Appraisal 'Alternatives'

More alarmingly, these automated valuation models are all over the map when it comes to the value of a specific property. The hottest trend in automated valuation is "cascading values," which allows a lender to "hit" several databases and select the value – the highest – they will use to justify the mortgage. "Value shopping" should be banned.

Appraisers are mandated to use long-established, well-developed methods to arrive at a professional opinion of value. Then the appraiser must explain his or her findings, to the extent that if necessary, a review appraiser can check the work. On the contrary, automated collateral databases use proprietary algorithms to evaluate often incomplete sales data. Underwriters, reviewers, investors and consumers are in the dark about how an automated value came to be. Automated valuation developers should be required to disclose their methodology with respect to individual properties.

Read about Copyright Protection