What is an AVM? An Automated Valuation Model (AVM) is a computer-based system that uses mathematical modelling to estimate the value of a property. Relevant data, such as recent sales of comparable properties, Land Registry data, market trends, and property attributes including; location, size, and construction, is used to generate the valuation.

AVMs are increasingly being used, particularly in low-risk mortgage lending scenarios, for example, in cases where the property is known to be of standard construction, for re-mortgages, or when the loan-to-value ratio is low. Their primary advantages are their speed, efficiency, and low cost.

However, there are also downsides to AVMs. Firstly, they are limited in scope as they rely on the data they use to be comprehensive and accurate. Secondly, they cannot assess property defects, such as structural movement, which can significantly impact a property’s value, affect its mortgageability, and lead to extremely high repair costs. AVMs are also often unsuitable in situations where mortgage lending is considered high risk to the lender, if the property is unusual or complex, or if the market is small or volatile.

While AVMs offer time and cost savings, the expertise of a surveyor inspecting a property cannot always be replicated. A surveyor can physically inspect, assess hidden issues, and account for unique factors that a data model would miss. AVMs are primarily used for informational purposes only and should not be solely relied upon to determine a property’s value or assess its condition, which is a crucial aspect for property owners and lenders. If an AVM is used as part of a lending decision, such as during a property purchase, it is vital that property buyers are advised by their estate agent, mortgage advisor, or lender to instruct an independent surveyor to assess the building’s condition and protect their financial interests.

Avery & Co: https://averysurveys.co.uk/

RICS – Automatic Valuation Models