Some may be surprised to learn that one of the nation’s most accurate and highly-rated real estate valuation models is behind closed doors. And for good reason.
Tested by leading independent companies for accuracy and hit rate, the Realtor Valuation Model® (RVM®) has shown consistent high performance. Those “accuracy and hit-rate” indicators—primary measures of automated valuation model (AVM) quality—are regularly analyzed across multiple markets and a wide variety of market conditions.
As the only REALTOR®-owned automated valuation product, the RVM turns a traditional AVM on its heels by offering users customizable refinement tools. Attributes not found on consumer-facing real estate sites.
This distinct advantage allows users to refine the RVM by home improvements made and/or needed, property facts, and market conditions—typically based on knowledge of the property or an on-site visit. AVMs do not factor in a property’s condition; instead relying on “average condition” scenarios when determining value.
In defense of the AVM, accurate estimations of comparable on-market properties can be obtained using a prior physical inspection. Yet, according to Karen France, RPR senior vice president of market engagement, those values can fail to live up to true market realities.
“Many things can distort the estimated value of a property. A home might be unusual compared to its neighborhood counterparts or access to off-market data is limited,” says France.
“If an MLS shares only on-market listings with an AVM provider, rather than both the on- and off-market information that they share with RPR, the valuations tend to fall short of an accurate estimation.”
Plus, adds France, AVMs draw from public records sources, which can be inaccurate, incomplete, and slow to record transactions.
Lastly, the RVM offers a one-to-five star confidence score that describes the expected accuracy of a property’s estimated value. Based on the outcomes of multiple automated valuation models, higher scores are defined by narrower valuation ranges. The opposite is true for lower scores. The ranges are beneficial guideposts that help REALTORS® navigate list-price discussions with potential sellers.
RVM Margin of error for confidence scores
To date, RPR’s Realtor Valuation Model® is in a class by itself among automated real estate valuation models. Learn more about this valuable tool.
RPR encourages REALTORS® to educate consumers on the important difference between AVMs, RVMs and appraisals. RVMs and AVMs are not meant to serve as appraisals. REALTORS® determine market value that must be validated by an appraiser. Lenders rely only on an appraisal.