What Exactly is an AVM (Valuation Of Your Home)?

As we all know this is the information age and digital resources are literally at our fingertips.   With a push of a button we can find out what our home is worth, how to properly stage our home to sell for top dollar, and the average days our home be on the market. With all this technology coming at us from all different directions, lets take a second to look at Automated Valuation Models (AVM) and determine exactly what it is.  

Investopedia explains it well.

Automated Valuation Model - AVM

A service that uses mathematical modeling to value properties. The majority of automated v...

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What does this mean to the Valley of the Sun?

"By analyzing all past sales we are able to calculate an estimated value for nearly all 1.25 million homes in Maricopa County. Our model is tested by comparing new sales as they occur to our previously calculated estimated value with the thought being that the price for which the home sells is its true value. We then ran our test against the last 10,384 sales. The historical data used to calculate the AVM were from home sales occurring prior to the 10,384 sales used in the test - no listing data was used.

47.5% of estimated values were within 5%
75.2% within 10%
88.3% within 15%

When incorporating MLS Listing Data into the model the percentages rise.  If we factor the listing price into our model, our accuracy scores go up dramatically! Further proof that if you want to know what your home is worth, ask an ARMLS Subscriber.
84.6% of estimated values were within 5%"
94.2% within 10%
96.8% within 15%

-Tom Ruff of The Information Market

Source: ARMLS® Copyright 2016