Source: South Florida Agent Magazine —
With the advancement of tech-based real estate services such as Zillow, Realtor.com, Redfin and others, customers can easily research and estimate the value of their homes without involving a Realtor. The big question is, how accurate are they?
Property valuations are the most integral part of a real estate agent’s business. You may find, or already use, easy and quick ways to determine property values. One such method is using an automated valuation model, or AVM. With so many options available, you will want to know how an AVM can benefit you and who the top providers are.
What exactly is a real estate AVM?
A real estate automated valuation model is a machine learning-based system that examines various data points to determine the worth of a particular property.
The information examined often includes details of the property, comparable sales data, the property’s age, market trends and more. There are many available real estate AVMs on the market. Zillow’s “Zestimate” is the most popular.
The Zestimate
Zestimate is a key feature offered by Zillow and one of the first AVMs made available to the general public. When introduced, it caused some controversy, particularly among real estate agents. However, the Zestimate is so prevalent in clients’ minds that agents frequently intentionally bring it up during their listing presentations, detailing why it is either high or low or, perhaps, exactly right.
Zestimate pros and cons
The main benefit of Zestimate is that it gives users a basic idea of the value of their homes. On the other hand, Zillow’s estimates frequently rely on data submitted by users; as such, they can only be as reliable as the information given to them. Users’ errors or omissions can jeopardize the accuracy of the data.
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I live in Missouri which is a non-disclosure state. In other words, the sales price cannot be published anywhere. The only people who know the sales price are the people involved in the transaction and the appraisers. So Zestimates and other similar systems have no idea what a property has sold for in Missouri and thus their estimates are not accurate.
Ethel – their estimates are not accurate anywhere! I just made a comment about this. Zillow needs to be stopped!
To answer the title question “Are AVMs replacing the CMA?”, the answer should be “NO” if you are a diligent and professional agent. AVMs cannot detect, identify, or adjust for nuances and characteristics such as quality, condition, site view, detrimental aspects, or desirable attributes. With rare exception, no two properties are identical. Each needs to be judged as a property within a particular market period and place. An AVM may be useful in some circumstances to establish a range of likely value, but what agent worth their salt is willing to put his or her clients’ wealth and fortunes at risk for the sake of a shortcut evaluation?
see above
Dear Ethel, It have been a Licensed Real Estate Broker, specializing in commercial real estate for 43 years as of December 2022. I have also been involved in residential for fiends, family and personal investment.The Title Company knows the sales price of any structure: building or home. The Title Company submits the paperwork after closing to your local County Appraisal District. I have lived in 10 states and also foreign countries when my husband was in the military; finally retiring to San Antonio, Texas. The County Appraisal District usually takes the Sales Prices as their initial valuation for your property Texes. My personal experience shows anytime a
new person buys or builds a building or residence, their local County Appraisal District uses that figure for initial property taxes. It is not an estimate, it is an actual figure.
AVMs will NEVER take the place of a human being who knows their craft actually walking the property, measuring the square footage, and analyzing the data available to them. The real estate industry has gotten too sloppy with too many agents relying on public record s/f numbers (which are not accurate for RE purposes) and homeowners who have not been educated about how Zestimates are calculated, which are 100% computer-driven and therefore unreliable. Zillow must be stopped before they completely ruin this industry!