Artificial Intelligence Real Estate Appraisal

[Camille T.]

Has anybody used an AI program as a back up or check, or for preliminary screening on any investment properties? I am in escrow on a multi family and the lender is also the seller, so I'm going to either get my own appraisal to verify seller/lender's appraisal (I have done due diligence and have compiled my own comps) or use AI.  Just wonder if anyone has experience using AI for appraisals?  

[Account Closed]

I know many major commercial lenders have the option to perform a "virtual" appraisal. This is based on an algorithm that looks price per square foot of sold comps  using specific filters. I imagine this is what you're referring to. 

In most cases with this type of appraisal, investors will pay a bit extra to have a real human being look at the results the algorithm has generated and make adjustments so that the comps would be more representative of the subject property, if possible. 

I don't think there are any "AI" appraisals out there per se. An algorithm is just automated instruction- basically a detailed formula or set of formulas that are linked to eachother. AI is far more complex and uses machine learning to make judgement calls and cope with situations that tend to fall outside of the constraints of algorithms or formulas. You're probably not going to find an appraisal program that is this sophisticated. They're usually very simple.

If your lender is using a virtual appraisal, then I don't imagine you getting an extra one is going to do much. Pull some real comps yourself and make a determination of the value, this way to get to exercise real judgement (provided you understand the asset, market, etc...)