6 Reasons Why Human Real Estate Evaluations Are Superior to AVMs
In the digital era, Automated Value Models (AVMs) have gained popularity for providing quick and automated real estate evaluations. However, when it comes to accurately valuing properties, human real estate evaluations continue to offer distinct advantages over AVMs.
In this blog post, we will explore six reasons why human evaluations are superior to AVMs. We will highlight their ability to provide market intimacy, exclude off-market sales, offer a more holistic assessment, and more.
1. Market Intimacy and Local Expertise
One of the primary advantages of human real estate evaluations is the market intimacy and local expertise they bring to the table. Real estate professionals have a deep understanding of their local markets and can provide insights based on their experience and knowledge.
They possess a contextual understanding of local conditions, such as neighborhood and community dynamics, local amenities, market trends, and recent sales activity, which allows them to consider the specific factors that influence property values in a given area.
This market intimacy, coupled with their local market expertise, enables human evaluators to navigate the intricacies of the real estate landscape, resulting in more accurate and reliable evaluations.
2. Exclusion of Off-Market Sales
While AVMs primarily rely on publicly available data, human evaluators understand the significance of excluding off-market sales in their assessments. Off-market sales, by definition, refer to a property that is sold without ever being publicly marketed for sale.
Human evaluators recognize that off-market transactions may not reflect the true market dynamics and conditions. By excluding off-market sales from their analysis, human evaluators ensure that their assessments are based on reliable and relevant data, providing a more accurate representation of a property’s value.
This approach aligns with the industry standard and allows for a more informed evaluation of real estate properties.
3. Refined Sales Comparison Approach
AVMs rely on algorithms to generate sales comparisons, often resulting in the inclusion of incomparable homes or inappropriate property matches. On the other hand, human evaluators possess the expertise to select and adjust appropriate sales comparables based on various factors, such as property condition, location, and unique features, bringing a crucial element of subjectivity and uniqueness to the evaluation process.
Additionally, human evaluators engage in qualitative analysis, considering factors like the emotional appeal of a property and its design aesthetics, which goes beyond the quantitative data processed by AVMs.
Furthermore, when dealing with complex properties that may challenge automated algorithms, human evaluators excel in making accurate judgments and adjustments, ensuring that the sales comparison approach is refined appropriately. This comprehensive approach by human evaluators ensures a more accurate valuation that authentically reflects the true market value of a property.
4. Holistic Assessment
Human evaluations provide a holistic assessment that considers various factors that AVMs typically overlook. AVMs rarely incorporate home inspections, cost approaches, or income approaches in their valuation models. However, these elements are crucial in providing a comprehensive evaluation.
Home inspections help identify potential issues affecting a property’s value, such as quality and condition. Moreover, the ability of human evaluators to conduct property inspections adds a layer of precision that goes beyond the capabilities of automated algorithms. The cost approach considers the replacement value of the property, which is essential for assessing its worth, and human evaluators can effectively apply this method based on their experience and expertise.
Additionally, human evaluators bring ethical considerations to the forefront, ensuring their fair evaluations and addressing potential biases that may be present in AVM algorithms.
Interpersonal skills also play a vital role in the evaluation process, allowing for direct communication with property owners, gathering additional information, and fostering better relationships, all of which contribute to a more nuanced and accurate assessment.
The adaptability of human real estate evaluations sets them apart in a dynamic and ever-changing market. Unlike AVMs that may struggle to keep pace with evolving market trends, human evaluators showcase adaptability by incorporating the latest market dynamics into their assessments.
Continuous learning is a fundamental aspect of their approach, enabling them to stay informed about shifting market conditions, new regulations, and emerging trends. This commitment to ongoing education positions human evaluators as agile professionals capable of adapting their methods to ensure relevance and accuracy
This adaptability of responsiveness to market trends and a commitment to continuous learning positions human real estate evaluations as a resilient and effective tool in navigating the complexities of the real estate landscape.
6. Legal and Regulatory Awareness
Legal and regulatory awareness stands as a crucial advantage in human real estate evaluations. Human evaluators possess a comprehensive understanding of the intricate legal and regulatory landscape governing real estate transactions. This awareness allows them to navigate and interpret local laws and regulations skillfully, ensuring that their evaluations align with the legal framework.
In a field where compliances are paramount, human evaluators’ capacity to stay up to date with legal changes and nuances enables them to conduct assessments that are not only accurate but also in full adherence to the governing rules. This heightened legal and regulatory awareness provides an added layer of security and reliability to the evaluation process, reinforcing the trustworthiness and integrity of the overall real estate assessment.
Entrust Real Estate Evaluations to Human Professionals
While AVMs may offer convenience and speed, they lack market intimacy, determinations of off-market sales, holistic assessments provided by human real estate evaluators, and more.
Real estate professionals bring expertise, local knowledge, and the ability to analyze complex factors that influence property values. When accuracy and reliability are paramount, entrusting real estate evaluations to human professionals is essential for making informed decisions in today’s dynamic real estate market.
Whether you’re dealing with a residential, commercial, or agricultural property, Akrivis can help you with your real estate valuation needs. Contact Akrivis today to get started with your human real estate evaluation.
To learn more about real estate evaluations and AVMs, check out our blog, Real Estate Evaluations vs. Automated Value Models.