I was glad to see this on the page! (There is more to this article but I could not attach all comments becuase of size issue) go to: The Big AMV Lie Lookout - the next time you buy or refinance your home..... The BIG AVM Lie Automated Valuation Models (AVMs) Many lenders, including Fannie Mae, Freddie Mac, Wells Fargo, Countrywide and Washington Mutual have recently made a very risky decision to utilize computer generated appraisals (known as AVMs) instead of licensed real estate appraisers. These AVMs are similar to those you pay $10-$20 for on YaHoo or at some other company sites. They were known as neural logic or "fuzzy logic" when they were used on the stock market in the mid 90's. They failed there miserably. Like neural logic programs of the past, AVMs which the banks are now using are also failing miserably. These computer programs begin their "appraisal" by blindly generating an appraised value for a home with very faulty data. This computer "analysis" is based on multiple regression analysis with a large amount of the most pertinent variables, including your homes actual condition, its actual verified size, and your location removed from their equation. Only after AVMs find the appraised value do they begin searching to find what they consider likely comparables. The reason the banks are doing this is not to save you money--but to increase their own bottom line (they collect the fee). This also allows the lender to "fudge" these computer generated home valuations, because no 3rd party (like an appraiser) is now watching them. When a mortgage company is involved, our experience as state licensed appraisers is that a large percentage (not all) of loan officers will do anything it takes to "push a loan" just to collect their own commission. This is not always in your best interest! Suppose you owe much more than your home is worth, and the real estate market takes a down. You may soon find yourself filing bankruptcy if you had to sell your home. Relying on these AVMs to give you a value prior to selling your home could very well cost you $10,000-$100,000 in lost equity. It has happened to many people. AVMs and LOW VALUES: AVMs base their value estimates without anyone ever evaluating the condition of your home or the condition of the comparable sales used to estimate your value. AVMs nearly always totally ignore the number one criteria in real estate--location. These computer programs could care less if your home is located in a much superior neighborhood--an inferior neighborhood is often separated by just one street from you. These computer programs don't care if you have an ocean front view, or even a "crack house" view. A comparable which your home is judged by these AVMs may have sold low because half its foundation was falling down a cliff. It could have sold low by $50,000 because it has urea formaldehyde in the walls--AVMs don't care. Because its within their "circle" computers figure it's equal to yours. AVMs always indiscriminately compare your neighborhood with run-down and other incompatible neighborhoods. That's because computers cannot see the difference as they incorrectly analyze data in an office hundreds or thousands of miles away from you. Computer generated evaluation databases are predominated by 10-15 year old county data. This data most likely does not show whether you renovated your home's interior or exterior, put in new thermal windows, finished your basement, added an in ground pool, deck or porch. Computer generated evaluations will most likely miss your new kitchen and your new bathroom also. Additionally, AVMs are not likely to measure your home correctly. And they'll probably miss that finished 3rd floor and that new $60,000 addition in the rear. In short, AVMs do oranges against apples. They'll include a finished basement as if living area (gross living area) in the comparable sale--and often they'll not do the same with your home. Computer generated evaluation databases will most likely not include "fresh sales" in your neighborhood, or even across the street from you. If you have waterfront property, a computer evaluation will most likely compare your home against a non-waterfront home. Should your lot spill over to another town or even another state, this AVM will most likely miss that lot portion outside of your town. Computer generated evaluations will not talk to local brokers about why a home sold so high, or so low. They will also miss a lot of good comparables that exist when a homeowner sells their own property (FSBO). If you have a lot that could be sub-divided to give you a windfall of $100,000-$100,000,000, unlike an appraiser--the bank computer will give you no "heads up" so that your "gravy" goes to the new buyer--and you are none the wiser. The worse thing about these computer evaluation models (AVMs) is that they are spitting out reports to homeowners who are basing their selling decisions on these. We suggest if you lose money by relying on one of these - that you contact an attorney and file suit. AVMS are often falsely advertised as "Appraisers", "Real Estate Appraisers" and "Appraisal" on internet search engines. WHAT CAN A HOMEOWNER DO? Tell the Mortgage Company or Bank that you insist on an appraisal by a state licensed appraiser.