What Is My Home Worth? How to Use Free Automated Valuation Models
Your home is likely one of your most valuable assets. U.S. homeowners saw a significant rise in equity in 2023, with the average homeowner gaining roughly $24,000 over the previous year, according to the CoreLogic Homeowner Equity Insights report from Q4 2023.
If you are considering selling your home, you’ve probably wondered a lot about what your home is actually worth. You may have run across different types of free online valuation tools and have questioned how helpful they can be to accurately value your home.
These tools use automated valuation models (AVM) based on high-tech algorithms and loads of data to estimate your home’s value for free. So while it is possible to get a ballpark valuation using these free online valuation tools, it’s important for you to understand how they work and what their limitations are so you can use them appropriately.
In this guide, we’ll help you understand the ins and outs of free online valuation tools and AVMs. For expert insight, we spoke with Sandi Bates, a top real estate agent in American Fork, Utah, who sells homes quicker than 53% of other agents in her area.
What is an automated valuation model (AVM)?
An automated valuation model is a tool that uses a machine-learning algorithm to compare your home against a massive dataset of other homes to estimate its value. An AVM uses a wide array of publicly available and user-sourced data, such as property type, size, general location, and comparable property sales to provide an immediate value estimate available through the click of a button.
If you’ve been exploring online valuation tools, you’ve probably noticed that the same property can have different estimates depending on which tool you use. While each tool follows the same general AVM approach, they also use their own proprietary data and models to estimate values. We can attribute the discrepancies that you notice to variations in the approach to building the model, and the type of proprietary data, such as user-submitted data or website analytics, that each tool uses.
