Six federal agencies have issued a final rule designed to create safeguards for automated valuation models (AVMs) in the real estate industry. While most of what’s in the rule is specific to real estate appraisals, some of it may help inform the business valuation profession as it develops its own guidance. For example, the new rule requires firms that utilize AVMs to implement certain quality control factors to ensure that their models uphold data accuracy and security. Firms must “adopt policies, practices, procedures, and control systems to ensure” that their use of AVMs meets the quality control factors. However, the rule does not specify what those should be, giving firms the flexibility to craft their own. The 180-page final rule is available if you click here.

The issuing agencies are Department of the Treasury (Treasury), the Federal Reserve System (FRS), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Consumer Protection Financial Bureau (CPFB), and the Federal Housing Finance Agency (FHFA).