appraisers. Then, appraisers could use AVM technology to their advantage. As the situation currently exists, I don't feel comfortable using them for anything in my market.
     
  5. Tim Hicks (Texas)

    Tim Hicks (Texas) Elite Member

    19
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Texas
    A couple of years ago, I noticed an AVM for a big bank I did work for had several discrepancies. My MLS sale would show $128,000, but the AVM would show $133,000. I asked the bank VP about it and he explained that the AVM was forecasting for the increase in market. I wonder how that forecast program is working since property values have been flat in most areas this year and down in the up-scale neighborhoods?
     
  6. Carnivore

    Carnivore Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Tim,

    The should try and sell this predicative software on late night Infomercials!
    Imagine how many people would buy the stuff to get even richer from the world of real estate foreclosure and no money down lala land.


    We should not complain. Its just plain ole good news for us!
     
  7. Otis Key

    Otis Key Elite Member

    0
    May 15, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Andrew - How is Fidel?

    Tim - we really all, at least the experienced appraisers, understand that there's is only garbage in and garbage out from most of those programs. I'm surprised that someone hasn't sued one of them (I shouldn't be) because of false estimates. I shouldn't be, like I said because the borrowers are getting inflated values and taking the money and running with it before the foreclosure proceedings catch up with them. Of course, we really shouldn't complain too much about the AVM inflations because what it really does is increase foreclosure work for the appraisers who report the facts and realities of this business and market.
     
  8. roger hughes

    roger hughes New Member

    0
    Aug 11, 2004
    hey guys I don't know much about the AVMs. I need to get off my but and catch up. Explain to me about forecasting on AVMs. That's a real big step for already skippy funny data. Was the avm an erc or regular 1004 or what. thanks roger.
     
  9. Ross (CO)

    Ross (CO) Senior Member

    0
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
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