Automated valuation model
 | This article includes a list of references, related reading, or external links, but its sources remain unclear because it lacks inline citations. (July 2009) |
Automated valuation model (AVM) is the name given to a service that can provide real estate property valuations using mathematical modelling combined with a database. Most AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties. Some also take into account previous surveyor valuations, historical house price movements and user inputs (e.g. number of bedrooms, property improvements, etc.).
Appraisers, investment professionals and lending institutions use AVM technology in their analysis of residential property. An AVM is a residential valuation report that can be obtained in a matter of seconds. It is a technology-driven report. The product of an automated valuation technology comes from analysis of public record data and computer decision logic combined to provide a calculated estimate of a probable selling price of a residential property. An AVM generally uses a combination of two types of evaluation, a hedonic model and a repeat sales index. The results of each are weighted, analyzed and then reported as a final estimate of value based on a requested date.
An AVM typically includes:
- An indicative market value for many residential properties nationwide.
- The tax assessor's indication of value, if available.
- Information on a subject property and recent sales history.
- Comparable sales analysis of like properties.
In the late 1990s, this technology was used primarily by institutional investors to determine risk when purchasing collateralized mortgage loans.
Advantages
AVMs are increasingly used by mortgage lenders to determine what a property might be worth in order for them to lend against the valuation. The advantages of using AVMs over traditional chartered surveyors are that they save time, money and resources (e.g. there are no transport requirements), thus lowering the cost of valuing a property. Many AVMs can be made and used with little cost, so more choices in valuation methodology are also possible. It is claimed that unlike traditional surveyor valuations, AVM outputs do not suffer from the same fraud risk although certain providers can have their systems manipulated intentionally or otherwise if property features are incorrectly entered.
AVMs are particularly useful in assessing the value of a property portfolio. Using an automated model can also be useful for valuing an individual property where the provider can deliver a suitable level of accuracy.
Providers
| Provider | Link |
|---|---|
| Calcasa | http://www.calcasa.co.uk |
| Calnea Analytics | |
| Collateral Analytics (US) | |
| CoreLogic | http://www.corelogic.com/ |
| CoreLogic United Kingdom (previously UKValuation which was sold to First Title, then on to CoreLogic) | |
| First American Title Insurance Company | |
| Five Bridges Advisors | http://www.fivebridgesllc.com |
| Hometrack | |
| Real Info, Inc. (US) | http://www.real-info.com/ |
| Rightmove | http://www.rightmove.co.uk/ |
| Szybko.pl Sp. z o.o. | http://ceny.szybko.pl/wycena-nieruchomosci |
| Eiendomsverdi (Norway) | http://www.eiendomsverdi.no |
These are the only UK AVM providers to have been reviewed by Fitch Ratings and Standard & Poor's. For the Dutch market, Calcasa is reviewed by Fitch Ratings. Mitropoulos, A. (2007). Criteria for Automated Valuation Models in the UK. Fitch Ratings. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
References
Sources
- Downie, M. L. & Robson G. (2007) Automated Valuation Models: an international perspective. pp 10–11 Council of Mortgage Lenders, London, ISBN 1-905257-12-0.
- Mitropoulos, A., Wu, W. & Kohansky G. (2007)Criteria for Automated Valuation Models in the UK. Fitch Ratings.
- Bahjat-Abbas, N., Carron & A.Johnstone V. (2005) Guidelines For The Use Of Automated Valuation Models For U.K. RMBS Transactions. Standard and Poor's.
- Douglas Seiler: (Real Estate Brokerage)