Which requirement is among the quality control standards imposed on institutions using automated valuation models?
Correct Answer
D) That the models comply with nondiscrimination laws
Why this is correct: The governing concept is that institutions using automated valuation models (AVMs) must adhere to quality control standards. These standards include ensuring a high level of confidence in estimates, protecting against data manipulation, avoiding conflicts of interest, conducting random sample testing and review, and complying with applicable nondiscrimination laws. The requirement that models comply with nondiscrimination laws is explicitly listed among these standards. Why the other choices are wrong: "That every model output be reviewed by an appraiser" is incorrect because standards do not mandate a 100% manual review; they require random sample testing and review. "That models be rebuilt at least once each calendar year" is incorrect because there is no specified annual rebuilding requirement in the standards. "That model estimates be within five percent of value" is incorrect because there is no fixed percentage accuracy threshold imposed; standards call for a high level of confidence but not a specific numeric tolerance. Exam tip: Remember that AVM quality control standards emphasize reliability, integrity, and legal compliance, not rigid numerical targets or universal manual review.
Why This Is the Correct Answer
Why this is correct: The governing concept is that institutions using automated valuation models (AVMs) must adhere to quality control standards. These standards include ensuring a high level of confidence in estimates, protecting against data manipulation, avoiding conflicts of interest, conducting random sample testing and review, and complying with applicable nondiscrimination laws. The requirement that models comply with nondiscrimination laws is explicitly listed among these standards. Why the other choices are wrong: "That every model output be reviewed by an appraiser" is incorrect because standards do not mandate a 100% manual review; they require random sample testing and review. "That models be rebuilt at least once each calendar year" is incorrect because there is no specified annual rebuilding requirement in the standards. "That model estimates be within five percent of value" is incorrect because there is no fixed percentage accuracy threshold imposed; standards call for a high level of confidence but not a specific numeric tolerance. Exam tip: Remember that AVM quality control standards emphasize reliability, integrity, and legal compliance, not rigid numerical targets or universal manual review.
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