Since automated valuation model vendors use varying methodologies, valuation professionals should use caution when relying on AVM data, according to an article from the Winter 2020 issue of The Appraisal Journal.
“Principles for Calculating AVM Performance Metrics” by Hans R. Isakson, Ph.D., Mark D. Ecker, Ph.D., and Lee Kennedy, demonstrates that the calculation of performance metrics is not standardized and tends to overstate AVM reliability.
The authors address how AVMs also neglect to follow best appraisal practices in selecting comparable properties. The authors also show that AVM reliability would improve if well-recognized valuation principles were implemented.
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