For most Canadians, a home is not merely a physical structure; it is the cornerstone of their lives. It is where they raise their families and build their futures. Homes represent significant financial investments and often form the bedrock of retirement plans. Owning a home is stability, security, and a sense of belonging.
In recent years, rapid price fluctuations, bidding wars, and rising interest rates have caused stress on buyers and sellers, reshaping the real estate market. As Canadians now grapple with an affordability crisis, they want and deserve transparency in protecting their most important financial asset: their home.
Professional Appraisers play an indispensable role in fostering a fair and trustworthy real estate market and overall housing system. They are hired by residential, commercial, and industrial market participants, as well as the public, to provide independent, evidence-based, real-time opinions on the value of property to help Canadians make informed decisions. In 2024 alone, Appraisal Institute of Canada (AIC) Professional Appraisers conducted nearly one million appraisals valuing over $1.5 trillion. Their assessments not only ensure that homebuyers are protected and lending remains responsible, but they also inspire confidence in the housing market.
The AI factor
In an age where AI is everywhere, increasingly taking over tasks and jobs, Canadians overwhelmingly trust certified appraisers over Automated Valuation Models (AVMs) when it comes to determining their home’s worth. This sentiment was highlighted in a recent study by spark*insights, revealing that 84 per cent of Canadians favour appraisers for accurate property assessments, with only 14 per cent trusting AVMs more than appraisers. Of this 14 per cent, half still have concerns about AVM local market knowledge and lack of on-site inspections – two of the most important assets that professional appraisers bring to the table, ensuring valuations are rooted in real market conditions and not just algorithms.
AVMs neglect essential on-site inspections
The rise of online real estate platforms in the early 2000s led to the use of AVMs, effectively changing the way properties are assessed by removing the human element.
These automated models use statistical data to estimate a home’s market value. While this approach may offer convenience, it raises concerns as Canada’s housing landscape becomes increasingly intricate. It removes the human touch from the most important purchasing experience most Canadians will ever make.
AVMs neglect the essential on-site inspections that professional appraisers conduct. Canadians are concerned that, without this critical analysis, relying solely on computer-generated evaluations can lead to inaccuracies. Such inaccuracies pose risks of under- or overvaluation, particularly when homes are deteriorated or recently renovated, where markets are rapidly changing, or in rural areas where data may be sparse.
While Canadians have the right to request their bank or lender use a traditional appraiser – especially when the property is unique or does not conform to typical market conditions the decision ultimately rests with the lender based on their policies.
Call to action
While AVMs may have their practical uses, it is evident that questions remain about their limitations. At the same time, it is clear that financial institutions will continue to incorporate AVMs into their processes. Therefore, we are calling for oversight.
We are calling on the federal government to establish a permanent, multi-sector Stakeholder Advisory Committee made up of industry experts, including appraisers, to anticipate emerging consumer and systemic risks, identify regulator vulnerabilities, strengthen transparency, trust, and policy responsiveness, and inform oversight of automation and algorithmic tools such as AVMs. This committee would aim to mitigate market risks and enhance the integrity of the mortgage system in Canada.
Data shows that 79 per cent of Canadians agree with the formation of a committee, highlighting a strong public demand for oversight of the system.
Housing affordability, for most Canadians, is still an issue. For many properties, the price remains high, and household debt is increasing. Homeowners are also facing reduced equity and rising mortgage payments, with the Bank of Canada warning that financial stress will grow.
Through this volatility, oversight of the housing system has never been more important. The federal government must prioritize the integrity of home valuations, ensuring that the future of homeownership in Canada is based on trust and expertise rather than algorithms.
Donna Dewar brings over 20 years of experience in the non-profit sector to the AIC, having held executive roles at the Federation of Canadian Municipalities, the Canadian Nurses Association, and the Canadian Red Cross. She specializes in strategic planning, partnership building, and program development.
She holds an MBA in Innovation Leadership from the University of Fredericton and a Project Management Professional (PMP) designation. She is passionate about driving positive change and believes in the value of innovation and efficient member support.
What needs to happen, is the appraisal institute govern the AVM models that real estate VOW websites create, in many cases they are out of date with current market pricing and give false opinions.
On big name VOW website actually states a listing as “way below market value” and “likely to sell over asking”. This information is inaccurate in today’s market and creates confusion with sellers and buyers, causing us professional REALTORS(R) to in some cases fight the “advice” given by these websites, when the public should be trusting what their professional REALTOR(R) is saying, in accurately assessing value with real information for the market now.
Another example is a AVM on one of these site states a property was grossly overpriced, but it’s local data pull was only able to reference new build pricing from years previous.
It has become a real issue in our industry, because we know our client enjoy the info, but it should not be at the expense of feeling as said in this article “it removes the human touch”
Let’s rally to combat the VOW AVMs as well. In my opinion, a website should not be able to offer comment.
100% agree. With 20+ years appraising over 20,000 homes in the greater Vancouver area I think I do a more accurate appraisal report than any AVM
Just what we need – more government intervention – when was the last time that was ever a solution?
I’m strongly in favour of the proposed Stakeholder Advisory Committee. This would be a prudent move.
I do wish that we would more accurately and consistently frame AVMs though. An AVM is a valuation tool. The use of an AVM does not preclude local market insights, onsite inspections, or appraisal judgement. It is an automation of part of the process.
It is the non-appraisal use of this appraisal tool that is the problem.
My Broker once told me that while walking by the front of the house (AVM) to ascertain it’s value might be faster and easier in most cases, but can you smell the Dog Crap in the basement from the street.
Industry regulation required on live and AI appraisers, just like Realtors There needs to be appraisal transparency, review and appeal process – not a slam dunk result and wall of silence on how appraisal was determined. Of course the appraisal can be devastating for a new mortgage, remortgage etc. Clients/agents may disagree with the appraisal number and have good grounds for it and need a process for expressing same.
Unfortunately named ICE Mortgage Technology offers an “AVM waterfall” where their lender clients can pick the number they want or as they put it ..
“ICE’s Property Valuation Model leverages multiple ICE AVMs and selects the most appropriate output based on a variety of factors, including the geography of the property and model’s preference data, resulting in optimal performance. Each of the individual AVMs rely on the same data but use different algorithms and techniques when arriving at valuation estimates. Property Valuation Model delivers automated, configurable preference data based on user-defined rules to determine which model to leverage for the subject property.”
Don’t say you weren’t warned, The future isn’t friendly.
Banks don’t need accurate appraisals. Their goal is to lend as much money as possible at the terms that meet their objectives. One of the requirements is a legitimate appraisal they can lean on to eliminate liability. If an AVM is deemed legitimate (though inaccurate), they’ll use it as long as it helps to meet the objectives.
I’ve personally dedicated almost three years of my life to solving this exact issue. Our project was born out of the frustration with extremely inaccurate AVMs.
In Vancouver especially, Renovation and View are two of the biggest price drivers, yet I haven’t seen a single AVM account for either. That’s why we’ve been building a platform that doesn’t just spit out a number, but also explains how that number was calculated. Transparency is key. Consumers deserve more than an opinion; they deserve a clear breakdown of the logic behind the valuation.
At the same time, let’s be honest, some realtors struggle with pricing as well. Whether it’s inexperience, an overwhelming number of comps, or the pressure to win a listing by overpricing, mispricing happens far too often. That’s why we believe there’s room( and a real need) or a neutral, transparent online platform that complements the expertise of professional REALTORS®.
To be crystal clear: this is not about replacing realtors or appraisers. Far from it. There will always be a need for the human touch, local insights, and professional judgment. But just as realtors bring trust to clients, a transparent AVM can bring trust back to online valuations.
We’re very close to launch, and I’d genuinely welcome your feedback once the platform is live. This is about raising the standard together, not taking away from the profession.