AVM - Automated Valuation Model

The definition of mortgage term: Automated Valuation Model

The use of mathematical modeling to value properties by comparing the values of similar properties in the same area at the same point in time. The AVM can be faulty in that it doesn't take into account the condition of the property and assumes it is comparable to others in the area. This can magnify the value of a sub-par property or undervalue a superior property. AVMs are sometimes used by lenders instead of traditional appraisals. AVMs can also be useful to consumers as it can give a rough estimate to what your home is worth when looking at purchasing a new property.


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