An automated valuation system (AVS) is a quick way to value a property without doing a full human appraisal.
AVSs (a.k.a. AVMs, GVMs, or GVSs) 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.
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 love pushing out fast approvals without appraisal conditions. If you’ve got a tight closing, or you are a broker keen on prompt service, then 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, waiting for the underwriter to review the appraisal report, yada yada…
On the cost side of things, AVSs are also a clear winner. If they’re not free altogether, they’re as cheap as $50-$75. That compares to upwards of $250 or more for a human appraisal.
For most clients, free is pretty appealing. That’s especially true on a refinance. Sometimes applicants pay $250+ for an appraisal only to find out their house isn’t worth enough to support their desired loan amount.
Speaking of cost, some lenders out there charge for AVS appraisals. Others don’t. Other things near-equal, most mortgage professionals clearly prefer lenders with free AVSs. For some reason though, lenders who charge for AVSs seemingly don’t realize that.