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AVM Question

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Jim Hill

Thread Starter
Member
Joined
Oct 13, 2003
Professional Status
Certified Residential Appraiser
State
Florida
With all the problems in the real estate markets all over the country and right here in Florida with concessions from cars, trips, appliance packages and just about anything else you can think of how can any AVM work.

Is there a way they can plug in any of this type of information about concessions so that the AVM number makes any sense?

I know how hard it is for appriasers sometimes to even get all the complete information on concessions and then try and figure what their value is and how that effects the appraisal report.

How is this information entered into an AVM and is this part done by an appraiser?

Jim Hill
 

blackswamp

Freshman Member
Joined
Mar 22, 2005
Professional Status
Certified Residential Appraiser
State
Ohio
I'm not sure why you care. AVM's have their place and will only continue to increase in use as the accuracy of the data improves. They're not going anywhere as they shouldn't. They can be a very useful tool.

The concession issue is a valid one. Hopefully, as the industry moves forward, the open exchange of information and data will help improve these
avm's to allow them to incorporate concessions to increase reliability.

Please spare me the comments about how avm's are worthless and contribute to the downfall of our industry. Focus on doing good appraisals and making yourself a solutions provider for your clients.

avm's are here to stay.
 

Couch Potato

Elite Member
Joined
Mar 15, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
AVMs are not all the same. How an AVM collects and analyzes data will vary with each program. Much like psychological tests, they are best used in batteries based on their strengths and weaknesses.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
AVMs are a study of numbers. Appraisals are a
study of behavior. AVMs will never have the
element of judgement.

AVMs will always be +/-10%. A good appraisal is
+/- 3%. Since 3% has become the standard for
seller paid concessions, AVMs will most likely
choose to ignore them, especially since they
inflate prices, and higher AVM values are gooder.

An appraiser can interact with an AVM, but cannot
influence them or then they would be doing an
appraisal. Appraisers can take an AVM to dinner,
but cannot have sex with them (it).
 

Jim Hill

Thread Starter
Member
Joined
Oct 13, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Bill Attermantt

Bill:

You wrote the following back to my post,

I'm not sure why you care. AVM's have their place and will only continue to increase in use as the accuracy of the data improves. They're not going anywhere as they shouldn't. They can be a very useful tool.

Bill I agree with you and they do have their place but my question was right now I see concessions that are between $2,000 and $75,000 dollars and even more in some cases.

Is there a way they input this data into an AVM that you know of?



Jim Hill
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I've received some mumbled responses to that question when asked of the AVM proponents... nothing that made any sense though. IMO, they can't figure out how to clean out the frauds so they don't want this issue brought up.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Is there a way they input this data into an AVM that you know of?

For most AVMs that I'm familiar with, the answer to your question is "no-not in a practical way".

The advantage of an AVM is that they can look at a large number of data and run analyses on those data very quickly. There is no practical way (now) to automate the process of extracting concessions from a large set of sales at this time.

The large numbers works for and against AVMs.
They cannot extract sales concessions as I outlined above- a disadvantage.
If their sample size is large enough, the sales concession will have a minimum effect- an advantage.

No one looks to an AVM as being the gold-standard of valuation. If the value problem that needs to be solved does not require a high-degree of reliability (such as in a 50% LTV lending-decision) an AVM may be adequate.
 
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Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
The concession issue is a valid one. Hopefully, as the industry moves forward, the open exchange of information and data will help improve these
avm's to allow them to incorporate concessions to increase reliability.

avm's are here to stay.

I take it you support the idea that if appraisers particpate they should be fairly compensated out of the AVM revenue stream?
 

Brad Ellis

Senior Member
Joined
Feb 7, 2006
Professional Status
Certified Residential Appraiser
State
California
Jim,

None that I know of and I've tested just about all of them as far as I know.

When you get markets in which these seller concessions are the norm, like FL condo conversions (many- probably most- of which are just fraud) or new home sales up north of Sacramento, CA where large concessions are now the norm, the AVMs will not provide any meaningful answers.

At the same time, I'd also note that at the early stages of any of these projects, the AVMs will not run anyway as they will find the subject property to still be on the assessor records as an apartment buildking (conversions) or vacant land (new home developments).

AVMs are most reliable when and where you have a very high degree of conformity and a stable market.

Brad
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
AVMs will be able to do their work just fine. Even with concessions. All that is required to make AVMs accurate in this area is to enact legislation that require certain specific and standardized reporting methods in the industry as part of either the realtor or lender's responsibilities. Do they really need to know it's a car or just the dollar amount of the car? Why do you think we have "standardized" forms? Why do you think we have so many check boxes on those forms? And why do you think they rearranged the forms to require less addendum? In 10 years we'll report our appraisals using a scantron sheet and a number 2 pencil. "Please bubble in all that apply A, B, C, D. If none apply please bubble in selection E for other and enter your comments in 8 bit binary."
 
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