Image: Kannapat / AdobestockTechnology has transformed the way homes are appraised, and a new set of rules has emerged for sellers looking to maximize their home’s appraisal value.
Understand AVMs to Maximize Your Home’s Appraisal Value
Dated: September 26 2023
Image: Kannapat / Adobestock
Technology has transformed the way homes are appraised, and a new set of rules has emerged for sellers looking to maximize their home’s appraisal value. Understanding modern appraisals is essential, as appraisal value is critical in determining a home’s asking price.
Traditionally, home appraisals were done manually by professionals who used their expertise to evaluate properties based on location, size, condition, and market trends. Appraising a home was a mixture between the subjective and the objective, and it often came down to a personal decision by the appraiser.
The New Appraisal Landscape
Traditional appraisals are being replaced by automation. According to a report by analytics firm CoreLogic, an estimated 70% of residential property valuations in the U.S. are conducted using automatic valuation models (AVMs).
AVMs are computer programs that use a property’s data, such as its location, size, age, and historical sales, to estimate the property’s value. The newest AVMs incorporate algorithms that use complex mathematical models to analyze every last piece of available data about a property; this predicts the current and future value with even higher levels of precision.
AVMs Need Accurate Data
The most important step homeowners can take to prepare for an AVM-based valuation is to ensure their property information is accurate in all government records and also in any informal online listings. This is especially important for older homes whose improvements and renovations might not be reflected in public property records. AVMs have the ability to read the internet, so the more positive data about a property, the better. Make sure any unique features or amenities are thoroughly described in all records.
Be Aware That AVMs Have Limitations
AVMs may not capture certain aspects of a property, such as its unique features or intangible benefits that are not fully reflected in property records. In these cases, it may be necessary to supplement an AVM with a traditional appraisal. When selecting a traditional appraiser, look for professionals with local experience who will appreciate the holistic value of a home, including less-tangible factors like the view, architectural features, or other aesthetic qualities.
New technology always has drawbacks. AVMs aim to eliminate guesswork from home appraisals, but in reality, the human factor always plays a crucial role in determining a home’s actual value.
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