Automated Valuation Models

Generally, an appraisal is an independent estimate of a property's value that is provided by a licensed appraiser. With residential real estate, these valuations are often made on the basis of the value of recent comparable properties, as well as a physical examination of the home itself. As impartial third-parties with a strong knowledge of local pricing, appraisers provide a valuable service for buyers looking at properties they emotionally value.

Automated valuation models (AVMs) serve a basic and fundamental purpose to buyers and sellers, but are not a replacement for the services of a licensed appraiser. (In fact, companies offering AVM services have been subject to legal action for calling their products "appraisals".) An AVM is a computerized estimate of what a specific property is worth, based on database information and analysis of a variety of factors (including property attributes, location, recent sales, tax assessments, and other criteria). It is best-suited for situations when a reasonably accurate estimate of a property's value, rather than a full appraisal, is needed.

Critics of automated valuation models state that anything short of an on-site, exterior and interior professional appraisal is likely to overstate the true worth of the property if it's located in a slowly-appreciating market. They also point out that AVM estimates are often based upon very faulty data that will most likely not include "fresh sales" in your area.

Relying solely on AVMs to give you a value prior to selling your home is also risky. This is because automated valuation models base their value estimates without anyone evaluating the condition of your home or the condition of the comparable sales that were used to estimate your home's value. Your Realtor(R) can provide you with a list of comparable properties in your specific area and physically assess the interior and exterior of your home to give you suggestions on an appropriate asking price.

When you purchase a home, your mortgage lender will likely require a full appraisal by a state-licensed appraiser. (This is to ensure that the loan amount is consistent with the true value of your home, and that you are not overpaying for the property.) We can recommend qualified, experienced appraisers who are familiar with the New Hampshire market: For details, call (603) 472-2272.