AVM's-forcasted data

[Tim Hicks (Texas)]

I got to look at an AVM report this week on a property I appraised. My subject was FSBO selling for $136,500. I had nothing to support the sales price, but three sales within two blocks that ranged from $128-133,000. Nothing special about the subject, it was a corner lot, two of my comps were corner lots. All three sales were within 30 SF. Well, the loan officer went ballistic. Their AVM data had plenty to support the value. he sent me the report. The top two sales were the same as my comps #1 and #2. However, my MLS documents reflected $128,000 and $133,000. The AVM data said sales prices $142,500 and $145,000. My first thought -garbage in-garbage out. When I confronted the loan officer, he assured me that he would have answers for me. When I called him back he told me the AVM sales prices are forcasted sales prices, but would not elaborate. Both sales were less than six months old. I had no active listings for the same size home over $134,500 (five of them). I know some of you will say this home had upgrades or something that justified the higher price, but these are three year old cookie cutter homes. They all had similar updates and some had more. Anyway, just the facts, ma'am. I don't know the results except they ordered a technical review on my report. Oh, it was a rush closing Friday, ordered Monday, inspected Tuesday. The thanks for rushing this one never happened.

Keep up the good work AVM's. Maybe the garbage in-garbage out theory will make you implode.

 

[Pamela Crowley (Florida)]

Anyone out there that wants to buy a used car on 'Blue Book" value only, taking the used car salesman's description of it???????

 

[Dee Dee]

Pam,
That's a perfect analogy!

 

[The Bob]

I think you may have discovered the Achilles heel of AVM's.....A human being can tweak the inputs. In this case it looks like someone has gotten real agressive with "Forecasting". I imagine other areas that can be "tweaked" are condition and quality. Remember, anything above the room count grid is likley more subjective as opposed to measuring differences that are more of a straight addition/subtraction like GLA, garage/no garage etc...

 

[Terrel L. Shields]

I hope it comes as no surprise to anyone that AVMs are being pressured for higher values, too. The logical, justifiable way of doing that is applying time forecasts (upward adjustments) where possible. After all, the dirty little secret of AVMs is that 70-90 sales are considered minimum to do proper regression analysis. Often they are applying them to subdivisions with no more that 25-30 lots, let alone sales. Therefore, they go to nearby subdivisions, and as anyone knows you have to be able to determine which subdivisions are similar (Age, size, amenties, etc.) otherwise you may develop an analysis with bimodal (two or more possible) answers....

ter

 

[Blue1]

Tim,

"Forcasted Sales Prices????" They're basing the estimated value of the subject on what they THINK the comparables MIGHT sell for in the future? Someone's "Smokin' Rope" here 8) .....and it's not you :lol: . Like Terrel says, "it comes as no surprise to anyone that AVMs are being pressured for higher values, too." Looks like we've fingered the scoundrels in our industry :evil: ......it ain't us.

 

[Steve Owen]

This doesn't surprise me at all. Our county used a new computer program (AVM) to reassess the property this year and the values increased by about 40 percent. The real increase in this county has averaged 2 to 3 percent for several years. (Based on my continuing looks at sales and resales when doing appraisals.) Has anyone forwarded this information to whatever congressional committee has oversight over FNMAE?

 

[Restrain]

Every time I get a reconsideration requrest and an AVM is provided, the sales either do not exist or the majority are incorrect and inflated. GIGO is the correct term for these things.

 

[Doug in NC]

What bugs me is we have to pay all kinds of fees, get regular CE, take several courses to begin with, and submit our work to appraiser authorities when requested. Yet, AVMs and realtors can offer valuation services for compensation and not even have to have an appraisal license!

 

[slacker]

What bugs me is we have to pay all kinds of fees, get regular CE, take several courses to begin with, and submit our work to appraiser authorities when requested. Yet, AVMs and realtors can offer valuation services for compensation and not even have to have an appraisal license!

Interesting point. Is an AVM considered an appraisal when used for a federally related lending decision?