6 things an AVM automated or online valuation won't tell you:

Lenders and Real Estate brokers using On-Line Appraisal Tools known as Automated Valuation Models (AVMs) and homeowners using "free" online home values to determine the value of a property need to know what those results aren't telling them. Remember, you get what you pay for!

1.    Whether unique features of a property are actually present and how those features effect the market value. So a computer returns an estimated value of $150,000. Did it account for the sewage treatment station next door or the leak in the roof that has been patched? The railroad tracks nearby with trains that blow their whistles every night? The school district? The desirability of its tree-lined street versus the next street over? It has a pool worth $20,000 but can comparables support that assessment?  If not, the lender may not justify the added cost of that and other features.  Neighborhood Market Analysis is now a part of almost every residential appraisal in Southwest Missouri in 2010.  This portion of the appraisal is called the Market Conditions Addendum and insures the property being appraised conforms to the immediate neighborhood.  In todays economy, lenders are wary of loaning money on questionable propeerties.

2.    Assessed Values may be significantly less than Market Values. Many AVMs and free online services rely on public assessment records. Cumulative Market Data suggests public records often underestimate sqaure footage, for example and most fail to account for half-stories and finished basement square footage.  In most Southwest Missouri Counties, for example, assessments may only be required every three years — the value may be nearly three years old in that case. Our Market Research indicates evidence that the Assessor's version of 'Appraised Value' is typically less than actual Market Values included on appraisal reports.  Assessor's use Mass Valuation Appraisal Methods when determining land value, for example, where we employ methods like Linear Regression Analysis and Comparative Land Sales specific to the unique characteristics of each property appraised.  When you use an AVM or free online service, you risk a lower value than reality.

3.    What makes the comparables comparable. A computer might compare your subject property to another property with similar square footage (based on county records which are usually wrong), sold three months ago a quarter of a mile away. Even if that "comparable" property is in a different, less desirable school district, fronts a four-lane, 55 M.P.H. street, and is flood-prone. Or even if the property was sold under duress, such as in a foreclosure or divorce situation, or not at arm's length, such as to a family member. A computer simply does not know all the adjustments that might need to be made to a "comparable" property's sales price.  One of the last appraisals our office completed in Stone County used a private sale as one of the best comparables to represent the appraised property.  This comparable was almost a 'matched-pair' (exactly the same dwelling and acreage) and ended up being one of our best comparable sales.  Online Appraisal do not have access to FSBO information.  Only a local appraiser who lives in the area can find that information.

4.    Whether a market is declining. Automated valuations use data from recent, nearby sales. If those sales were completed at the peak of a local housing market, the computer will think the trend is going up. Even if a professional appraiser knows that the overall neighborhood is beginning to experience a downturn. As a lender, don't get stuck with a property that's been overvalued by a computer.  The Market Condition Addendum to the appraisal report solves this problem and adds support to the Final Opinion Of Value.  In todays economy, an interest in Real Estate demands knowledge of Market Conditions.  Online Valuations and AVM's are a gamble at best.

5.    Whether there is a conflict of interest. Free online home values are often farmed out to real estate agents in your area, who use the service to get your listing when you decide to sell. The best way to do that is to impress you with their confidence that they can get a higher price for your property. If they tell you your property is "worth" the high end of what they believe they can sell it for, the theory goes, you're more likely to sign a listing agreement. With most things, it's best to "under promise and over deliver" — but the opposite is true when you use a free online home value service.  A Certified Residential Appraiser can offer peace of mind with a solid report designed to equip clients, lenders and homeowners with evidence of values according to current market conditions in an unbiased, ethical manner through federal, state and local laws such as the HVCC and USPAP as benchmarks for honesty and integrity.  A promise much more valuble than the investment.

6.    What qualifications, designations, experience and education the preparer of the value has. When you work with a Certified Residential Appraiser, you can be confident we are highly qualified, ethical and prepared to complete your assignment professionally and with good judgment. Most of the time, you don't know the qualifications of whoever is behind those free online values, and they couldn't compare to an appraiser's if you did know! And if you're relying on an automated valuation, you're cheating yourself out of an appraiser's education, experience and expertise backed by mandatory Coninuing Education requirements and standards governed by established regulatory commissions and newly created oversights, set in place to insure consistency and accuracy when reporting the facts.  The difference between On-Line Valuation Methods, BPO's (Brokers Price Opinions) and AVM's are similar to the difference in quality between microwaved steak and grilled steak.  There's just no comparison when you taste the final results!

In today's economic climate, especially in the Real Estate Market; knowledge and accuracy are essential elements of a secure investment.  Rest assured your investment in an appraisal report through a Certified Residential Appraisal will bring you, our client, peace of mind and stability in an unstable economic climate.