Automated Valuation Models (AVM)

A number of math-based computer valuation models have become prominent on the Internet over the past few years.  We accept them as being useful for some purposes, however single-family residential clients call us and ask why the AVM they used has produced a value for their home that differs from the opinion that was concluded by an appraiser.  It is important to note that AVM's can not and do not claim a high degree of accuracy.  Some sources have noted that many of the models are within the plus or minus 15.0% range.

There are a number of reasons why a difference can exist between the models and report completed by an appraiser, but one of the most important reasons is that the computer generated AVMs have limited information about a property. The AVM models lack specific information about the condition of the interior of a property.  Anything that is not reported on a Uniform Residential Appraisal Report (URAR) type form by an appraiser (which is the source of AVM data) cannot be considered by an AVM model.  While a great deal of detailed information is collected and reported on a URAR, the form lacks the check boxes and narrative description text areas to convey all of an appraiser's opinions / judgments about a property.

The models also lack information about set-backs, subdivision aesthetics and appraisers are not permitted to discuss things like graffiti or crime.  Nothing on the standard URAR appraisal form considers how good or bad the layout / floor plan is, only if it is "functional."  In fact there are a number of details that an appraiser would consider when completing an appraisal assignment that just don't get into the report.  That's one of the reasons why appraisals are considered to be somewhat subjective in nature. Some of the factors that sell one home and see another sit on the market for months and months are simply not discerned by an AVM model. 

If you can afford to "miss" the market value of your home by 10.0%, 15.0% or more, which is $ 25,000 to $ 37,500 on a $ 250,000 home, then I guess the report from an AVM is ok for you. If you are, however, a normal homeowner who is sensitive to that kind of difference, and you can not miss" the value by that margin of error, then you should consider an appraisal completed by a licensed appraiser that considers all of the features and factors affecting the value of your home.

Contact us with your questions or concerns regarding AVM's or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.