Are Computer Valuations Smarter Than Appraisers?
After watching the NCAA National Championship game, I began to ponder how the betting line was so far off.
I started doing some research and found that there are several computer simulation programs including Sportline, SEC Country, etc. that run up to 10,000 simulations. Last year the computer simulations picked Georgia to win the title with 67% of the simulations. This year all of the computer simulations picked Alabama to win the NCAA title.
We now know that neither of these simulations were correct! I am not a football guru or expert by any measure, but I did predict Clemson to win!
This brings me around to the area that I am an expert in, appraising homes.
AVM - Automated Valuation Models
Computer programs known as AVMs (Automated Valuation Models) can be a useful tool to check and balance appraisals - but just like the football simulations, they are not always accurate. That’s because they do not have the ability to take into account the specific nuances of a home including quality, condition, updating, and living area - especially if the home has additions.
In addition to these nuances, if your were to have an AVM done on your home by several different companies, the results could vary by 20% or more. If you have more than one appraisal completed by qualified appraisers it is likely that the results would be very similar.
I recommend betting on the human factor rather than a computer simulation. Just ask all the people that lost money on the Alabama-Clemson game.