An appraiser wishes to rely on an AVM figure in developing an opinion of value. What is required?
Correct Answer
A) A basis for believing the output is credible
Before relying on an AVM indication, the appraiser needs adequate understanding of the method and a reasonable basis for its applicability and credibility for the subject and assignment. Evaluate relevant inputs, performance, limitations, and corroborating evidence, retaining needed support. A vendor license, registry entry, or client selection alone does not establish credibility. A client may specify a tool as an assignment condition, but the appraiser must still determine whether the resulting scope can produce credible results.
Why This Is the Correct Answer
Option A is correct because the appraiser needs a basis for believing the AVM output is credible before relying on it. That requires adequate understanding of the method and evaluation of its inputs, performance, limitations and corroborating evidence for the subject property, with support retained in the workfile.
Why the Other Options Are Wrong
Option B: Written permission from the model's vendor
Option B requires written permission from the model's vendor. A vendor license or permission may govern use of the product, but it does not establish that the output is credible for the assignment.
Option C: That the model be registered with the state
Option C requires that the model be registered with the state. A registry entry alone does not show that the model's estimate is reliable for the subject property.
Option D: That the client select the model to be used
Option D requires that the client select the model to be used. A client may specify a tool as an assignment condition, but client selection does not by itself make the output credible.
Believe it before you use it
Credible means worthy of belief, so the appraiser needs a reason to believe the AVM result before relying on it.
How to use: Use this phrase when a question asks what is required to rely on any tool or data source.
Exam Tip
When asked what is required to rely on a tool, choose the answer about the appraiser's own basis for credibility rather than permissions or registrations.
Common Mistakes to Avoid
- -Treating vendor permission as proof of reliability
- -Assuming a client-selected model needs no evaluation
- -Relying on an AVM figure without understanding its method or limits
Concept Deep Dive
Analysis
This question tests what an appraiser needs before relying on an AVM figure. Under USPAP, credible means worthy of belief, so the appraiser needs a reasonable basis for believing the output is credible for the subject and assignment. Administrative items such as vendor permission, registration or client selection do not supply that basis.
Background Knowledge
USPAP defines credible as worthy of belief and requires that assignment results be supported by relevant evidence and logic. When an appraiser uses tools such as AVMs, the appraiser must understand them well enough to judge whether their results are applicable and reliable for the specific property.
Real-World Application
An appraiser considering an AVM figure for a rural property checks the vendor's documentation and finds the model has thin sales coverage in that county. The appraiser gives the figure little weight and relies on verified local sales instead.
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