Data is Only as Good as Its Source: A Personal Look at Appraisals and Tax Assessments
Two things in life are guaranteed: death and taxes. This past summer, I had my personal reminder of the latter when my property tax assessment arrived. As I looked through the assessor’s report, one thought stuck with me: Are you sure you have the right house? The bed/bath count was off, the square footage was incorrect, and there were multiple other inaccuracies. I wasn’t the only one noticing discrepancies. I booked an appointment at City Hall and found myself among most of my neighbors, all gathered to clear up errors in their assessments.
What I witnessed left an impression. The large number of people disputing assessments raised alarm bells. As someone involved with the real estate industry, I couldn’t help but wonder about the implications. After all, these local assessment records feed directly into the property data used on platforms like MLS, Zillow, and Automated Valuation Models (AVMs). It was a stark reminder that data is only as good as the information provided—and errors can go unchecked for years. In my case alone, the city only reassessed every 10 years. 10 years of feeding incorrect data to the marketplace.
This data issue becomes even more important with Fannie Mae and Freddie Mac expanding their appraisal waivers to higher LTVs and, soon, to inspection-based waivers. Since the creation of the Uniform Collateral Data Portal (UCDP) and the Electronic Appraisal Delivery (EAD) portal, Fannie Mae and Freddie Mac have built an extensive database of property data. But not all properties have gone through recent transactions or even accurate tax assessments. As these waivers grow, one question stands out: how will regulators, investors, and lenders address the quality and accuracy of the underlying data?
In the ten years since my last tax assessment, I’ve had two traditional appraisals performed on my property, which provide an accurate foundation of documentation. But in that room at City Hall, I felt like one of the few with solid evidence to support my case. As it turned out, neither of these appraisals made their way to the property tax appraiser or any AVM processor. If expanded appraisal waivers are to succeed without sacrificing loan quality, stakeholders must find ways to verify and correct property data. It’s a task that goes beyond reliance on AVMs and tax records. In the end, only accurate, verified information can support a robust, fair mortgage market.
Striking a Balance Between Technology and Trusted Expertise
As we move forward with these expanded waiver programs, it’s clear that there’s a place for both modern technology and the security of independent evaluations by appraisers. AVMs and data-based assessments provide an efficient, cost-saving solution, but they can’t fully capture the nuanced insights appraisers bring to the table. Leveraging both tools allows lenders to save borrowers money without compromising the integrity of their portfolio.
However, like everything in our industry, a balance is essential. Relying solely on technology risks overlooking property details and market trends that human appraisers can identify, while an overreliance on traditional appraisals could limit affordability for many buyers. A combined approach—using AVMs to streamline the process where appropriate and calling in appraisers for high-value or complex properties—can reduce costs and still safeguard against valuation errors and market instability.
So how do we fix this?
Lenders must monitor their portfolio of loans closely and resist the temptation to rely solely on waivers. Fannie and Freddie have left the door open for lenders to make the final decision on what’s best for each loan. This option requires thoughtful consideration, and lenders need to review the use of waivers with care. Appraisers may be lighter in numbers, but they are here for valid reasons, providing an essential layer of scrutiny and expertise. Ensuring loan quality isn’t just about data—it’s about making informed, responsible choices at every step.
While expanding appraisal waivers aims to reduce the cost of homeownership, particularly for first-time and lower-income buyers, was this truly the only option? Could we have explored other solutions that both address affordability and maintain the integrity of property valuations? As we push forward with these initiatives, it’s worth considering how we might balance innovation in the lending process with a commitment to reliable data and loan quality. Because in a world where data and technology drive so many decisions, a balanced program approach could protect us from the next major crash.
About the Author:
Kristin Butler, is the Director of Client Services at a leading provider of software solutions for the mortgage industry. With over 15 years of experience in mortgage support services including home inspection, appraisal software, and client management, Kristin brings a wealth of knowledge and experience to her role. Kristin’s mission is to help clients achieve their business goals through high-quality software solutions and unmatched customer service. Passionate about creating user-friendly processes, building customer loyalty, and fostering innovation in mortgage lending, Kristin continues to shape meaningful improvements across the industry.
