AVMs and UAD

[Mile High Trout]

Trust me, a programmer's salary will not break the bank when compared to all the money saved on appraisal fees. Not to mention the elimination of bias and human error.

Incorrect. Computer programs are guided by the programmed directives. The programmer would merely be setting a sort of permanent bias, which would present itself as anomalistic on both sides of the spectrum occasionally. The reason the program would behave that way, is because a computer can never be unbiased like a human. A computer is completely biased to follow a stringent set of directives. Those directives are the will of the programmer.

The notion that automation is less biased is a fallacy. The biased is set in stone, and now is easily predictable. Where as with a human appraiser, you might just have to act right, because you can not predict if they will identify and fall for your tricks. As many appraisers are increasingly keen to stopping tricky behavior or engagement, the avm seeks to get rid of that pesky shortcoming which is anything that get's in the way of complete value and price control.

Avm's work great for bankers looking at large portfolios, they work rather poorly for an individual loan scenario. Try explaining to the homeowner why their 10k addition can no longer contribute to their homes value, because it is a skewed indicator in the congruency of the larger data sets. That's simply not how a sales scenario operates. The major shortcoming of an AVM is that it's neither a salesman, a customer, or a lender. It has no perspective, so to speak.

 

[lefty2cox]

You're right. It's impossible. You should go ahead and agree to give your intellectual property rights to management companies.

Have you ever thought of asking yourselves why a management company would need your intellectual rights? Furthermore, give me a reason why we can't standardize appraiser's reporting without utilizing specific codes with exact numbers of characters.
Do you think they know something that you don't?

So besides the potential for a rouge programmer hell bent on sabotaging the equilibrium of the real estate market by administering bad directives, what else you got?

 

[lefty2cox]

Also Rich,

Whether you like it or not the machine exists. We're not talking about designing a program here and whether or not it will work. It's here and it works. Its reliability is a function of the data it has to work with. There are people in the world who are investing millions if not billions into this concept. Are they all wrong and you and Pete are right? Is this an unattainable goal they have?

And I get your point about bias. I guess you're right. The program is biased toward the truth. The people developing it are on a quest for the truth or at least a level of risk that their clients are willing to accept.

 

[Rich Heyn]

Also Rich,

Whether you like it or not the machine exists. We're not talking about designing a program here and whether or not it will work. It's here and it works. Its reliability is a function of the data it has to work with. There are people in the world who are investing millions if not billions into this concept. Are they all wrong and you and Pete are right? Is this an unattainable goal they have?

And I get your point about bias. I guess you're right. The program is biased toward the truth. The people developing it are on a quest for the truth or at least a level of risk that their clients are willing to accept.

Perhaps you have me confused with another poster. I said nothing about the existence or non-existence of any machine or bias, although now I'm intrigued as to what "machine" you are referencing.

 

[lefty2cox]

My apologies Rich, I meant Mike. I will quote next time. I'm sorry but you'll have to stay intrigued. I'm out of gas.

 

[CANative]

Lefty... you should take Rich's webinar on the UAD. You'd gain an understanding of these issues.

The idea is not to steal reisdential appraisal work from appraisers. Here are just two reasons for the rationale:

It opens the door to the creation of a database that would allow the GSEs to “push” information back to lenders and appraisers. In other words, information harvested from a large number of appraisals could be very useful to individual appraisers. Would you agree that more information is better than less information?

The overwhelming appraisal fraud uncovered in the loan packages the GSEs purchased from the early‐2000s to 2008. The GSEs have learned a hard lesson about risk management and the necessity to be proactive and part of the game early on; versus being reactive and sitting on the sidelines waiting for something bad to happen.

The process allows the GSEs to detect incongruities in real time... before making the decision to buy a loan.

 

[lefty2cox]

I'm in the wrong place man. Do you believe that this is being done in order to compile the information and give it back to us? Talk about drinking the kool-aid. I'm sure Rich is a nice guy but I can't believe this is his position. And I don't care what the GSE's intentions are. I'm talking about the unintended, or intended, consequence of a commercial entity having may wares coded for entry into their database and my written permission to utilize said wares for whatever they want. This is my point. Please people...stay on point. Do I have to apologize for busting Pete's plumbs? Is this what this is about? I'm sorry Pete.

 

[CANative]

You're very misinformed. It's not even an AVM, per se. What you're talking about is a future database that can be used for a number of things. Some will help appraisers.

Take Rich's webinar. It's only thirty bucks for the first one (three total).

 

[Rich Heyn]

I'm in the wrong place man. Do you believe that this is being done in order to compile the information and give it back to us? Talk about drinking the kool-aid. I'm sure Rich is a nice guy but I can't believe this is his position. And I don't care what the GSE's intentions are. I'm talking about the unintended, or intended, consequence of a commercial entity having may wares coded for entry into their database and my written permission to utilize said wares for whatever they want. This is my point. Please people...stay on point. Do I have to apologize for busting Pete's plumbs? Is this what this is about? I'm sorry Pete.

I have not yet developed much in the way of a personal position on any of this yet, as much of it is still either in flux or in a "wait and see" state. I totally agree that there will be many consequences as a result of the UAD and many will not be pretty. My business partner and I are trying to identify and foresee as many of these consequences as possible. That's why I keep coming back to you for clarification.

You have referred to "the AVM," "the machine" and now, "a commercial entity." I'm honestly just curious as to specifically what or whose AVM, machine or commercial entity you are talking about.

 

[J Grant]

Why do these unamed Orwlellian entities need to construct a data base in such a painstakingly slow manner? Data on homes is all over the place, on tax records, on Zillow, on Google Earth, on MLS views and other sources avail over the internet.

So an appraiser adds a code that the kitchen was remodelled a year ago. Top secret information !!! By the time anything else is needed on the property, say a refi 3 years down the road, all the codes will be outdated anyway. I am not too worried about it.