A couple of years ago Joan Trice of AppraisalBuzz created a by invitation only forum for AVM developers. I was one of 60 people invited to participate. There was not a lot of posting going on about technical issues because no one wanted to give away proprietary information. I stated that the key to AVM and general appraising in the future related to credibility issues and verified model performance. I also pointed out the limitations and I am sure everyone involved knew those limitations.
The bottom line was that money can be made with these AVM’s and given the short comings; they were going ahead with them anyway because big lenders wanted them and were willing to pay the price. It all come down to whose model could do the best job with the lowest predicted price variance.
One of the short comings I pointed out were inflating and deflating markets. The AVM will always be way behind the curve and multiple regression will not work with a broad mixed data base as pointed out in the article.
And here's some better news--I spoke to a chief appraiser today with a rather large 'lender' throughtout the SE who, despite his best efforts, is meeting with several AVM providers. They want FAST and CHEAP. As I've said before, the current meltdown is but a mere bump in the road. Quality IS NOT an issue as the losses based on foreclosures is minor in comparison to the profits. The lenders are positioning themselves to provide quick approvals, because if they don't commit to that loan before that customer gets up and walks out the door, their chances of them losing that deal increases dramatically.
It always has been and will continue to be about the bottom line, thus compromises will always be made, unfortunately.
So for you appraisers who are still afraid to come forth with your stories, you only have yourselves to blame. Complacency by the ones who know what goes on, but refuse to say or do anything, are often as responsible for the atrocities they help hide.