Lenders and brokers using Automated Valuation Models (AVMs) and homeowners using "free online home values" to determine the value of a property need to know what those results aren't telling them.

Whether the house is really there. A computer cannot go to a house to see if it is actually located where it's supposed to be, has four walls and a roof, and really is the house the computer believes it to be.

Whether unique features of a property might add to or detract from market value. So a computer returns an estimated value of $350,000. Did it account for the gas station next door? The trolley tracks  or bus stops nearby? The school district? The desirability of a home in a Cul-De-Sac versus one on a busy street?

How long ago the property was assessed. Many AVMs and free online services rely on public assessment records. In many area's, for example, assessments may only be required every three years — the value may be nearly three years old in that case. When you use an AVM or free online service, you risk a lower value than reality.

What makes a good comparable. A computer might compare your subject property to another property with similar square footage sold within the previous six months and within a mile from your property. The problem is, that  "comparable" property may be in a different, less desirable neighborhood, backs to a freeway, or has a cracked slab. Other problems a computer cannot see or understand is that the property may have been sold under duress, such as in a divorce situation, or not at arm's length, such as to a family member. A computer simply does not know all the adjustments derived from market conditions that might need to be made to the sale price of a "comparable" property.

Whether a market is increasing or decreasing. Automated valuations use data from regional sales data so they do not get a true picture of the local or specific housing market. As a lender or investor, you don't want to get stuck with a property that's been overvalued by a computer because it see that the market values within the subjects region are increasing but the neighborhood in which the home is located is in decline. As a borrower, you don't want to be paying for an property that is worth less than what you owe within the first year. Accuracy matters...period. 

What qualifications, designations, experience and education does the preparer of the valuation have. When you work with an appraiser, you can be confident we're highly qualified, ethical and prepared to complete your assignment professionally and with good judgment. Most of the time, you don't know the qualifications of whoever is behind those free online values, and they couldn't compare to an appraiser's if you did. So, if you're relying on an automated valuation, you're cheating yourself out of an appraiser's education, experience and expertise.