what is avm in real estate

An Automated Valuation Model (AVM) is a computer program that uses statistical modeling techniques and software to estimate the value of a property. AVMs use mathematical formulas, property information, and property database information to provide reports on a propertys estimated value. They are used by real estate professionals to determine property value and support underwriting for mortgages and home equity loans, for refinancing decisions, and to aid in loss mitigation and credit risk management activities such as marking-to-market of real estate holdings in institutional investment portfolios. AVMs are particularly useful in assessing the worth of an entire real estate portfolio and can be operated with little expense once set up. However, AVMs are only as good as the data they use, so there needs to be a large amount of high-quality data for an AVM to operate successfully. Additionally, AVMs dont factor in the actual value of the property, so any variations in the condition of the property could cause a discrepancy between the estimate and actual property value.