The Editor's Note from the Inman News Article "Part 2 - Effects of a national housing slump" says in part: "Inman News examines three areas of impact: how the slowdown is expected to influence economic growth; problems created in the property appraisal process; and consumer attitude toward home buying. (Read Part 1) The following is an excerpt from Part 2:
They aren't about to replace experienced appraisers, but proponents of automated valuation models (AVM) say they can give their human counterparts a run for their money as lenders look for numbers they can trust in a down market.
AVMs -- computer programs that appraise homes by crunching numbers from public records and multiple listing service data -- are used for mortgage loan pre-qualification, loan underwriting and quality control, and to value loan portfolios and mortgage-backed securities.
Both human appraisers and AVMs can have difficulty producing accurate valuations in markets where home prices are rapidly appreciating or depreciating. But there's evidence that AVMs are getting better at coping with swings in the market -- perhaps even better than humans.
That could be bad news for appraisers who are already coping with the slowdown in housing sales, but a boon for lenders and consumers who may save time and money in the loan approval process.
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