Federal agencies have proposed a plan to reduce the number of homes that require an in-person appraisal, hoping to speed up the closing process and save money for home buyers and borrowers looking to refinance. Under the proposal in-person appraisals would be necessary only for homes valued at $400,000 or more. Currently, that threshold is $250,000.
Automated home evaluations likely would take the place of in-person appraisals for qualifying properties—a move appraisers warn could lead to inaccurate estimates and more sellers who are unrealistic about home value.
Buyers and homeowners who are refinancing could save an estimated $500 by forgoing an in-person appraisal. However, appraisers say automated appraisals are unreliable. “Automated valuation models are when you throw a lot of data in the hopper and flip the switch; it churns, and it spits out a value,” Jonathan Miller, president and CEO of New York–based appraisal firm Miller Samuel Inc., told realtor.com®. The problem, he says, is that AVMs don’t account for property condition, which lead to “wildly inaccurate” estimates.