Why is random sample testing of model output required of institutions using AVMs?
Correct Answer
B) To detect estimates drifting away from actual prices
Why this is correct: Random sample testing compares AVM estimates to actual sale prices or independent appraisals to detect systematic error (drift) as market conditions change. Random sampling ensures unbiased detection of accuracy loss. Why the other choices are wrong: "To confirm the vendor holds a valid state licence" is not the purpose. "To ensure every property is valued at least annually" is impractical and not the goal. "To identify which appraisers reviewed each output" is unrelated to testing for drift. Exam tip: Random sample testing is a key quality control step to catch model drift before it affects many valuations.
Why This Is the Correct Answer
Why this is correct: Random sample testing compares AVM estimates to actual sale prices or independent appraisals to detect systematic error (drift) as market conditions change. Random sampling ensures unbiased detection of accuracy loss. Why the other choices are wrong: "To confirm the vendor holds a valid state licence" is not the purpose. "To ensure every property is valued at least annually" is impractical and not the goal. "To identify which appraisers reviewed each output" is unrelated to testing for drift. Exam tip: Random sample testing is a key quality control step to catch model drift before it affects many valuations.
More Emerging Methods Questions
How does an alternative inspection method affect the appraiser's disclosure obligations?
A collector's photographs show a condition the appraiser believes needs specialist assessment. What is the appropriate step?
What responsibility does an appraiser retain for an error originating in a third-party database?
Under current USPAP guidance, what is the output of an automated valuation model before an appraiser analyzes it?
Which assignment type still requires the appraiser to develop an opinion of value?
A model returns an estimate far from the appraiser's own conclusion. What is the appropriate response?
What does it mean that a tool cannot comply with USPAP?
An appraiser is asked to review an assignment where an AVM supplied the value. What does the review examine?
Why is the date a data extract was pulled worth recording in the workfile?
A desktop appraisal is best described as an assignment completed how?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam