Remote, robot appraisals - known as Automated Valuation Systems (AVS) - are quickly taking over how homes are valued, a job currently done by human appraisers. The automated appraisals are used by major lenders, as well as by mortgage insurers, including Canada Mortgage and Housing Corporation.
The appraisal robots are basically massive computer databases of public records. They use comparable sale data to value billions of dollars of real estate every year, and they do it in seconds or less.
One mortgage insurer, for instance, claims they can make an accurate home appraisal in eight seconds or less for most urban markets.
Given their efficiency, AVSs have been catching on with more lenders. While they're not perfect (some question their accuracy and their occasional fraud allowance), AVSs have two compelling advantages: speed and cost.
Lenders and mortgage professionals find they can make fast loan approvals without appraisal conditions. If a mortgage broker, for example, has a tight closing window, choosing an AVS lender is a definite stress reliever. There's no waiting for appraisal appointments to be booked, waiting for the appraiser to view the property, waiting for the appraisal report, or waiting for the underwriter to review the appraisal report. On the cost side of things, AVSs are also a clear winner. If they're not offered for free, they can cost as little $50 to $75. That compares to upwards of $250 or more for a human appraisal.
