Bank of America introduced late in 2012 a new assessment model that takes us further away from a true appraisal for a short sale. As if BPOs and drive by BPOs weren't bad enough, we now have evidence of Bank of America using an Automated Valuation Model (AVM) to decide on a short sale contract.
An AVM is a report driven by technology. It calculates a property's value using math and a database of public record information. The report analyzes values of comparable properties, and some AVMs even take into account previous surveyor valuations, historical price movements, and user inputs (like number of bedrooms, property improvements, etc.)
Because a physical inspection of the property does not occur, AVMs do not take into account the current condition of the property. AVMs may save time, money, and resources (for example, there are no transport costs), but there is NO physical inspection of the property! The AVM report supposes an average condition that often does not reflect reality. It's like trusting Zillow and Zestimate to give an accurate reflection of the value of a property.
A lender who uses an AVM may insist that a property is worth more than its true value, thereby hurting the possibility of a short sale. When are short sale lenders going to learn to create solutions instead of obstacles?
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.