Automated Valuation Model - AVM

DEFINITION of 'Automated Valuation Model - AVM'

A service that uses mathematical modeling to value properties. The majority of automated valuation models (AVMs) compare the values of similar properties at the same point in time. Many appraisers, and even Wall Street, use this type of model to value residential properties. While these models are quick and cheap, they do not factor in the condition of the property to determine its value.

BREAKING DOWN 'Automated Valuation Model - AVM'

AVM reports are driven by technology and can be obtained in seconds by lenders and agents. They usually contain both a hedonic model and a repeat sales index, which are both weighed and analyzed in order to generate the price estimate. AVMs usually include the tax assessor's value, all pertinent information on the property in question, such as its sales history, and an analysis of the sales of like-kind properties.

RELATED TERMS
  1. Assessed Value

    The dollar value assigned to a property for purposes of measuring ...
  2. Sales Comparison Approach - SCA

    A real estate appraisal method that compares a piece of property ...
  3. Property Management

    The administration of residential, commercial and/or industrial ...
  4. Model Risk

    A type of risk that occurs when a financial model used to measure ...
  5. Relative Valuation Model

    A business valuation method that compares a firm's value to that ...
  6. Property Tax

    A tax assessed on real estate by the local government. The tax ...
Related Articles
  1. Personal Finance

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  2. Investing

    Exploring Real Estate Investments: Finding Investment Value

    By Ian Woychuk, CFA Real estate returns are generated in two ways. First, the income return comes from tenants' rent payments. The income return is a straightforward calculation because all you ...
  3. Personal Finance

    Your Property Tax Assessment: What Does It Mean?

    The amount of a property tax bill is based on the property’s value, the exemptions it qualifies for, its use and the local property tax rate.
  4. Personal Finance

    This Is How Property Taxes Are Calculated

    Understanding how property taxes work will ensure that you won't be overcharged.
  5. Investing

    What is a Business Model?

    Business model is the term for a company’s plan as to how it will earn revenue.
  6. Personal Finance

    Real Estate Valuation: What You Should Know

    Anyone from mortgage lenders to property buyers and sellers can benefit from a basic understanding of real estate valuation.
  7. Personal Finance

    Explaining the Income Approach

    The income approach is one of the three main methods that appraisers use to value property.
  8. Personal Finance

    Rental Properties: Cash Cow Or Money Pit?

    Create a valuation system to forecast the profitability of an income-producing property.
  9. Personal Finance

    The Complete Guide To Becoming A Landlord: Hiring A Property Manager

    A property manager can perform such duties as marketing your rental property, selecting tenants, maintaining the property, creating budgets and collecting rent. You may consider hiring a property ...
  10. Personal Finance

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
RELATED FAQS
  1. A relative left myself and 6 other family members about 70 acres. If we sell right ...

     The property evaluates at $200,000. If there are any costs involved, about how much would they b... Read Answer >>
  2. How does securitization play a role in the implementation of PACE financing?

  3. How is market value determined in the real estate market?

    Learn how fair market value is determined during a real estate appraisal and how market values are really decided by professional ... Read Answer >>
  4. What is the average return on equity for a company in the electronics sector?

    Learn about the Black-Scholes option pricing model and the binomial options model, and understand the advantages of the binomial ... Read Answer >>
  5. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
  6. What is the difference between financial forecasting and financial modelling?

    Understand the difference between financial forecasting and financial modeling, and learn why a company should conduct both ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center