Appraisers vs. Machines
- Federal Valuation Agency Impact on Appraisers & the Public - July 22, 2022
- Is Georgia Going Rogue? - June 13, 2022
- Bias in Automated Valuation Models - February 28, 2022
Collateral risk analysis (appraisals being a key element of that) is partially art, partially science. Those two facets are blended inseparably, like a soup…the ingredients can’t be separated. While computers can undeniably perform certain tasks better than humans (such as the handling of large amounts of data) appraisers can perform other absolutely critical aspects of the process better than a machine. The appraiser can actually see the property to be valued, they can utilize their human senses, they can use their judgement based upon what they observe by physically being at “ground zero” (the Subject property), and can then apply their experience. The appraiser can see the improvements or remodeling efforts made by a homeowner, assess its condition, and determine any functional obsolescence of the dwelling’s room layout. A computer cannot.
While the machine may provide large amounts of data, the appraiser has the ability to verify that data, assess the validity of those verifications, and filter the data into what is, or is not, pertinent to a specific property. The experience of the appraiser in the marketplace can not be duplicated by any machine.
It has been said that computer generated home values are not subject to human bias. That is simply not true. Home “values” generated by computers are not actually values, but are instead simple home sales price models. And those models are based upon the algorithms upon which the sales price model is based. In turn those algorithms and their programming are performed by humans. They can be “juiced’ to produce results which are more “satisfactory” or pleasing to their lender/client, with no consideration given to the consumer of the mortgage product, namely the homeowner or borrower. Learn more about algorithm bias here.
This also leads to another critical question: What regulatory protocols are in place to oversee the computer? Are there any at all? Can a machine be held accountable for unreliable (or worse, corrupted) output? In contrast appraisers are licensed professionals and subject to strict oversight on each and every valuation assignment they perform.
Large amounts of data, and it’s analysis, is not in any way foreign to appraisers. They understand that humans with machines is a productive and useful paradigm. However ultimately, when it comes to the financially critical task of placing a value on your home, the appraiser cannot be replaced by a machine.
So that’s what common sense sounds like…
Good article vacap. Common sense indeed!
You go in a house, smell the mold, smell the heating oil leak, smell the cat pee, smell the previous puppies that have now rotted the floor underlayment to the point, replacing it is the only way to rid the property of the smell. The buyers, smell the same things.
Naw, it’s assumed to smell “typical”. Part of the algorithm, you know, just like mystery inspectors will tell you what a home smells of. Big data that ignores many of the human senses that the rest of the market relies upon.
That ‘programmer’ whom ever they may be, a tech nerd, an employee, a contractor, analyst whatever. They’re all biased parties whom have a financial interest to please those whom pay them. If this was the stock market, they’d fall under insider trading rules. Let’s re invent the wheel, what could go wrong. Clickbait and avm’s, this is the future of real estate?
The Programmer- reporter (would) have pointed out the cat pee smell, the converted floor plan, the terrible décor, and any of the issues appraisers report on. Thus CHANGING the name from appraiser to computer analysts.
Wouldn’t that increase our credibility? I know you always include an interior floor plan analyzing the efficiency of the building, aren’t all square foots the same, 1200 sq. ft. is the equal of any other 1200???