Professional Opinions Can Never Be Replaced
- There has been zero evidence that an AVM produces credible approximations of MARKET VALUE consistently or with even an acceptable degree of variance. None.
- Like George indicates, an AVM is NOT an appraisal. By definition, it is not an appraisal. FIRREA required appraisal standards; NOT banking industry and TAF proposed alternatives. TAF is very far out of line giving AVMs any imprimatur of legitimacy.
- George postulates that FNMA (lenders) don’t want opinions. They want quantifiable results.
- I don’t know that to be true. Certainly nothing in there guidelines suggests they are ready to forego professional appraisal OPINIONS.
- BY definition (again) real estate appraisals are opinions. Not merely quantifiable facts to be found. Too many people/organizations including TAF, have forgotten this.
- Real Estate Markets are imperfect. Especially residential real estate markets. That is because they are made up of human beings, who in turn are imperfect. Quantifying these imperfections in total will never work because they exist or become evident to varying degrees and varying characteristics in every single transaction. Go ahead and ‘quantify’ the positive or negative impact of the brightest lemon yellow living room you can imagine; or the hottest pink kitchen both nationally and then again in a 90% predominantly Latino neighborhood (Right, I know we can’t rely on racial or ethnic characteristics or stereotypes, but I live in such a neighborhood; and have lived in less ‘flamboyant’ color preference neighborhoods). Too close to prohibited considerations? OK, imagine a neighbor that keeps chickens in a residential (suburban) area. Chickens that stink beyond normal tolerance. Go ahead and quantify that impact ‘factually’ in say the old Clifton Heights annexed area of Redondo Beach, CA.
- FNMA, MISMO, TAF and a host of others have been trying to redefine appraisal since their inception. This despite the fact that they are not the only users or arbiters of proper appraisal techniques or even practices.George has spent a great deal of his life working at ‘perfecting’ or attempting to perfect data science applications. I think he is one of the good guys. Even though his work leaves less scrupulous characters like the operators of (former ZAIO), Clarocity and others something to hang THEIR versions of automation on.
- AVMs are seen as an alternative to the need to engage in price fixing between banks and AMCs for ‘valuation’ services (THAT work should be prohibited from ALL use except Business Valuation!).
- IF Congress intends that the American taxpayer is to be 100% off the hook against future too big to fail situations (including those like the current apparently successful Covid disaster emergency measures), then it really doesn’t matter if FNMA / Freddie Mac, HUD, & VA retain & utilize strong, principle-based real estate appraisal guidelines and rules. The self-serving industries can take their own chances and make their own rules… hoping Wall Street fraud doesn’t become more rampant than it already is.
Reminder to TAF and all others. Professional OPINIONS have value that can never, repeat NEVER be replaced by automation. Neither I nor most other people can tell you HOW our mind utilizes a life time of experience coupled with specific appraisal related skill to ‘know’ what the impact of certain market factors are… but the ‘fact’ remains that most good agents and appraisers “know” their markets even when they cannot be quantified.
I’m not suggesting we abandon tangible support for our opinions. On the same hand I AM suggesting that we do NOT abandon professionally developed opinions that have been proven over time to represent typical specific market perceptions…whether or not those opinions can be ‘quantified’.
Qualitative analyses are still recognized.
Our profession has been getting addicted to the sugar-laced data science kool-aid for far too long. It is a LIMITED USE tool at best. No programmer’s algorithm is capable of reproducing the neural network that God designed & created many eons ago.