How do those real estate websites know how much your house is worth?  How accurate are they?  Can you rely on this information when buying or selling a house?  Let’s answer these questions by helping you to better understand the Automated Valuation Model or AVM.

What is an AVM or Automated Valuation Model?

An AVM or Automated Valuation Model is a form of Artificial Intelligence or AI.  The information about other homes that are listed for sale is put into an algorithm that then uses that information to average out a probably listing price for a house.  Generally the information that is considered is the zip code.

So that’s how those websites know how much my house is worth!

Yes.  Most people are familiar with Zillow and their “Zestimate” of what a house might be worth.  This is a great example of an AVM.  However, this is not the only place that you may find an AVM.  Sometimes a real estate brokerage website will have a “what’s my home worth” button or page that lets you plug in your address to see what the house might be worth.  This too runs a report automatically for you through an AVM.  Other companies may send you a postcard in the mail with a special code or link that is specific to your house or neighborhood.  This too will likely run a report automatically for you through an AVM. Basically, anytime you put in an address on-line and get an instant response on a value it will be generated by an AVM.

How accurate is an AVM or Automated Valuation Model?

This just depends.  You may get a good general idea of where the pricing may land, however all properties are different and the real estate market shifts and changes depending on other economic indicators (such as interest rates and unemployment).  If you really want to know what your house is worth or how much money you could sell your house for, your best bet is to hire a professional to assist you.  A real estate professional such as a home APPRAISER or REALTOR would be a good choice.  This professional will visit your home in person to view the condition of the home.  You may have many updates in your home that other comparable listings didn’t have.  On the flip side, you may find that all of the comparable listings are completely updated while your property may need some updates or repairs.  Property condition plays a very big part in pricing the property.  Additionally, the number one rule of real estate is:  location, location, location.  If your home backs to a major road or a commercial real estate area that could negatively affect your pricing.  Or your property may be on a greenbelt or back up to a golf course which could positively affect your price/value.

Once your real estate professional views your home in person, they can then do some further research on not only what has been listed for sale but also what actually SOLD.  This is a huge difference between what information the AVM has access to and what a professional has access to when you are in a “non-disclosure state” where real estate sales prices are not automatically disclosed as public record (like Texas).

So, can I rely on an AVM when preparing to sell my house?

As noted above, using an AVM may give you a general idea of what kind of price you could possibly sell a property for.  However, to find the true price that a ready, willing, and able buyer may spend to purchase your house you will definitely want to speak with a REALTOR.  Your local REALTOR is a professional who has access to the information who can make adjustments based on the property condition.  If the person you are speaking with has not viewed your home in person, they cannot accurately predict what the most probable sales price will be. 




About the author:

Melissa Hailey is the Broker-Owner of North Texas Top Team, REALTORS in the Dallas-Fort Worth Metroplex.  Our Team helps home buyers, sellers, landlords, and tenants move across North Texas and we connect clients to other great REALTORS across the country.  She is a real estate instructor and coach who loves to see others succeed.  She is a serial volunteer helping others in her community and in her industry.  Connect with her at