Probably, yes, because of their potential for inaccurate valuation assessments. Photo appraisals and drive by appraisals are in the same boat. They do not, and can not, possibly properly evaluate any real estate property. How can anyone accept an appraisal that is done by a glimpse, a mere snapshot of a piece of property. Oh, maybe if all you are selling is bare land. But it is not possible to assess the value of a building of any type without actually getting out of the car or going inside in person to take a look around, to do accurate measurements, and to see what real condition the property and attachments or appliances, etc., are in! It is ludicrous, but it is being done, and accepted by lenders; no wonder the banking industry is in dire straights!
It doesn't take long to find horror stories about AVM's, automated valuation models, computer generated appraisals. Stories of under or over valuations by tens of thousands of dollars. What would possess a homeowner to accept an image appraisal? Low cost? Like anything else, you get what you pay for. An on site appraiser visit does cost a lot more than $20. But it is so worth it to have an accurate appraisal. The computer generated appraisals are using old comparative information, up to 15 years old county information. It does not take into account any recent improvements to property.
Sometimes these quickie appraisals and drive bys are ordered by loan officers who want to make a deal but are aware of something wrong with the property, like illegal basement apartments, or gutted rooms. It may look attractive at first glance, to have just an image appraisal, but in the long run it can come back to haunt lenders, buyers, sellers, and even the appraisal company like a bad wound or disease attack.
Of course, no one will admit to wanting to make a bad loan based on an inaccurate appraisal. That is in no one's interest. But, selling, moving that property off the market, getting that loan approved, is in everyone's interest. Except for the guy who gets stuck with an overvalued property and an upside down loan! Caution is the road to take when making appraisals. You get what you pay for. Reality is an accurate, hands on, inside look, appraisal. There is no question about that.
Image appraisals offer a quick look at property, rooms, inside and out. They are never a substitute for a hands on appraisal. The image appraisals combine with the AVM's to give realtors a fast way to put property for sale on the internet, to a much broader audience. They can cut time down by weeding out uninterested or unproductive leads, because after viewing the images, they already know if they are really interested or not. It is a time saver, a cost cutter, and a nice tool for real estate agents to use. But they are not a substitute for they eye and pen hands on detailed assessment of property worth.