As we watch time and technology march forward as it should, the era of advanced artificial intelligence and robotics has begun in the real estate field as well and it raises new home appraisal questions. More and more, drones are handling tasks that used to be handled by people by taking photographs of houses and properties and sending that data to be analyzed by advanced computer software for various parts of the listing process and determining a home value.
Recently, automated technology has made it so that drones, software and more are now part of the home appraisal process and, with new regulation being proposed by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve, concerns about professional home appraisers being replaced by machines have risen and spread across relevant industries.
What Is the Regulation?
The regulation in question is that, across the nation, homes valued under $400,000 will not require a human appraiser as part of the process. This is a significant raise from the $250,000 level that is currently set and, theoretically, take away business from home appraiser businesses and individuals as homes below $400,000 in price make up as much as 2/3rds of homes available for sale in the Unites States.
Wall Street Journal writes, “Proponents of the change, primarily financial institutions and state banking regulators, say that by not having to hire a licensed appraiser, lenders and home buyers will save money and real-estate deals can be completed faster. Appraisers and consumer-advocacy groups that have opposed the change argue that it introduces new risks to the $10.9 trillion market for home loans and that computer models and other technology can’t replicate a trained appraiser’s judgment, human senses and experience.”
Not As Easy As Automation Makes it Sound
Furthermore, according to rismedia.com, this policy shift will complicate matters that the industry is already struggling with due to other policy changes that have taken place in recent times.
“Raising the threshold has to be looked at in conjunction with what else is impacting the appraisal profession,” according to [Steve Sousa, executive vice president for Association for Valuation Professionals], which include the following:
* “The GSE’s move to waive appraisals and expand the use of bifurcated appraisals.”
* “The NCUA increase in the commercial threshold to $1 million.”
“Disregard of prudent lending practices with a reliance on questionable automated valuations places the real estate market on the edge of a slippery slope,” warns Sousa.”
Sides Chosen
Naturally, there are quite a few detractors from this regulation change as well as those who ardently support it. Supporters talk about how it will reduce costs for home buyers and mortgage lenders during the often expensive process, while detractors talk about how quality professional home appraisals should be left to human judgment where it can make decisions and recommendations that artificial intelligence cannot.
More on this can be found at https://rismedia.com/2019/09/10/human-appraisers-federal-requirements/#close and https://www.wsj.com/articles/your-next-home-might-be-appraised-by-a-robot-11566639000.
