Courtesy Adobe Stock Karen Roach

A new proposal, created in part by the Federal Deposit Insurance Corp., calls for raising the threshold for homes that require an in-person appraisal, rather than an automated appraisal, from $250,000 to $400,000. If approved, this would be the first change to this threshold since 1994.

Skipping a human appraisal could speed the closing process and save buyers and homeowners attempting to refinance about $500. However, both appraisers and real estate professionals note that automated valuation models, or appraisals conducted via computer, are not as reliable as human appraisals. Because they are based on an interpretation of data, they may not consider factors that the data doesn’t account for – such as the condition the home is in.

"Automated valuation models are when you throw a lot of data in the hopper and flip the switch; it churns, and it spits out a value," says New York City–based real estate appraiser Jonathan Miller. "[But] the problem with that is AVMs are wildly inaccurate."

“If I'm lending $400,000 I would absolutely require an [in-person] appraisal,” says Richard Bettencourt, president at National Association of Mortgage Brokers. “I want to make sure the structure’s there.”

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