AVMs Immune to Transactional Pressure?

Automated valuation methods are immune to transactional pressures, according to a white paper issued by the Collateral Assessment and Technologies Committee of the Real Estate Information Professionals Association.REIPA said the study found that biases in full appraisal value opinions are sometimes pronounced, and consistent with allegations of transactional pressure placed on appraisers by originators. While AVMs have a lesser tendency to overstate values, they are not as accurate as full appraisals. But the overvaluations that come from a full appraisal are more highly correlated with mortgage default risk than are the overvaluations from AVMs, the study found. "High-quality AVM systems are proven solutions that are capable of bringing incremental objectivity, consistency, and controls to collateral valuation and risk assessment processes in our evolved and modern marketplace," said the white paper's author, Terry Loebs, senior vice president at Fiserv Inc. and a member of CATC's Executive Committee. "They can do so in an efficient and cost-effective fashion that even the best-intended appraisal industry reforms or new regulations may be hard-pressed to match." The paper, "Systemic Risks in Residential Property Valuations: Perceptions and Reality," was presented at REIPA's Annual Predictive Methods Conference in Newport Beach, Calif.