AVM companies now admit to using appraisals for their data

Recently valuation data company FNC, Inc.  posted an article by its chief legal counsel arguing that appraisals are not copyrightable.  The U.S.  Copyright Office and appraisers who have won copyright infringement suits are among those likely to disagree.  But the interesting part of the article, appearing at this link, was this:

Copyrighting an appraisal, however, does not keep its data – the facts – from being used by others, whether lenders, other real estate professionals or even the developers of automated valuation models (AVMs). The developers of AVMs are interested in the facts, not the written descriptions and comments, since it is only the facts that are modeled as the basis for estimating value.  All AVMs want to use the data, which is not protected.

AVM developers and advocates have always, until this moment, been oddly reluctant to admit that AVMs were interested in using appraisals as data sources.  Now we have an admission that not only are they interested, they do, even if they have to ignore a copyright notice to do it.

The sheer chutzpah needed to deny AVMs used appraisals without appraisers’ permission when data companies bought up Appraisal Management Companies in the first half of this decade and companies like FNC entered into agreements to facilitate arrangements where appraisers paid for the privilege of entering their own work into databases for later re-use has always been impressive.  Now that it’s apparently over, the profession can more clearly see why copyrighting can be a good idea to an individual businessperson: there is a market for your work that goes beyond your client and the intended user of your report.  You can let that market co-opt your work without your permission and without compensating you, or you can choose to bargain with it on your terms.

It is, and should be, up to you.  Not to companies that admit to using reports which were not prepared for them, and which they have not paid for, to create a derivative product meant to put you out of business.

The issue whether a report is a collection of objective “facts” or the result of analysis, selection, judgment and expertise has been played out many times.  It is certainly the case that anything in a report that any three appraisers would agree on separately is probably a “fact.” That however includes very little of value in an appraisal.

The selection of comps, and the verification that they represent arm’s length, free market transactions, and whether an almost-finished basement constitutes part of Gross Living Area are only a couple of the things you use your judgment to ascertain.  And the appraiser down the street may very well come up with something different for both.  You are both unlikely to disagree on the postal address of the property and how many cars fit in the garage, but we doubt that’s all AVMs are interested in.

And if an appraisal were simply a collection of facts, a computer could do it well.