The Need To Reference Automatic Valuation Models To the Valuation Process
by Don Epley PhD CCIM MAI,
Professor of Real Estate
Director, Center for Real Estate & Economic Development
University of South Alabama
5811 USA Drive, MCOB-Rm 126
Mobile, Al 36688-0002
This project recommends that any computer-assisted estimate of market value be in compliance with the Uniform Standards and controlled by the well-known valuation process which 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 contract to a large other group which says it is only a "price." The government regulations and academic literature contains both discussions which leads to a difference in concept as to the content of each computer-assisted model. Evaluations of each A VM 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 A VM developments.
*This project was partially supported by a grant from the Appraisers' Research Foundation. They are not responsible for the content or opinions.