Crestwood—Neighborhood Analysis of Single-Family Residential Homes (November 2019)

The Crestwood neighborhood is part of the Southwest portion of Portland and is one of the periphery neighborhoods. This neighborhood is largely residential with minor commercial and one city park (Dickinson). This neighborhood has a overlapping section with the adjacent Ashcreek, but that small section is omitted in the following analysis.

2019-11-30_21-10-51

 

Appraisers endeavor to take the measure of a neighborhood with a variety of tables, charts, and graphs. It helps them to frame the value opinion and see how the subject property relates to the neighborhood as a whole. Before we dive in, a…

Quick Note

The following information is based on detached single-family residential homes that were sold and/or listed on the open market as reported by RMLS—the primary MLS service for the City of Portland. Data was pulled from the year 2000 to the present date. The data export was checked, validated, and scrubbed of obvious errors using custom tools developed by the author. With that out of the way, let’s look at some neighborhood stats.

Neighborhood Statistics Overview

The following table summarizes important metrics for the neighborhood. Each column is independent of the others and the basement square foot column reflects only properties with a basement.

2019-11-30_21-25-18

Approximately 3% of sales in the neighborhood were new constructions.

The following scatter plot shows all closed-sale detached single-family residences  (with a red trendline):

DOS

The neighborhood suffered during the housing crisis, but has recovered with prices generally higher than they were before the crash. The following chart shows quarterly average and median sales prices over the last two years:

Quarter

Percentile rank is a way of seeing price bands for the neighborhood. For instance, the 50th percentile, or median rank, shows that half of all sales since the year 2000 have been under $279,900. Prices are fairly clustered all the way up to the 90th percentile:

Percentile

 

The following table shows important marketing information for both the last two years and since the year 2000:

2019-12-01_0-20-24

 

The “SP/OLP” label stands for “sales price/original list price” ratio. This is an important metric, as it shows what the particular property sold for relative to the original list price that was advertised. The “SP/LP” column tracks what the sales price was relative to the final published list price. This column, while not as important as the first one, still yields important insights as to the direction of negotiations. The “DOM” column tracks the days on market for all properties sold and listed and helps frame expected marketing time. Finally, the “CtL” label stands for “contract-to-list” ratio. It is the number of pending sales divided by the total number of listings. A low ratio means many properties are sitting on the open market waiting for offers. A high ratio indicates properties are being absorbed by the market quickly, commonly referred to as a “seller’s market.”

As of this post date, there are more properties under contract than waiting for an offer.

The following table more closely examines DOM as well as CDOM (cumulative days on market). CDOM is also an important metric as homes are often taken off the market and then subsequently relisted (typically at a lower price). The CDOM metric can give you a better idea of total expected marketing time. The table breaks out DOM & CDOM by price segment:

2019-12-01_0-36-08

 

Let’s wrap up the neighborhood statistics overview with the following table showing the sales terms in the market over the last two years:

2019-12-01_0-40-47

 

Conventional financing is predominant, with the majority of the remaining sales being cash buyers or buyers using FHA financing.

Let’s conclude our tour of Crestwood with a histogram analysis of the neighborhood:

Histogram Analysis

Age

Age

Most properties in the neighborhood are between 30-69 years of age.

Bathroom Count

 

Bath

A home with two full bathrooms is the most typical for the market.

Bedroom Count

 

Bedroom

The vast majority of homes are have either three of four bedrooms.

Garage Stall Count

Gar

Most homes in the neighborhood have a two-car garage.

Total Square Footage

Total SF

This metric includes above-grade living area and basement space for a combined figure. The median total square footage for the neighborhood is ~1,800 sq. ft.

Gross Living Area

GLA

Gross living area only consider non-basement living space. Often the market reacts more strongly to gross living area, usually applying a discount to basement space. Median gross living area is approximately 1,400 sq. ft.

Level Count

# of Levels

The majority of properties are two levels in this neighborhood, although a single-level is very common.

Lot Size

Acres

The median lot size for home in the neighborhood is ~9,150 sq. ft. 

Sales Price

Sales Price

This histogram includes sales prices over a 20-year period. The median sales price over the last 20 years is: ~$280,000; and the median sales price over the last 2 years is: $437,000.

The highest sales price obtained in the neighborhood (on the open market) was $1,095,000 on 10/16/2018. The home was a new construction at the time of the sale and has 4,050 total square feet.

# of Sales

 

# of Sales

The number of sales in the neighborhood have been trending lower this year as compared to the previous two.

So, there you have it, a market overview for the Crestwood neighborhood!

Appraisal Reports

If you are a homeowner and are looking to sell your home, you would greatly benefit from a prelisting appraisal. Our firm will bring high-level analytics to your report and give you a sound understanding of the current market.

If you are an agent and need detailed neighborhood analysis, or analysis of specific areas or specific segments of the market, please contact us and we can generate a custom report to help you frame a listing price for your client!

Far Southwest—Neighborhood Analysis of Single-Family Residential Homes (August 2019)

The Far Southwest neighborhood is just that—far southwest! It represents one of the periphery neighborhoods of the City of Portland. The neighborhood is largely dominated by the Portland Community College Sylvania Campus. The campus was opened in 1968 and has approximately 28,000 students enrolled each year.

Aerial Small

Appraisers endeavor to take the measure of a neighborhood with a variety of tables, charts, and graphs. It helps them to frame the value opinion and see how the subject property relates to the neighborhood as a whole. Before we dive in, a…

Quick Note

The following information is based on detached single-family residential homes that were sold and/or listed on the open market as reported by RMLS—the primary MLS service for the City of Portland. Data was pulled from the year 2000 to the present date. The data export was checked, validated, and scrubbed of obvious errors using custom tools developed by the author. With that out of the way, let’s look at some neighborhood stats.

Neighborhood Statistics Overview

The following table summarizes important metrics for the neighborhood. Each column is independent of the others and the basement square foot column reflects only properties with a basement.

2019-08-11_17-37-32

Approximately 6% of sales in the neighborhood were new constructions.

The following scatter plot shows all closed-sale detached single-family residences  (with a red trendline):

2019-08-11_18-00-32

The neighborhood suffered during the housing crisis, but has recovered with prices generally higher than they were before the crash. The red trendline shows prices have leveled and have even dipped a bit. This is further borne out by a review of average and median sales prices over the last two years:

Quarters

Percentile rank is a way of seeing price bands for the neighborhood. For instance, the 50th percentile, or median rank, shows that half of all sales since the year 2000 have been under $340,350. Prices are fairly clustered all the way up to the 90th percentile:

Percentile

The following table shows important marketing information for both the last two years and since the year 2000:

OLP

The “SP/OLP” label stands for “sales price/original list price” ratio. This is an important metric, as it shows what the particular property sold for relative to the original list price that was advertised. The “SP/LP” column tracks what the sales price was relative to the final published list price. This column, while not as important as the first one, still yields important insights as to the direction of negotiations. The “DOM” column tracks the days on market for all properties sold and listed and helps frame expected marketing time. Finally, the “CtL” label stands for “contract-to-list” ratio. It is the number of pending sales divided by the total number of listings. A low ratio means many properties are sitting on the open market waiting for offers. A high ratio indicates properties are being absorbed by the market quickly, commonly referred to as a “seller’s market.”

As of this post date, there are more properties waiting for offers than are under contract.

The following table more closely examines DOM as well as CDOM (cumulative days on market). CDOM is also an important metric as homes are often taken off the market and then subsequently relisted (typically at a lower price). The CDOM metric can give you a better idea of total expected marketing time. The table breaks out DOM & CDOM by price segment:

CDOM

Let’s wrap up the neighborhood statistics overview with the following table showing the sales terms in the market over the last two years:

Sale Terms

While conventional financing is predominant, there is a substantial cash market.

Let’s conclude our tour of South Portland with a histogram analysis of the neighborhood:

Histogram Analysis

Age

Age

Most properties in the neighborhood are between 10-44 years of age.

Bathroom Count

Bath

A home with two full bathrooms and one half bathroom (powder room) is the most typical for the market.

Bedroom Count

Bedroom

The vast majority of homes are have either three of four bedrooms.

Garage Stall Count

Garage

Most homes in the neighborhood have a two-car garage.

Total Square Footage

TSF

This metric includes above-grade living area and basement space for a combined figure. The median total square footage for the neighborhood is ~2,400 sq. ft.

Gross Living Area

GLA

Gross living area only consider non-basement living space. Often the market reacts more strongly to gross living area, usually applying a discount to basement space. Median gross living area is approximately 1,880 sq. ft.

Level Count

Levels

The majority of properties are two levels in this neighborhood.

Lot Size

Lot

The median lot size for home in the neighborhood is ~10,000 sq. ft. 

Sales Price

Sales Price

This histogram includes sales prices over a 20-year period. The median sales price over the last 20 years is: ~$340,000; and the median sales price over the last 2 years is: $437,000.

The highest sales price obtained in the neighborhood (on the open market) was $1,095,000 on 10/16/2018. The home was a new construction at the time of the sale and has 4,050 total square feet.

# of Sales

# of Sales

The number of sales in the neighborhood have been trending higher this year as compared to the previous one.

So, there you have it, a market overview for the Far Southwest neighborhood!

Appraisal Reports

If you are a homeowner and are looking to sell your home, you would greatly benefit from a prelisting appraisal. Our firm will bring high-level analytics to your report and give you a sound understanding of the current market.

If you are an agent and need detailed neighborhood analysis, or analysis of specific areas or specific segments of the market, please contact us and we can generate a custom report to help you frame a listing price for your client!

Lake Oswego—Neighborhood Analysis of Waterfront Single-Family Residential Homes (July 2019)

Oswego Lake is a scenic and picturesque former channel of the Tualatin River. It is a natural feature, but has been enlarged due to a dam to its present size of  ~395 acres. Lake Oswego-SmallMany homes rim the lake as well as the smaller bays connected to it. Some of the properties surrounding Oswego Lake are among the more expensive in the Greater Portland Area.

Appraisers endeavor to take the measure of a neighborhood with a variety of tables, charts, and graphs. It helps them to frame the value opinion and see how the subject property relates to the neighborhood as a whole. Let’s examine waterfront properties on Oswego Lake (including the bays). But before we dive in, a…

Quick Note

The following information is based on detached single-family residential homes that were sold and/or listed on the open market as reported by RMLS—the primary MLS service for the City of Lake Oswego. Data was pulled from the year 2000 to the July 2019. The data export was checked, validated, and scrubbed of obvious errors using custom tools developed by the author. With that out of the way, let’s look at some neighborhood stats.

Neighborhood Statistics Overview

The following table summarizes important metrics for the neighborhood. Each column is independent of the others and the basement square foot column reflects only properties with a basement.

Neigh Stats

There has been relatively little new construction along the lake with ~3.8% of all sales/listings over the past 20 years having been new homes.

The following scatter plot shows all closed-sale detached single-family residences  (with a red trendline):

2019-08-03_16-59-16

The neighborhood suffered during the housing crisis, but has recovered with prices generally higher than they were before the crash. The red trendline shows prices have leveled and have even dipped a bit. This is further borne out by a review of average and median sales prices over the last two years.

Two Years

Percentile rank is a way of seeing price bands for the neighborhood. For instance, the 50th percentile, or median rank, shows that half of all sales since the year 2000 have been under $1.29 million. Prices are fairly clustered up to the 70th percentile where the upper range begins to balloon:

Percentile

The following table shows important marketing information for both the last two years and since the year 2000:

2019-08-03_17-39-01

The “SP/OLP” label stands for “sales price/original list price” ratio. This is an important metric, as it shows what the particular property sold for relative to the original list price that was advertised. The “SP/LP” column tracks what the sales price was relative to the final published list price. This column, while not as important as the first one, still yields important insights as to the direction of negotiations. The “DOM” column tracks the days on market for all properties sold and listed and helps frame expected marketing time. Finally, the “CtL” label stands for “contract-to-list” ratio. It is the number of pending sales divided by the total number of listings. A low ratio means many properties are sitting on the open market waiting for offers. A high ratio indicates properties are being absorbed by the market quickly, commonly referred to as a “seller’s market.”

As of this post date, there are more properties waiting for offers than are under contract.

The following table more closely examines DOM as well as CDOM (cumulative days on market). CDOM is also an important metric as homes are often taken off the market and then subsequently relisted (typically at a lower price). The CDOM metric can give you a better idea of total expected marketing time. The table breaks out DOM & CDOM by price segment:

2019-08-03_17-52-20

Let’s wrap up the neighborhood statistics overview with the following table showing the sales terms in the market over the last two years:

2019-08-03_17-58-54

Unsurprisingly, there is a substantial cash market among waterfront homes.

Let’s conclude our tour of waterfront properties in Lake Oswego with a histogram analysis of the market:

Histogram Analysis

Age

Age

The median age for the waterfront market is 55 years; however, a substantial number of properties are 35 years old or newer.

Bathroom Count

Bath

Two to four bathroom homes are typical for the market.

Bedroom Count

BR

The vast majority of homes have between three to five bedrooms.

Garage Stall Count

Gar

Most properties have either a two or three-car garage.

Total Square Footage

Total SF

This metric includes above-grade living area and basement space for a combined figure. The median total square footage around the lake is ~3,600 sq. ft.

Gross Living Area

GLA

Gross living area only consider non-basement living space. Often the market reacts more strongly to gross living area, usually applying a discount to basement space. Median gross living area is approximately 2,900 sq. ft.

Level Count

Levels

The majority of properties are two to three levels.

Lot Size

Lot

There are some acreage properties along the lake, however, the median lot size is 0.21 acres (~9,150 sq. ft.).

# of Sales

# Per Yr

The number of sales along the lake have been trending higher this year as compared to the previous two.

Sales Price

Sales Price

This histogram includes sales prices over a 20-year period. The median sales price over the last 20 years is: $1,290,000; and the median sales price over the last two years is: $1,765,000.

The highest sales price obtained among waterfront properties in Lake Oswego (on the open market) is $6,950,000 on 6/20/2000. The home is nearly 14,000 square feet; sits on 1.65 acres; has 7 bedrooms; 9 full bathrooms and 4 half bathrooms (powder rooms) and custom European-style architecture.

The highest listing was for $19,500,000. This was for the property on Jantzen Island.

Jantzen-sm

It is the only private island on Oswego Lake. The home sits on 5 acres, is 13,500 square feet, and is reachable by a gated private bridge. According to an article in the The Oregonian, the property was purchased for $2.2 million in cash back in 1987. $5 million was spent improving the property and it was listed on 9/08/2008 for nearly $20 million. It stayed on the market for that price for more than a year and a half before the listing was cancelled. It was relisted again about a half year later at a reduced price of $15 million, but it stayed on the market for over three years without selling. Had, it sold for even $10 million, it would have set a record for the Lake Oswego market.

So, there you have it, a market overview of waterfront properties on Oswego Lake!

Appraisal Reports

If you are a homeowner and are looking to sell your home, you would greatly benefit from a prelisting appraisal. Our firm will bring high-level analytics to your report and give you a sound understanding of the current market.

If you are an agent and need detailed neighborhood analysis, or analysis of specific areas or specific segments of the market, please contact us and we can generate a custom report to help you frame a listing price for your client!

South Portland—Neighborhood Analysis of Single-Family Residential Homes (July 2019)

The South Portland neighborhood is one of Portland’s waterfront communities, bordering the Willamette River. It is connected to the east side of the city via four bridges and boasts some of the city’s modern skyscrapers—including the John Ross Tower, Portland’s largest residential structure. Shopping, fine dining, numerous parks, recreation, OHSU with its aerial tramway, and major employment centers are all features of this dynamic neighborhood.

2019-07-27_8-02-02

Despite being part of Portland’s urban core, the South Portland neighborhood has a thriving detached single-family home market.

Appraisers endeavor to take the measure of a neighborhood with a variety of tables, charts, and graphs. It helps them to frame the value opinion and see how the subject property relates to the neighborhood as a whole. Before we dive in, a…

Quick Note

The following information is based on detached single-family residential homes that were sold and/or listed on the open market as reported by RMLS—the primary MLS service for the City of Portland. Data was pulled from the year 2000 to the present date. The data export was checked, validated, and scrubbed of obvious errors using custom tools developed by the author. With that out of the way, let’s look at some neighborhood stats.

Neighborhood Statistics Overview

The following table summarizes important metrics for the neighborhood. Each column is independent of the others and the basement square foot column reflects only properties with a basement.

Neigh Stats Corrected

There has been relatively little new construction in the neighborhood with ~5.8% of all sales having been new homes.

The following scatter plot shows all closed-sale detached single-family residences  (with a red trendline):

DOS vs SP

The neighborhood suffered during the housing crisis, but has recovered with prices generally higher than they were before the crash. The red trendline shows prices have leveled and have even dipped a bit. This is further borne out by a review of average and median sales prices over the last two years:

Two Years

Percentile rank is a way of seeing price bands for the neighborhood. For instance, the 50th percentile, or median rank, shows that half of all sales since the year 2000 have been under $359,000. Prices are fairly clustered up to the 90th percentile where the upper range begins to balloon:

Percentiles-2

The following table shows important marketing information for both the last two years and since the year 2000:

OLP

The “SP/OLP” label stands for “sales price/original list price” ratio. This is an important metric, as it shows what the particular property sold for relative to the original list price that was advertised. The “SP/LP” column tracks what the sales price was relative to the final published list price. This column, while not as important as the first one, still yields important insights as to the direction of negotiations. The “DOM” column tracks the days on market for all properties sold and listed and helps frame expected marketing time. Finally, the “CtL” label stands for “contract-to-list” ratio. It is the number of pending sales divided by the total number of listings. A low ratio means many properties are sitting on the open market waiting for offers. A high ratio indicates properties are being absorbed by the market quickly, commonly referred to as a “seller’s market.”

As of this post date, there are more properties waiting for offers than are under contract. The CtL is a fluid metric, however, and may not be indicative of long-term trends.

The following table more closely examines DOM as well as CDOM (cumulative days on market). CDOM is also an important metric as homes are often taken off the market and then subsequently relisted (typically at a lower price). The CDOM metric can give you a better idea of total expected marketing time. The table breaks out DOM & CDOM by price segment:

By Segments

Let’s wrap up the neighborhood statistics overview with the following table showing the sales terms in the market over the last two years:

2019-07-27_9-57-18

While conventional financing is predominant, there is a substantial cash market.

Let’s conclude our tour of South Portland with a histogram analysis of the neighborhood:

Histogram Analysis

Age

Age

Most properties in the neighborhood are over a half century old. With the oldest home being a 920 sq. ft. cottage built while Abraham Lincoln was still president of the United States.

Bathroom Count

Bathroom

A two-bathroom home is the most typical for the market, with a single bathroom being fairly common as well.

Bedroom Count

BR

The vast majority of homes are have three bedrooms.

Garage Stall Count

Gar Fixed

There is near parity between properties with no garage and a one-car garage. A two-car garage is not uncommon either.

Total Square Footage

2019-07-27_10-43-38

This metric includes above-grade living area and basement space for a combined figure. The median total square footage for the neighborhood is ~2,200 sq. ft.

Gross Living Area

GLA

Gross living area only consider non-basement living space. Often the market reacts more strongly to gross living area, usually applying a discount to basement space. Median gross living area is approximately 1,550 sq. ft.

Level Count

Levels

The majority of properties are three levels in this neighborhood.

Lot Size

Lot Size

The lion’s share of properties are on lots 0.06 ac – 0.119 acres (~2,610 sq. ft. – ~5,180 sq. ft.). 

Sales Price

Sales Price

This histogram includes sales prices over a 20-year period. The median sales price over the last 20 years is: $359,000; and the median sales price over the last 2 years is: $530,533.

The highest sales price obtained in the neighborhood (on the open market) was $1,500,000 on 6/13/2018. The home is over 6,000 total square feet; sits on one of the larger lots for the neighborhood; has a sauna & pool; and has a studio!

# of Sales

Sales Per Yr

The number of sales in the neighborhood have been trending lower this year as compared to the previous two.

So, there you have it, a market overview for the South Portland neighborhood!

Appraisal Reports

If you are a homeowner and are looking to sell your home, you would greatly benefit from a prelisting appraisal. Our firm will bring high-level analytics to your report and give you a sound understanding of the current market.

If you are an agent and need detailed neighborhood analysis, or analysis of specific areas or specific segments of the market, please contact us and we can generate a custom report to help you frame a listing price for your client!

 

Ladd’s Addition—Neighborhood Analysis of Single-Family Residential Homes (July 2019)

Ladd’s Addition is a unique historic district in the city of Portland that is known for its diagonal street pattern radiating from a central park spoke—the Ladd Circle Park & Rose Gardens. Ladd’s addition is named after the 19th century Portland mayor, William S. Ladd. This historic district is part of the Hosford-Abernethy neighborhood. The street layout is easy to spot from aerial maps of the city and clearly delineates the district’s boundaries.

2018-11-07_18-10-38

Appraisers endeavor to take the measure of a neighborhood with a variety of charts and graphs. It helps them to frame the value opinion and see how the subject property relates to the neighborhood as a whole. For this blog post we will use the venerable histogram to better understand the single-family residential market for Ladd’s Addition.

A histogram is a graphical display of data using bars of different heights. In a histogram, each bar groups numbers into ranges. Taller bars show that more data falls in that range. A histogram may be used to display the shape and spread of the data of the real estate market and illustrate trends of properties that have sold and/or are listed. They’re a great visual tool!

The following information is based on detached single-family residential homes that were sold and/or listed on the open market as reported by RMLS—the primary MLS service for the City of Portland. Data was pulled from the year 2000 to the present date.

Age

Age

Most properties within Ladd’s Addition were built around 1900-1930. This is reflected in the age histogram showing most of the homes falling in the 91-97 years bracket. New/newer constructions in Ladd’s addition is nearly unheard of.

35 different homes that sold over the last 20 years were on the National Register of Historic Places.

Bathroom Count

Bathroom

Most homes in the neighborhood have two bathrooms; but a home with only one bathroom is not uncommon. One home had the equivalent of 5 & 1/2 bathrooms. There is no waiting in that house!

Bedroom Count

Bedroom

Two to four bedrooms is the norm, with a few outliers having either one or 6-7 bedrooms.

Garage Stall Count

GAR

A one-car garage is the norm for Ladd’s Addition. However, a substantial number of homes in the dataset have either no garage at all or an extra garage stall.

Total Square Footage

Total SF

This metric includes above-grade living area and basement space for a combined figure. The median total square footage for the neighborhood is 2,500 sq. ft. There are some larger homes in the area, with 32 sales/listings being at or above 4,800 sq. ft.

Gross Living Area

GLA

Gross living area only consider non-basement living space. Often the market reacts more strongly to gross living area, usually applying a discount to basement space. Median gross living area is approximately 1,700 sq. ft.

Level Count

# of Levels

The majority of properties are three levels in this neighborhood.

Lot Size

Lot Size

The vast majority of properties are on lots 0.120 ac – 0.129 acres (~5,227 sq. ft. – ~5,619 sq. ft.). There is substantial uniformity of lot sizes in this neighborhood.

Sales Price

Sales Price

This histogram includes sales prices over a 20-year period. The highest sales price obtained in the neighborhood (on the open market) was $1,105,000 on 3/17/2017.

# of Sales

# of Sales

Ladd’s Addition doesn’t have a substantial turnover of homes each year. The fewest sales in a year was back in 2015, when only 10 single-family residential homes sold. 2016-2018 averaged 20 sales per year. This year looks to be trending lower. Year-to-date sales are only 8 and, if the trend holds, 2019 may signal a cooling off of the number of sales.

So, there you have it, a brief histogram overview of one of Portland’s most iconic neighborhoods!

Appraisal Reports

If you are a homeowner and are looking to sell your home, you would greatly benefit from a prelisting appraisal. Our firm will bring high-level analytics to your report and give you a sound understanding of the current market.

If you are an agent and need detailed neighborhood analysis, or analysis of specific areas or specific segments of the market, please contact us and we can generate a custom report to help you frame a listing price for your client!

An Appraiser’s First Impressions of Clear Capital’s AVM

Collage_HD 2018-12-27 23_53_58

It’s no secret the lending industry is aggressively pursuing alternatives to traditional appraisals. While most participants in the industry will concede an appraisal is still the gold standard for collateral valuation, they increasingly see the appraisal as something to be steered around or avoided altogether. An array of products/alternatives are being bandied in lieu of a traditional appraisal: Hybrids, Evaluations, BPOs (broker price opinions), Desktop Appraisals, and outright Appraisal Waivers. The industry is also turning its attention more and more to AVMs (automated valuation models).

AVMs have been around for nearly three decades now. The first AVMs had a hard time with consistency and accuracy, but as the world has become increasingly digital and data driven, the accuracy of the models has been steadily increasing. In conforming tract home subdivisions with sufficient recent sales, their value may be extremely accurate.

An appraiser should keep an eye on alternatives to the services he/she offers, so I recently downloaded a number of white papers on AVMs from different websites, including Clear Capital’s. I was somewhat surprised that Clear Capital’s white paper freely admitted that an AVM is not as good as an appraisal, but could be a starting point in risk assessment and collateral valuation. I had to provide my email address and phone number to access the white paper. This resulted in me receiving a follow-up call from Clear Capital. (Full disclosure: I previously worked for Clear Capital for a couple of years doing quality assurance work on incoming appraisals.) The gentleman on the phone was very nice. We chatted a bit and I asked him how long the product has been offered and he mentioned they took their previous AVM off the market and just released a new and improved model a couple of months ago. I asked him if they needed beta testers and he said no, but he did email me a code to sample five AVM valuations for free on their website.

Clear Capital AVM Sample Redacted

That day I had just completed an appraisal report and, after completing it, ran the subject property’s address through their portal. The AVM is highly specific in its dollar output: $416,771, which I thought was a bit weird. It might be their way of emphasizing this is an algorithmic valuation. If so, that is the opposite of what we as appraisers do, which is round an opinion of value to emphasize a measure of uncertainty. (I sure hope no licensed appraiser is signing their name to an opinion of value as specific as $416,771!) For reference, my developed opinion of value was: $400,000, so the AVM was ~4.2% higher.

The AVM output is very bare bones: just three pages and mainly a list of addresses. I got 30 addresses in total; 15 apparent sales and 15 apparent listings; I say apparent because, oddly enough, there is no legend anywhere in the document explaining what the colors denote. The AVM gives a high estimated value of $451,500; a low estimate of $390,000; and the official, highly specific, estimate mentioned previously. It also provides a confidence score with a letter next to it: “H,” “M,” or “L” to presumably denote either high, medium, or low confidence. (My AVM report had an “H” next to the confidence score.) A map of the properties is provided on the second page. The third page consists of just two paragraphs of disclaimers: first warning the product is not an appraisal and then warning the reader not to reverse engineer their work or infringe on their intellectual property. With so little explanatory material in the document itself, I don’t think they need to worry about anyone being able to reverse engineer their system.

All the sales listed are within approximately one third of a mile of the subject property and the dates of sale within ten months of the date of the AVM report. (The listings are selected from within three quarters of a mile.) Five of the seven comparables I used in my report are found on the list, but none of the comparables I used cracked the top ten on either the sales or listings tally. My subject is a single-level home and all the properties I gridded in the report are single-level as well. Of the top ten sales the Clear Capital AVM used: five are two-story structures; one was not listed in the local MLS; another was listed but had no photos and no agent comments at all; one was a bit older and smaller; and the other two would have made acceptable alternative comparables in my report.

As I mentioned before, there is almost no explanatory material with the AVM output, so I really don’t have a clue how it derived its value estimate. I checked to make sure the AVM didn’t do something as simple as average the 15 sales (or the 15 sales with the 15 listings). It didn’t.

So, is something like this useful? I think so. While many of the properties it listed were rejected by me in my comparable search, the results were within 4% of my opinion of value. As their own white paper stresses—and the disclaimers in the AVM report itself reiterates—the AVM output is not an appraisal. The cost of the AVM would have been $10 if I didn’t have the promo code. I can see lenders using products like this when the loan-to-value ratio is low and the credit score of the applicant is high. (A full-blown appraisal may be overkill in that situation.) A $10 charge is also nominal considering the total fees a mortgage or other real estate loan product may generate. A quick peak at the AVM early on may give a loan officer an idea of what they’re in for or if the deal is feasible or not. (It is hoped said loan officer is also paying mighty close attention to the confidence score.)

(I am glossing over the bigger question as to how these products will be checked for accuracy, data integrity, tamper resistance, etc. But that is a blog entry for another day.)

While my opinion may be considered biased for obvious reasons, I genuinely believe appraisers offer an extremely valuable service to the public and are a pillar in sound collateral valuation and risk mitigation. However, it is clear that the future of valuation will include increased utilization of AVM products such as the one Clear Capital offers or the free Zillow “Zestimate.” Appraisers who work in areas with highly conforming properties will need to make sure they level-up their skill set to specialize in the valuation of complex properties; the type that currently gives computer algorithms nervous breakdowns. I strongly suspect the appraiser of the future will be, essentially, a data scientist. One that has strong Excel, R, Python, and/or SAS proficiency. There may be fewer of us in the future, but the ones that remain will be extremely talented professionals who offer local, boots-on the-ground expertise with high-level analytical skills. And we can offer what no computer currently can: a friendly smile and a listening ear as the homeowner tells the story of their property!