What Is an Automated Valuation Model (AVM) in Real Estate and Should I Use One?

You’ve heard it said before: purchasing real estate is one of the biggest financial decisions you will make in your life. That is more true now than ever. According to a recent report by ICE Mortgage Technology, the average American homeowner has $299,000 in equity, $193,000 of which is “tappable” and can be withdrawn.

Understanding the current value of such an impactful asset is incredibly important whether you are considering selling your home, estimating your home’s tax burden, or calculating your net worth and investment portfolio.

You’ve likely run across several different types of online valuation tools, which use automated valuation models (AVMs). In this guide, we’ll help you understand the ins and outs of AVMs, including how they are calculated and when they are (or aren’t) appropriate to use when making decisions in real estate.

To help understand how to best leverage AVMs in the current real estate landscape, we spoke with Sandi Bates, a top real estate agent in American Fork, Utah, who sells homes quicker than 54% of other agents in her area.