Computerized appraisals have been an issue for awhile, but recently, they have become a problem for a much larger group of people.
Appraisals done by people in general are both objective and subjective, which means that often if you had two professional appraisers come to your house, you would likely get two different price opinions, if they did not have a target price to go from.
Computerized appraisals are just that. It uses transactional data information but does not take updates and other ancillary details into consideration. According to the Wall Street Journal article by M.P. McQueen,
Automated valuation models were pioneered by Yale economist Robert Shiller, who developed the first systems in the early 1990s. While arguing that these appraisals are more objective than human appraisers, Mr. Shiller and others say that in some situations the models may be providing unrealistically low values, prompting lenders to reject loan applications or lend less money on particular properties.
I have to question as to whether the data is similar to those used by Zillow Zestimates to find value. Baltimore County Zillow Zestimates have been well off in many situations, and the disclaimers on their site are many. Their CEO & CFO explained their data issues to me, and I discussed them in my post about misleading Towson Zestimates.
If owners have tax credits or have lived in the property for a long time, that can easily skew results, creating an incorrectly low “appraisal” or Zestimate.
So, if you are looking to refinance your Baltimore County home, be aware of computerized appraisals.