Comparing independently developed Automated Valuation Model (AVM) Values to County Market Values (CMV) will point to the areas of failure, meaning over and under-valued assessments on the Tax Roll. Often, the higher value properties are under-assessed, while the lower value properties are over-assessed. If the comparison of "AVM to CMV" points in that direction, the Property Tax Appeals Consultants ("consultants") must work up a small sample, using comps, to further authenticate the discovery. If the comps sample validates the discovery, consultants must pay special attention to that over-valued/ over-assessed population segment.
In choosing AVM Vendors, consultants must ensure that those AVM Values are developed specifically for the Tax Status Date. If the Valuation date (or the Tax Status Date, as the case may be) is 1-1-2019, but the AVM Values were developed in June 2018, those values would produce a flawed picture when compared with the County Values. Therefore, it is advisable to work with AVM Vendors that develop custom or specialized models for the Appeals industry, per se.
Many AVM Vendors also sell Comps Reports. However, the Appeals Consultants must be careful in working with the specialized AVM Vendors who additionally tie their AVMs to the Comps production. In other words, the specialized AVM Vendors who use the model coefficients to adjust their comps via the Comps Adjustment Matrix do not necessarily produce the most optimal comp reports as AVM (top-down) and comps reports (bottom-up) are diametrically opposite solutions. If a consultant is looking for a long-term AVM vendor, this is always worth asking, meaning if they tend to tie their comps (reports) to the model coefficients.
In the due diligence course, consultants may ask for a sample Adjustment Matrix for the comps production. The sample itself will say a lot about the quality of their valuation process. For example, if the Comps Adjustment Matrix shows a 'Lot SF' coefficient of .10 (10 cents per Lot SF, assuming it's transferred from the regression model producing the AVM model values), it would be difficult to explain such adjustments to the clients looking for self-explained comps. It would be a clear indication that the vendor is working with totally unqualified "make-shift" modelers.
While no AVM Vendor would be forthcoming to show their AVM models, they might share a sample Comps Adjustment Matrix. It could be telling!
Many Consultants use free or low-cost home valuation sites to work up samples. Unlike the free brokerage sites, some of those sites are generally self-directed, allowing them to arrive at their value conclusions. A few of them even comprise a host of advanced features like subject simulation, comps selection, quantitative adjustments, distance matrix, time adjustments, flexible valuation dates, multiple ranking methods, interactive spatial interface, comps grid, value analysis, and an all-inclusive report, to name a few. Some newer sites are mobile-friendly (so no additional Apps are needed) and strictly top-down, providing "quick look" subject valuations. Of course, those who subscribe to the local MLS have access to the comps solutions as well.
In any case, having access to a custom or specialized AVM will help consultants to isolate the meaty cases from the Roll, thus narrowing the competition down. It makes no economic sense to go after the cases which are valued at or below the market.
-Sid Som
homequant@gmail.com
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