A technological leap set to offer consumers cheaper, more accurate comparables information could also render some online comparables services obsolete.

Later this year, for $5 to $10 a search, you'll be able to access online the Appraisal Institute Residential Database (AIRD), key in a street address or a set of home-search variables and obtain digital extracts of recent appraisals of homes, say, similar to one you might be about to sell or buy.

Before consumers get a crack at the system, appraisers will begin using AIRD as a "comparables" generator for actual on-site appraisals or for "automated valuation model" (AVM) work they perform for some lenders.

That could cut the cost of appraisals in some consumer transactions.

Often available online to consumers at a greater cost than ARID's planned fee, AVMs consist of databases that attempt to match similar properties to obtain a list of comparable sales. Lenders also use the information to verify that a loan is commensurate with a home's value, thereby reducing risk. AVMs can be faster than traditional appraisals, saving lenders time and money.

Lenders or appraisers can't rely heavily upon AVMs, however, because they often supply spotty, even inaccurate information.

AVM providers most often compile the data from county records of closed sales or, much less often, from actual appraisal reports. Regional disclosure differences, outdated records -- especially in fast-moving real estate markets -- and the task of compiling and maintaining the sheer volume of data has created imperfect databases.

In an analysis of four AVMs, Standard & Poor's found that while AVMs can be extremely accurate for some properties or geographic locations, inaccuracies can over-estimate a property value by as much as 200 percent.

The spotty nature of AVMs force lenders to continue to rely heavily upon appraisers, whose new AIRD system -- years in the making -- will radically change the work they do and the information available to consumers.

"Because Appraisal Institute members have the most accurate and reliable information on residential properties from coast to coast, we view our involvement in the AIRD as an outstanding opportunity to showcase and share our members' expertise with the marketplace," said Woody Hansen, Appraisal Institute president.

A joint venture with FNC, Inc. (Financial Neural Computing), AIRD will by next month offer appraisal extracts on more than 90 percent of homes in the nation's 75 largest real estate markets -- some 12 million records.

"AIRD is not an AVM," says Ann Spitzley, president of AIRD, Inc. and a director at FNC.

The first-ever national electronic source of physical appraisal data will be comprised of actual appraisals completed by licensed appraisers from the 19,000-member institute.

Consumers who use the system will see a host of physical information, including the address, parcel number, property type, census tract, site and property square footage, property age, number of rooms and stories, date of value, date of sale, indication if the property sold or not and other information.

"It's designed to aid the appraiser in processing reports and reduce time. It's not our intention to have fees of full appraisals drop. The appraiser can use it to diversify the different types of services provided to clients and consumers. Perhaps the lender will pass on the time-cost savings to the consumer. That's where the consumer will benefit the most," Spitzley said.

AIRD also won't eliminate the need for an appraiser because privacy statues prohibit releasing data about appraised values, the home buyer, owner or whoever paid for the appraisal. Also, many sales continue to need the physical presence of an appraiser on the job.

"I wouldn't imagine seeing the need for the appraiser go away. If anything, I'd count on it as a supplement to the appraiser's work, as a safety net. When everything goes digital, you see an increase in the propensity for fraud and the appraiser would be a fail safe," said David Williams, assistant director of industry technology for the Mortgage Bankers Association Of America.

Published: June 30, 2000

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.