Surfing the Web • Chapter 10 ½ 2

Chapter 10: REAL ESTATE APPRIASAL

Surfing the Web

Go to http://www.appraisaltoday.com/comm__avm.htm and read “Automated Valuation Models - Threat and Opportunity,” by Ann O’Rourke.

1.  What does the author say is the key to valuation data?

2.  How is tax assessment used to determine values?

3.  Who has developed AVMs for lenders?

See next page for answers


Answers

1.  What does the author say is the key to valuation data?

The key to an accurate AVM valuation is data. Although many lenders thought AVMs could provide values for all their loans, many areas don't have adequate data. Some states, such as Texas, are non-disclosure on sales price. Even California, which supposedly has some of the "best" data, has many counties (including urban counties) that don't provide data on property characteristics or only limited data. Other counties sell their data for very high prices.

2.  How is tax assessment used to determine values?

In many states, tax assessment information can be used to determine values. This is particularly useful for a local appraisal firm or lender, who is familiar with local assessment practices. Some assessments are at 100% of market value and some are at 6%. If assessments are equalized in a neighborhood or city, all you have to do is apply a factor to the assessment.

3.  Who has developed AVMs for lenders?

PSAR (Property Survey Analysis Report), which was developed in the 1980s by an appraiser, Robert Maxfield, Sr. for use in his probate and divorce appraisals.

REASON (Real Estate Evaluation Appraisal Statistical Observation Navigator) was developed in three appraisers, Atom Levi, Phil Mitchell, and Joe Cuffaro.

AREAS (Automated Real Estate Analysis System) was developed by HNC, a company specializing in "artificial intelligence" applications for several industries, including lending.

Case, Schiller, Weiss, founded by college professors, started with a paper-based trend index and now has an AVM, CASA (Characteristics And Sales Analysis).

HPI, Home Price Index, a price trending model, is sold by TRW/REDI, now Experian.

Valuepoint, now owned by Experian, was developed by Solimar, which was founded by Larry Hudack, a former real estate investment banker. Solimar's new AVM is PASS.

ValueWizard from Banton Research was started by an appraiser and former college professor, H. Stan Banton, and is connected to his appraisal company.

Q-Val from real-info was developed by an appraiser, Jim Kirchmeyer in New York.

Larsen • Real Estate Principles and Practices