These use what is generally referred to as an Automated Valuation Model (AVM). From the Uniform Standard of Professional Appraisal Practice (USPAP): An AVM is a tool that delivers an estimation or calculation, whereas an appraiser arrives at a value opinion by applying his or her judgment and experience. An appraisal is defined as an opinion of value, which is distinctly different from an estimate or calculation of value. An AVM uses automated processes and cannot produce an opinion of value because only individuals can exercise judgment and form opinions.
A few Key Differences:
- IL law requires an appraiser to identify the relevant features affecting value when developing their opinion. No licensed local experts of any kind are involved in development of the automated algorithms used by these services so no judgment is made regarding what features may or may not affect value in a particular market.
- An appraiser will identify, compare and rate subjective factors such as location, condition & quality when developing their opinion. No licensed local experts of any kind are involved in development of the algorithms used by these automated services so they make no consideration or adjustment for these factors.
- An appraiser is a local research expert that is required by law to verify information and make judgments about conflicting data. No licensed local experts of any kind are involved in selecting or verifying data used in the development of the mathematical models produced by these automated services.
- An appraiser is required by law to disclose their scope of work and make multiple certifications about the process and their objectivity. Every aspect of the appraisal process is regulated buy rule and law to promote transparency and ensure public trust. Instant value services like Zillow, Trulia and Redfin are immune from law and accountability for the estimates they provide in Illinois and other states. See dismissed US District Court case No. 17-CV-4008.