If you are considering buying or selling a waterfront property, how much credence should you give the multitude of automated valuation models (AVMs) out there in the public purview? Although widely used – they power online price estimators sites like Zillow – their accuracy and reliability vary considerably.
WHAT IS AN AVM?
Automation valuation models (AVMs) plug basic property characteristics, publicly available data, local market information and price trends into a computer algorithm to arrive at an estimated value for a property. Different companies use different AVMs.
Additionally, each one uses its own formula & data sources which they do not reveal. Some use MLS data but those that do not are obviously less accurate than those that do, further contributing to the unreliability and inconsistency of the estimates.
Most models do not account for the property condition. For example, two adjacent houses built in 1973 that are the same in every way will generate very similar estimates, despite the fact that one has new siding and a modern kitchen and bathrooms while the other has the original avocado green fixtures and rotting siding.
While there is some entertainment value to plugging your property information into a website and getting an estimate of value, my advice for when you get serious would be to work with a Realtor who is familiar with your market. Don’t rely solely on estimates from any online company that uses the AVMs as a way to determine the price of a property.
Why take my advice? The article below from the Texas Association of Realtors shows what these websites have to say themselves about limitations of their online estimates: