What is AVM testing?
AVM testing is the process of asking an AVM to value properties where the actual sale prices are known to you but not to the AVM. The AVM valuations are then compared to the actual sale prices, and performance metrics are calculated to determine the AVM’s overall level of accuracy. This ability to measure AVM accuracy compares favorably to the traditional appraiser environment where the preparer of the report can be subject to transactional pressures, and users are not aware of the statistical accuracy of the product. Q: What are the benefits of AVM testing? A: One of the biggest benefits of AVM testing is that it enables lenders to measure valuation error, confidence score validity, hit rate and other parameters, and thus make comparisons among multiple AVM brands. AVM testing also provides the information needed for constructing AVM cascades and for determining when AVMs can be used in lieu of more costly or time-intensive valuation methods such as field appraisals. Q: I’ve heard tha
