When buying a home, the appraisal is a critical step where a licensed professional estimates the property’s market value to confirm it supports the mortgage amount. Before the appraisal report reaches the loan officer, lenders often use an Automated Appraisal Review System (AARS) to digitally check the report for accuracy and compliance.

An AARS uses algorithms and extensive data sources—including public records, recent sales, and lender-specific guidelines—to rapidly review appraisal reports. Its review process highlights potential issues, such as inconsistent property details, questionable comparable sales, valuation outliers, missing photos, or outdated forms.

This automated review helps identify errors or areas needing explanation, speeding up the underwriting process and reducing risk for lenders. For example, Fannie Mae’s Collateral Underwriter® (CU®) is a widely used AARS that evaluates appraisal quality with a risk scoring system based on hundreds of data points.

Key factors AARS checks include:

  • Data consistency: Verifying that property details like square footage or address match across all report sections.
  • Comparable properties: Ensuring the selected comps are similar and appropriate for the valuation.
  • Valuation risk: Comparing appraised value with automated valuations and recent sales to flag discrepancies.
  • Regulatory compliance: Confirming all required forms and fields are completed as per industry standards.
  • Documentation quality: Checking that required photos and sketches are included and accurate.

It’s important to distinguish an AARS from an Automated Valuation Model (AVM), such as Zillow’s Zestimate. While AVMs generate an estimated home value using public data and algorithms, AARS reviews and validates a completed appraisal report created by a licensed appraiser.

If the AARS flags potential issues, a human underwriter or appraisal specialist reviews the findings. They may request clarifications from the appraiser, order additional reports, or decide the flagged items do not impact the loan decision.

This automated review tool complements human expertise, ensuring faster, more consistent appraisal quality checks that enhance lender confidence and help homebuyers move smoothly through the mortgage process.

For more on mortgage underwriting, see our Mortgage Underwriting guide. To better understand property valuations, visit our Estimated Property Value page.

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