What types of AVM Models Exist?

Automated valuation may be based on one model or the combined outputs of multiple models. The most common types include:

  • Price Indices: Multiple repeat sales are used to create and establish house price indices for a specific geographic area. This index is then applied to a past transaction price or valuation of the subject property to provide a current valuation.
  • Hedonic: Largely based on statistical models using some form of linear regression. Property attributes such as location, property size, and nature of improvements are data requirements of this model type. Essentially, the attributes of a subject property are compared with other comparable properties using a radius search pattern or other logical search parameters, over a pre-determined time period.
  • Tax Assessed Value Model: The Current Market Value is estimated by updating the valuation assessed for tax purposes at a past date. The statistical relationship between past assessed values and subsequent price data is measured to create a ratio which is then applied to update the assessed values
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