Well, maybe. . .
Most AVMs will, themselves admit to inaccuracy rates of three to five percent, however, a recent study by Standard and Poor have shown inaccuracies can result in an over or under estimate of property value by as much as 20%. Enhancing this risk, several states do not make property records available to the public. And even in states that make information available, there can be a 60- to-90-day lag between the time a home sells and when the information is finally recorded.
Further, AVMs do not take into account the condition of the subject property, nor the condition of the comparable properties. Because there is no physical inspection of any of the properties, the valuation produced assumes an ‘average’ condition for all the properties. This, probably is not an accurate reflection of the reality. Finally, there is no one to physically check the accuracy of any of the data they have collected.
The reality is that there is a great deal of information about your home, your neighborhood, and your community that AVMs can’t capture. They have no idea that your kitchen has granite counter tops with inlaid marble floors, or that three homes on your block are boarded up and in foreclosure. For that kind of knowledge, buyers and sellers must turn to professional real estate agents and appraisers not only to set prices and but help get the deal done as well. The National Association of Realtors in a recent survey found that a whopping 81 percent of home buyers who started their search for a home ‘online’ ended up purchasing it through a real estate agent who knew the area first hand.
Unless we are dealing with true mortgage scams, the kindest answer lies somewhere between the "highest and best" value that an appraiser will give the equity lender who naturally wants to value the home as high as possible (since the home equity loan value is most often based on 75% of the homeowners equity); and the "most likely," and typically lower, appraisal that a REALTOR or standard fair-market appraisal will bring when actually selling the home.
This answer does not sit well with some homeowners who have found that they cannot sell their homes nearly for what their home equity loan appraisals said their home was worth. This realization often coming only after months of wasted time, effort, and money marketing the home in an unrealistic price range.
Since the burst of the real estate bubble in 2006, investigations have revealed that even reputable lenders to a large extent put pressure on appraisers to push home values as high as possible. The pressure may have been as subtle as simply not hiring a certain appraiser again, but pressure none the less. Since home equity loans and lines of credit were relatively safe, collaterally backed loans for the lenders, home values could and were pushed to max. In some cases, pushed well beyond a reasonable 'most likely' sales price, especially when the principal balance of the home equity loan or line of credit is combined with the principal balance of the first mortgage.
Since 2007 we've seen the disparity gap between home equity appraisals and standard appraisals diminish dramatically. But it is still a safe bet to say that home equity loan or line of credit loan value appraisals will always be higher than a REALTOR CMA or a Certified Home Appraisal.