The automatic valuation system only functions as intended on the front end.

Because when the home owners get past all of the remodeling after substantial cost investment, and go to refinance again, or try to sell on the open market, the value number is still the same…

Then the avm system needs tweaked higher to account for the renewed quality difference. Home prices move upward for everyone as a result. And that’s just one simple explanation how avm’s contribute to the national housing affordability crisis.

Most people don’t understand the difference between price and value. Even fewer understand the difference between value analysis and price forecasting.

The original article has links in it which support and explain each statement. Original article is here with links which explain revitalization and redlining. https://mary–cummins.blogspot.com/2024/06/details-about-alleged-racial-bias-case.html

Agreed. Lenders using alleged “bias” as rationalization for getting rid of human appraisers. Lenders can make more money without appraisers. They can make a lot of money in areas that are revitalizing if they use AVMs. AVMs don’t know condition. People with properties in less than condition could get bigger loans on their property because AVM will come in much higher.

Agreed. I’ve had borrowers tell me “the lender said it’ll easily appraise for xxx.” Lenders do that to suck in borrowers so the lender/agent can make money. Then they get the appraisal at market value and lender blames the appraiser for “coming in low.” They assume borrower is now invested with credit inquiry, time, fees, probably needs the deal and will just accept the actual loan and terms. It’s so frustrating. Lender only looks at AVM. If property is in less than condition, it won’t appraise at AVM. AVMs don’t know condition.

Or we could go back to mortgage bankers and appraisers having direct communication and meaningful professional relationships, better two way accountability. They could ask for a comp search before ordering the appraisal, so the borrower would know ahead of time a reasonable value range of their property’s market value. Borrower could make special requests if they were uncomfortable with any specific character type of appraiser, and lender could order the comp search from an alternative appraiser instead.

The separation from mortgage loan production rules is the root cause of the majority of the problems with valuation service, false complaints, dangerous technological advancements, inability of lenders to properly provide value estimates to their customers, consumers feeling harmed and wronged, a long list.

Remember the days when one single appraisal order only required one mortgage broker, with one mortgage lending customer, filling out a single piece of paper, and faxing it to one single appraiser? The only corrective rule that was ever needed was the mortgage broker should not have been allowed to tell the appraiser what number was needed, thereby nullifying their ability to shop appraisers based on value expectations. Nearly every appraiser, the best appraisers out there whom consumers no longer have access to, would still be in service to American consumers and would routinely complete mortgage lending reports among their other services provided. There would be no assignment portals, no unnecessary middle management, no additional costs to consumers, better two way comprehensive communication, no more surprises, far fewer complaints, less drain on government regulatory resources, fewer lawyers involved, lower insurance costs, etc, etc, etc.

Yes, home remodeling of older properties may carry extensive costs. Lead paint, hazardous insulation, asbestos remediation, framing, wood, siding, walls, paneling, fixtures, doors, structural, windows, roof, concretes, drainage, electric, sewer, water lines, exterior features, fences. Extensive retrofitting and installation of utility service components. Then over time, needs replaced again. The older properties get, the higher the adjustable line item becomes when compared against properties with superior condition. Add up all the service cost estimates individually, and enter that into the appraisal report. There is your -$200k negative adjustment and proof.

Cash out refinancing has a higher total financing cost because it’s such a long term loan. There are other loan instruments with less risk and shorter pay off terms. The better alternative for many people, especially people with limited financial resources, is to fix up the home incrementally over time with smaller loans. I do not understand peoples motivations to demand higher housing prices and subsequently pay higher taxes. What exactly is wrong with lower housing prices? Your two minutes of hate starts now.

Some days it feels like we should just charge $10,000-$20,000 per typical house appraisal so we can hire an attorney to ride shotgun with us on every house inspection, record everything the seller, buyer, builder and agent says and force same to sign a release from liability or just just walk away from the assignment. If they do sign it, then the attorney can spend a month or two looking over our shoulder as we write the appraisal, then do a legal review of it before we transmit it to the client. Maybe they can also put it before a grand jury and a panel of state regulators and see if it meets muster before transmitting. IDK, what do you think?

It’s like being trapped in a never-ending circus of nonsensical accusations!