Is an instant home valuation reliable? Testing An AVM model!
“How much is my home worth?”, you ask. Your instant home valuation will offer an approximation. In order to provide the most reliable instant estimate of value we can produce, we utilize the automatic value model technology and database developed by RPR. Since the database was originally created for use by professional appraisers, it is clearly the best resource available. To be sure, it is a reliable source of the current comparable sales information necessary to produce our estimate of your home’s value.
However, instant estimates have limitations. To test them, we visited six different websites and obtained instant valuations of the same home. We then compared the AVM valuations produced by these sites to assess the reliability of the technology. The home is located on NW 49th Manor in Coral Springs, Florida and was our home for twenty one years.
Therefore, I know the property intimately. It has approximately 3000 sq. ft. of living space and 4500 sq. ft. of total space, a large paver patio area with pool and spa, and an updated kitchen. Since it backs onto a small lake, it has a competitive advantage. To see the results of our experiment and learn more about valuation methods, please visit our “Are instant home valuations reliable?” page.
The CMA, a more reliable home valuation model
A Comparative Market Analysis (CMA) is a crucial model in the real estate industry. It is specifically designed value a home reliably. By analyzing similar properties that have recently sold in the same area, a CMA provides insights into current market trends and helps homeowners, buyers, and agents make informed decisions.
The process involves evaluating various factors such as location, size, age, condition, and features of homes comparable to the subject property. Real estate professionals gather data on recent sales, active listings, and expired listings to create a reliable picture of what buyers are willing to pay and sellers are willing to accept. The resulting valuation not only reflects fair market value, but also highlights price fluctuations based on neighborhood demand.
If you have followed the link we provided above and read the test we conducted to access the reliability of an AVM based home valuation, you already know that it only yields a rough estimate of value. Therefore, in our view it is ill suited to be relied upon when, as a seller, you are struggling with pricing your home competitively without leaving cash on the table. It is also not the best choice of valuation when, as a buyer, you are trying to make a competitive offer without overpaying.
For sellers, a well-executed CMA can guide pricing strategies to enhance competitiveness in the market. For buyers, it serves as leverage during negotiations by establishing a reasonable offer based on empirical data rather than emotional attachment or speculation. Ultimately, understanding a CMA home valuation empowers all parties involved in real estate transactions by providing the knowledge needed to make informed decisions.
