What is the difference between an AVM and a valuer?
An AVM (automated valuation model) is a statistical estimate of value from data, without a valuer inspecting the property or agreeing the basis of value with a client. For a home loan in Portugal the lender must have the property valued by an independent CMVM-registered valuer (Decree-Law 74-A/2017, article 18). An AVM does not replace that valuer.
What can an AVM not do?
It does not inspect the property, test special assumptions, or take responsibility for a reasoned report. Under the Red Book and the IVS the valuer agrees the terms of engagement, the basis of value and the valuation date, and signs the report. See What is a basis of value under IVS? and What is a Red Book valuation?.
Can a bank rely on an AVM alone for a home loan?
No. Article 18 of Decree-Law 74-A/2017 requires the lender to proceed through an independent valuer registered with the CMVM. That is a valuer, not a model on its own.
When is an AVM still useful?
As a first screen of asking prices, or as one input among others that a valuer may consider and then accept or reject. The reasoning in the report remains the valuer’s. See Market value is not price.
Read next
- What is a Red Book valuation?
- What is a basis of value under IVS?
- Market value is not price
- Market value under IVS