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New technologies are changing the home-sale and -purchase processes, including in real property valuation practices. Many appraisals are being aided by the use of automated valuation models, or AVMs, which help assess the market value of a specific property. AVMs are what provide today’s online real estate portals the ability to provide estimates of home values instantly, and allow some companies to provide instant offers to consumers selling their homes.

AVMs have been around since the 1980s, and in the 1990s became important tools for financial institutions in their evaluation of collateralized mortgage risk. At its base, an AVM is a data-based valuation that utilizes property, market and other relevant information to calculate an estimated value for a subject property through a computer program. The development of AVMs is proprietary; this means that companies do not share exactly what data they use or how much they weigh one dataset over another. AVMs can be “tuned” to the requirements of the end user for which they are intended, which includes lenders, mortgage investors, servicers and consumers. This is why you will find a variety of AVM products online, with many different values for the same property.

AVMs take information about a particular house from public property records, including tax assessments and deeds. In some cases, AVMs purchase information from Multiple Listing Services (MLSs). MLS data can provide an AVM with accurate comparable properties, detailed sales terms and information acquired from a prior physical inspection. Depending on the AVM developer, they might have access to prior appraisals on the subject property, which can also be included in that property’s current value assessment.

Lenders may use AVMs for internal quality control purposes when reviewing appraisals, and may use an AVM in place of an appraisal when evaluating a home equity loan or a home loan refinancing—situations where an appraisal is not federally required. A REALTOR® can use an AVM to obtain information on neighborhood home prices when developing a comparable market analysis. Well-developed AVMs can be useful for quickly providing a general idea of a home’s value. One such AVM tool is the Realtors Valuation Model®, or RVM®, an AVM produced by Realtors Property Resource® (RPR®), a wholly-owned subsidiary of the National Association of REALTORS® (NAR). The RVM incorporates MLS data licensed specifically for this purpose, and is provided at no charge to REALTORS® on the RPR website and mobile apps.

In some cases, an AVM-based valuation process is used in lieu of obtaining a traditional appraisal for a home purchase. Both of the government-sponsored entities, Fannie Mae and Freddie Mac, have introduced programs that allow a lender to use Fannie or Freddie’s proprietary methods to determine the value of a house without the need for an official appraisal. Some lenders are using what are known as hybrid, bifurcated or desktop appraisals in which an appraiser provides the analytical component of the appraisal, but the property information gathering is done with the aid of a third-party inspector. These types of valuations make use of AVMs to support the appraiser’s final opinion of value.

NAR supports and encourages credible, independent valuations of real property under the NAR Responsible Valuation Policy. Recently, NAR convened industry leaders to discuss the best practices and optimal use of AVMs that enable responsible real estate valuation. NAR will continue to assess the use of AVM growth and development for use by REALTORS® and the impact to the appraisal industry.

For more information about the RVM or RPR, please visit For more information about NAR’s valuation resources, visit    

Sehar Siddiqi is NAR’s Federal Policy Representative. This column is brought to you by the NAR Real Estate Services group.