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AVM is Automated Valuation Models and are being used by the lending industry to determine the value of a property. Homeowners are looking into websites which advertise free home value information (like at zillow). Many appraisers feel threatened by these so-called valuation tools because they think that these tools will eventually eliminate the need for appraisers completely. Actually, AVMs and online valuation tools are just that - tools that can give consumers very generalized information about property values in a given area. However, the world will always need "live" appraisers to physically view properties and use their years of experience and knowledge to make a determination of value.
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Many AVMs and free online services rely on public assessment records which may only be required every three years - sometimes more. Some states may mandate that an assessed value not increase beyond a certain percentage, even if the sales activity of the area indicates differently.
What makes a comparable property comparable? What takes appraisers years and thousands of hours of experience to master, takes a computer seconds to calculate. This is because, computers are only taking obvious comparable chunks of information about each property - size, lot size, pool or not, bedroom count, bathroom count, and garage. These programs have no way of storing data about noise, traffic, view, flood areas, access to public utilities and if the property was sold under duress. However, the latter issues are essential, if not more important to determining comparability than the "canned" features of a home.
AVMs can not handle information about declining or increasing markets. By the time that computers catch up with the status of the market place, that market place has changed again and again.
Here are several examples of why AVMs or online valuation tools have limited usability in true residential appraising.
There is no tool or computer gadget that can replace an appraiser physically viewing a property to make sure that it is still there. If you talk to any appraiser, most have stories of going to homes that have been badly damaged by earthquake or fire. Physical condition or existence of a property can only be done by an actual visit to the site.
Sites that give valuations rarely have the capability to evaluate conditions or features that add or detract from the value. For example, views, power lines, traffic noise and desirability of school districts are rarely considered in the automatic values that are listed on the inter
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