Will Human Appraisers Lose their Jobs to Automation?

by Isaac Benmergui, Esq on August 24, 2017

appraisersFannie Mae and Freddie Mac recently announced that for some home purchases and refinancing, they will waive the requirement for an in-person appraisal and instead rely on an appraisal algorithm generated by current housing data.

The industry was already hit hard during the housing crisis. Appraisers were often put in a difficult spot by banks, forcing them to appraise well or risk losing future business. Then, when the market tanked, the big banks blamed appraisers for overvaluing homes. This lead to additional regulation that made it harder to become an appraiser, while appraisal fees began to stagnate at the same time due to the introduction of appraisal management companies. This new middleman now regulates appraisers as well as taking a chunk of the fee.

Freddie Mac and Fannie Mae’s move to computer appraisals came after finding that computer-based models can appraise homes as accurately as people can. The current wavier program is small and focuses on easy-to-value properties. Despite protests from professional organizations that represent appraisers, real estate tech companies like Zillow says they can teach algorithms to recognize value-adding features like hardwood floors, granite countertops, and even determine curb appeal. And the tech is getting better all the time, says Stan Humphries, the chief analytics officer at Zillow. Humphries says soon computers may be able to factor in ambient noise levels, airplane flight paths and other intangible aspects of a home.

The one weakness of the algorithms is that they rely on accumulated data, so the more unique features a home has, the more it may need a human appraiser to get an accurate value estimate. But in the meantime, buyers of regular old 3-bedroom ranches will enjoy saving that extra $600 to $1,000 when it comes time to buy.

Call Miami Real Estate Lawyer Isaac Benmergui at 305.397.8547 and set up a no charge, no obligation consultation to discuss your case. We have over a decade of experience handling Real Estate and Civil Litigation cases throughout Miami and South Florida, and will use our expertise to help your case to the best of our abilities.

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