How Good Are Automated Valuation Models?
It sounds easy and simple: Enter an address into an online tool, and the website will tell you how much the home is worth. But there is more to these automated valuation models (AVMs) than meets the eye. Many websites promise instant, accurate appraisals, but return only a very broad range of prices and demand a follow- up visit for a more detailed quote. Others require the user to enter personal information that can be sold to brokers or lenders looking for business. And the accuracy of AVMs is questionable. As statistics-based computer programs, AVMs rely on data that is often incomplete, inconsistent, or outdated. Plus, a computer tool can never evaluate the actual physical condition of a property. What if you’re dealing with a great home in a bad neighborhood? Or a home that’s unfinished on the inside? Or gutted? AVMs don’t take these factors into account. Finally, an AVM simply can’t replace the breadth of knowledge and expertise that a skilled appraiser has. As Fannie Mae, one of
