The Red Book contains mandatory rules and best practice guidance for members undertaking asset valuations
In 2017, RICS published a paper on the Future of Valuations, where we looked at current trends in technological development and client expectations, and described what a future valuation process could look like. Discussions around this report indicated a need to look at developments of Automated Valuations Models (AVMs) in more detail.
AVMs are going through rapid developments. Whether used as a tool by valuers or a standalone product, there is a need for better understanding the opportunities and risks associated with AVMs, and the role RICS can play as a public interest organisation, setting and enforcing standards.
At the end of October 2018, we had a Leaders Forum in the Netherlands, where we had representatives from the AVM sector, ‘traditional’ valuers and banks discussing these questions.
AVMs already have their use for certain property types and certain valuation purposes, mainly in the residential sector. However, with current technogical developments (big data, AI), there is no doubt their usefulness will expand.
For these three issues (liability, data and the need to understand the internal process) it was mentioned that these can be equally challenging for human valuers as they are for AVMs.
RICS will continue the discussion, with a specific emphasis on the usefulness of a global standard to create clarity and consistency around AVMs, whilst keeping in mind local needs as required by custom, practice and jurisdictional requirements.
Director Corporate Affairs, Europe