According to the report, 87% of respondents felt that AI-powered valuation tools failed to reflect a home’s true value — particularly in northern, lower-income, and rural areas — despite 78% saying they heavily relied on AI or AVMs for pricing homes, with as many as 23% claiming they ‘always’ used them.

According to this year’s ‘EY UK Bridging Market Survey’, 46% of respondents believed lenders were increasingly using AVMs, with 33% already using them. Despite this percentage having fallen since 2023, the number of those who planned to use them increased from 5% to 14% over the same time frame. However, 50% of respondents had no intention to use AVMs.

While the rise of AI may be undeniable, trust is far from guaranteed. Some 73% of respondents in Alto’s research claimed they did not fully trust the tools they were using to make calculations.

Specialist finance lender Albatross Lending said it had noticed issues when it came to valuations. After running AVMs on 106 historic transactions last year, the company found an average discrepancy of 3% and a median of 6% lower than its Redbook valuations.

According to Albatross, of its sample (which concentrated on London and the South East), 64% of the cases had negative differences, indicating that AVM valuations were generally more conservative than Redbook figures.

“One of the key limitations we’ve identified with AVMs is their inability to assess a property's condition accurately,” said Oliver Daniels, analyst at Albatross.

“While this can disadvantage borrowers who have high-specification properties, it also introduces risk for lenders when properties are unmodernised or in need of repair,” he continued.

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Oliver acknowledged that while AVMs were used widely across the industry — including by Albatross, for fast turnarounds — human surveyors remained essential in cases involving limited visibility on property conditions, sparse data, or non-standard assets.

“Ultimately, AVMs are reactive by nature, drawing heavily on historical data,” said Oliver.

“In contrast, surveyors take a forward-looking view, incorporating their local market sentiment and knowledge, which is something we've seen to be particularly valuable in the first half of this year given the prevailing market uncertainty.”

Andrew Lazare, director at Mint Property Finance, also noted a tendency for under-valuations from AVMs, especially when considering essential elements such as heating or plumbing.

He explained that valuations could be skewed if the property had suffered damage since its last sale, as they may not account for the cost or scope of repairs needed to make it suitable for occupation, resale, or refinance.

Because of this, Andrew suggested that using AVMs on their own produced an inherent risk.

“In the specialist finance market, where we’re often dealing with refurbishment projects, complex titles, or time-sensitive opportunities, these tools aren’t optimal when used in isolation,” said Andrew.

“They can definitely play a role in early-stage filtering or initial assessments, but they’re no substitute for experienced on-the-ground valuation professionals who understand the asset, the borrower’s plan, and the local market dynamics.”

While Andrew stressed the importance of embracing technology for its ability to improve speed, transparency, and efficiency, he maintained that AVMs could never fully replace the need for human assessments.

“In-person, expert-led valuations are often essential when dealing with complex, non-standard or high-value properties,” he added. “Technology should inform decisions, not make them in isolation.”