Property Valuation
Wisconsin's 'automated valuation models' (AVMs) used by lenders for property valuations are:
ALegally equivalent to a full appraisal under all circumstances
BComputer-generated estimates using statistical modeling; acceptable for some low-risk transactions but not a substitute for a full USPAP-compliant appraisal in most lending contexts✓ Correct
CRegulated by DSPS as appraisal reports
DOnly available to government agencies
Explanation
AVMs provide computer-generated value estimates and may be used for portfolio analysis or low-risk refinances, but most purchase money mortgage transactions still require a full USPAP-compliant appraisal.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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