An Instant Appraisal, or Automated Appraisal Model (AVM), is a service used by many real estate agents to identify the value of a property. The industry tool combines mathematical modeling with data collected from previous sales and existing properties, while comparing homes of similar value in the same area.
Other factors that AVM services may take into account include current house prices and previous expert appraisal reports.
Many real estate agents offer an AVM tool on their websites to provide sellers with an estimated value of the property.
After filling out an online form, a report is usually sent to the seller via an email, which is followed by a home visit where a real estate expert will provide a more in-depth appraisal.
An agent will then assess the most attractive features of a property, while offering advice on any areas where more value could be added.
READ MORE: Bird feeders could kill birds, biologist says
The website also pointed out that due to the objectivity of the model, the risk of fraud or incorrect quotation is greatly reduced.
When considering the downsides, Investopedia noted that in order for the model to produce representative information, a large amount of relevant data is required.
Although the service analyzes current house prices and past sales, it does not take into account the condition of a home, such as needed work.
This can only be explored while visiting a real estate agent.
The website also pointed out that an AVM relies on imputed data, therefore some information may be out of date and may not accurately reflect the value of a property.
Inspired to offer a more efficient real estate appraisal service, which replaces a physical appraisal, Houzen, an online brokerage company, has developed an online tool that uses computer vision, a form of artificial intelligence.
The real estate tool involves a new type of technology that allows a computer to evaluate images of a house to produce an appraisal.
The company said the technology has the ability to identify certain characteristics of a house.
“With the social distancing measures and the move to telecommuting, it was evident that the classic visual inspection performed by a real estate agent is becoming more and more troublesome,” said Saurabh Saxena, founder of Houzen.
âWith all the other services coming online, it was time to provide a data-driven tool for online real estate appraisals that could deliver results as specific as a in-person visit. “
If there are flaws in a property, technology is able to identify and assess them before they are factored into the valuation figure, the company said.
The technology combines a range of data to value a property, including public historical data and the company’s own data collected from buyers and agents over a four-year period.