A Valuation Report is also known as an AVM. AVM stands for Automated Valuation Model and is a process to establish a market value of a property through "scientific" measures, versus a human's inclination. To determine a property's current value, an AVM uses computer decision logic based on sales trends, title records, neighbored analysis, market metrics, tax assessment databases and more. These reports assume a subject property is in average condition for the neighborhood with no substantial improvements or deficiencies when compared to any other typical home in the neighborhood. Once the searching and sorting for data is complete, the analysis is conducted and the AVM affixes a value estimate to the property.
It is important to note that an AVM is just once piece of the puzzle when pricing your home. You need to take into consideration the condition of your home, including any major or minor upgrades and renovations.
You can purchase a Valuation Report or Property Report by clicking the Tools tab at the top of any page, then clicking Learn More under the heading "How Should I Price My Home in this Market?". If you are logged in to your Selling Center follow the links to Pricing Reports.
Or, simply go to www.forsalebyowner.com/appraisal.
Market Value is the price a home will command from a rational purchaser under normal conditions; the value of a home in today’s market. It is basic supply and demand economics. As home inventory on the market (supply) increases, home prices will fall if the demand is constant or declining.
It is also important to note what Market Value is not. It is not the amount you paid for your home, how much you owe on your home, the great price your neighbor received for their home, or the assessed value, or even the appraised value. It can change over night when the interest rates change or when five more homes in your area come on the market at higher or lower prices.
We recommend getting either a Valuation Report (AVM ) or CMA to use as a tool to help you price your home. There are many factors that go into determining the value of your property, including condition of your house, property values and the local housing market and trends. The price of your home should be based on both valuation and an objective assessment of current market conditions.
A few things to think about:
- Are there a lot of houses on the market in the area?
- Are houses selling slowly or quickly?
- Is the economy doing well?
- Are interest rates low or going up?
A comparable property or "comp" is a term used for a property that meets the following requirements:
- Similar in type and size to the subject property
- Sold in the past year
- Within a prescribed radius from the subject
Login to your Selling Center and click View Pricing Report(s). From there you will be prompted to confirm your address to receive your free Pricing Report.
A Valuation Report is used for several things:
- Selling your house. A Value estimate is one piece of the puzzle to use in pricing your home for sale.
- Calculating home equity. A Value estimate can help you see roughly what the appreciation of your property has added to your bottom line.
- Timing a home-equity loan. To find out if you have enough equity to make it worthwhile asking for a loan.
- Buying a house. Negotiating power, knowing how much a property is worth before you put in a bid. A Value estimate also give you an idea of local property values by letting you see what other homes in the area have sold for.
The short answer is, not all homes are created equal. When looking for comps, the Valuation Report, the real estate agent, the appraiser all have to use the current sales data that is available to them. If an exact floor plan to the subject property has recently sold, that is generally considered a good comp. If that same property (exactly the same) sold three years ago, it’s considered too old to be a good comp. Appraisers, CMA's and Valuations go through a logical process of making adjustments for difference is between properties. If a four bedroom, two bath home, with 2000 square feet is being compared to a five bedroom three bath home, the various valuation approaches will make an adjustment in value in an effort to make that sale "comparable" to the subject property. In that manner, they can judge value based on the similarities and differences of each property.
Theoretically, a Valuation Report could be updated as frequently as weekly (since it is fed by new comparables introduced to the system at regular intervals) if a person wanted to track the moderate changes in value. However, real estate is more of a long-term investment and we feel that reviews every 3-4 months a likely adequate.