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. Home & Auto

    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. Home & Auto

    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. Home & Auto

    This Is How Property Taxes Are Calculated

    Understanding how property taxes work will ensure that you won't be overcharged.
  4. Economics

    What is a Business Model?

    Business model is the term for a company’s plan as to how it will earn revenue.
  5. Home & Auto

    Explaining the Income Approach

    The income approach is one of the three main methods that appraisers use to value property.
  6. Home & Auto

    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. Home & Auto

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  8. Home & Auto

    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 ...
  9. Applications of Equity Valuation

    Equity valuation is a central part in many activities such as stock selection, stock analysis, inferring market expectations, evaluation of corporate events (merger and acquisition, divestiture, ...
  10. Home & Auto

    Rental Properties: Cash Cow Or Money Pit?

    Create a valuation system to forecast the profitability of an income-producing property.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What are some examples of different types of business models in major industries?

    Learn what types of business models are currently being used in the marketplace as well as examples of models that work for ... 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 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 >>
  6. How is Net Operating Income (NOI) used in real estate?

    Find out more about net operating income, what it measures and how it is used to analyze a real estate property's return. Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center