Weird Science
…technology to make a doll real?
Remember the movie Weird Science where the two guys develop technology to make a doll real? If you’re my age, I’m sure you do. If not get to googling Kelly LeBrock.
She did some amazing things. She looked great, was sexy and had odd powers that turned the older brother into a pile of emoji poop. Weird huh? Everything about her was amazing on the outside, but something was weird. That’s how I feel about new technologies that AMCS, Zillow and others have offered the public. On the outside, it looks great but what’s really happening on the inside?
I’ve seen examples of this technology when it comes to appraisals. They claim to be faster, cheaper and accurate but even Zillow’s owner’s home price was way off base. Let me explain to you just how inaccurate this is.
MMany of these companies rely on dirty data i.e. tax records and other public data that isn’t always accurate or vetted. What happens when you put an addition on your house, but the tax office missed that after the sale? Or that you’ve completely renovated your home? Maybe the neighbor hasn’t renovated in twenty years and the interior is falling apart. How can unverified data be superior to trained experts who are on site? Dependency on technology sites that produce and profit from bad information is dangerous.
Here’s another example how bad data works, because lets face it even you aren’t being fully honest. Say I said my car was in good condition on Kelley Blue Book when it’s only fair condition. What I see as good is not necessarily what a neutral professionally trained individual would see. If I use the wrong data when I go sell, that car will result in disappointment. The same applies to big data in real estate. On the upside, it goes the other way, too. Home sellers don’t want to leave money on the table.
Lenders and AMCS developed this technology, using unvetted data, to stream line your appraisal process making it cheaper and faster. That sounds good on the surface and some data is correct but as an appraiser, I often find mistakes in the data, big mistakes and lots of them. This is not an isolated extreme; it’s happening everywhere, and consumers need to be wise and sharp when it comes to cheap and fast.
Ask yourself these questions: did anyone come see your fabulous remodel? Did anyone accurately measure your home and new addition? Do these sites know the area or the surrounding amenities that help drive markets? If the answer to any of these is NO, then how confident are you knowing your net worth is being valued properly by these new technologies?
While technology is great in many ways and helped many areas of the appraisal profession, trying to determine your value based on sites like Zillow or an AMC hybrid is a risk in and of itself.
As a home buyer, seller, or if refinancing, it’s worth your attention to verify the sources and validity of your value estimates. The best way to truly know your net worth is to hire an appraiser who is independent of banks and AMCs and can give you that neutral, unbiased, on site and verified service.
- Look in the Mirror - February 27, 2023
- AMCs Take a Sizable Cut of the Appraisal Fee - October 5, 2022
- Proposed Rule to Eliminate C&R Fee Tabled - July 21, 2022
Working in a diverse county with 3.3 million people in it, as part of every search I do, I must always filter out the detached condominiums from the traditional homes, and the attached homes from the traditional condominiums. Just last week I completed a manufactured home assignment that was of a condo form of ownership with age restrictions. Relying solely on public record files without the local knowledge of an appraiser to filter out those properties that are not true substitutes, will alter the results (value), regardless of those rare cases when the subject itself is perfectly identified.
…….BREAKING NEWS…….. Stock Market just crashed…..the reason we’re told….no boots on the ground appraisals completed in the last 2 years……Who could have seen this happening???…..
And no I’m not a believer in the sky is falling tactics, but that’s the only time we are listened to is after the fact!
No boot’s on the ground but Drones in the sky soon.
Appraisers are getting beaten down again. What have we done wrong? Nothing. I’m almost numb to this BS but I refuse to give up.
Assessor’s records are so easily accessible in my area that I print the assessor’s sketch of the subject property before I go to the property. I use their sketch as a template while measuring the property myself. It is so important to do your own measurements. I cross out the wrong dimensions and put in the real dimensions. I add a comment in the report stating that the property was physically measured by the appraiser and may differ from public records.
This prevents the follow up question: “why doesn’t your GLA coincide with public records?”
I started keeping track of how often these discrepancies occurred. My estimate was 75 to 80 percent of the public records were incorrect (and that’s just square footage).
How is it possible to create an automated valuation model when it is absolutely impossible to collect accurate data unless a human being looks at the property. As far as Zillow goes, I’m sure they mean well but c’mon, they’re deceiving a lot of people that are making life changing decisions based on misinformation. Maybe Congress should focus on that economy breaking fiasco and let us do our jobs.
Common sense without personal gain would go a long way to make this crap right again.
The GLA difference in all markets I’ve studied is based upon HOW the measurements are made.
I’ve seen Realtors measure rooms, say 11.2″ X 14.1″ and then add all rooms up and that’s the GLA.
But the Tax records in Most markets is interior SF. While we measure Exterior. That’s just the easy explanation.
Now, add the Vaulted area’s, “Open To Below”, some Towns add this in the GLA, and then the Old Raised Ranch argument regarding “Above Ground”, how much is USABLE SF? Above grade????
It can’t be done, not in my career (6-8 more years), to have every one on the same page. Automated can go flush it self.
Some of my markets the builder does not include open space like a cathedral ceiling, but the assessor does, others the assessor gives GBA on residential and another assessor does not give out information at all they consider it personal information and give it only to the homeowner or to others like appraisers that sign up to be able to look (not print/download) the info.
In the case were the GBA is given they do not publish it the GBA it’s called living area. So consider this an AVM sees it as a GLA on one house at 3,000 sf above grade with unfinished basement and another house that it thinks is similar at 3,500 sf above grade but it in all actuality it only 2,500 sf above grade plus 1,000 sf finished below grade (3,500 sf living area). And with both houses they were cash transactions with no appraisal (UAD) completed.
What do you think is going to happen?!
In California it is COMMON for refinance transactions to be completed with a Grant Deed in addition to a Deed of Trust. This happens when the title company tells the borrowers that there is a problem with a past chain of title and that in order for them to insure the loan ‘someone’ (usually one or more of current owners) must grant the property to themselves in the borrowing entity. Sometimes it can involve a prior owner as well. Sometimes it is Fred and Ethyl buying together and then immediately granting it to their Trust. There are many reasons this takes place. They are not open market, arms length sales.
Quit claims carry no inherent warranty of good title. Grant deeds do.
My point is that CoreLogic is infamous for picking these up as new ‘sales’ and showing them as such. Experienced appraisers recognize there is something wrong with these transaction and usually will check for doc stamps paid (shown on recorded deed).
Another point – CL often translates stamps paid incorrectly. There are half a dozen (always increasing) cities that charge a transfer fee in addition to the country transfer fee. Some calculate this fee based on $500 increments of new money in a sale and others at $1,000 increments and the fees can range from $1.10 per thousand to $1.10 per $500; or $2.20 per thousand up to a high of around $4.40 per thousand PLUS the County fee of $1.10 and the deed MAY show an additional $22.50 / $23.80 ‘filing’ fee above and beyond the so called ‘recording fee’ which is technically a documentary transfer tax fee.
CoreLogic has never been able to reliably figure all these out. Even the nominal filing fee if miscalculated could equal a difference of $20,000 in purported sale price. This is just Los Angeles County. Other counties have their own peculiarities. 30 years ago we memorized the exceptions and their rates. Now an appraiser needs to look them up every single time they are using doc stamps to verify price.
CoreLogic simply cannot be trusted to get it right. They collect and ‘aggregate’ data. I think that’s a euphemism for selling compiled data that may or may not be misinterpreted and misreported as a result.