The Need to Reference Automatic Valuation Models to The Valuation Process

Computer-assisted estimates of market value should be in compliance with the Uniform Standards and be controlled by the well-known valuation process that all certified appraisers follow. This action would resolve a major discrepancy that exists in the market in the interpretation of the model estimate. One group calls the result “market value,” in contrast to a large other group that views it as only a “price.” The government regulations and academic literature contain both discussions, which lead to a difference in concept as to the content of each computer-assisted model. Evaluations of each automatic valuation model for potential use should be based on accuracy, qualifications of the model builder and user, number of properties, amount of supervision, and interpretation of results, and perhaps, profit potential to the underwriter. Comparisons among models will remain minimal as long as they continue to show commercial potential. The practicing appraiser using computer methods to analyze market trends and produce a market price should be aware of current AVM developments.