Automated Valuation Model (AVM)

An Automated Valuation Model (AVM) is a computer program that estimates the value of a property based on data like recent sales, property characteristics, and market trends. AVMs are often used by real estate professionals, lenders, and insurers to quickly assess property values without needing a full, in-person appraisal. While AVMs provide fast and cost-effective valuations, they may not always be as accurate as traditional appraisals, especially for unique properties.

Example

A bank might use an AVM to determine the value of a home when deciding how much to lend a buyer, using data from similar recent home sales in the area.

Key points

• Provides a quick estimate of property value using data and algorithms.

• Used by real estate professionals, lenders, and insurers.

• Faster and cheaper than traditional appraisals, but may not always be as accurate.

Quick Answers to Curious Questions

Who benefits from using AVMs?

Real estate professionals, lenders, and insurance companies benefit by getting quick property valuations without needing a full, time-consuming appraisal.

How accurate are AVMs compared to traditional appraisals?

AVMs are generally faster and cheaper but may not be as accurate, especially for unique or unusual properties.

When might an AVM be less reliable?

AVMs may be less reliable in valuing properties that are unusual or in areas with few comparable sales, where a more detailed, in-person appraisal might be necessary.