Are AVMs Accurate? What Phoenix Homeowners Should Know
Automated Valuation Models (AVMs) are becoming increasingly common tools for estimating the value of residential properties. Phoenix homeowners can easily access AVMs online to get quick, often free, estimates of their home’s value. But while these tools are convenient, understanding how they work and what they may overlook is key to knowing whether you can trust the results.
Not All AVMs Use the Same Data
Different AVMs rely on different data sources, and each system assigns varying levels of importance to those data points. Some models may lean heavily on historical tax records, while others prioritize recent MLS sales. This lack of standardization is why estimates can vary so widely between platforms. For example, if an AVM relies mainly on older tax assessments, it may not keep up with the rapid changes in Phoenix’s real estate market. Another AVM that pulls primarily from up-to-date MLS data might give a more accurate snapshot but that still depends on the quality and completeness of the data it uses.
The Limits of a Quick Online Estimate
While AVMs offer fast and low-cost home valuations, their accuracy depends entirely on the model used and the information available. They might give a general sense of a property’s worth, but they often lack the detailed analysis and expert judgment that a licensed appraiser brings to the table.
One major limitation is that AVMs depend solely on algorithms and historical data. They don’t include a physical inspection of the home. That means they can’t account for current condition, recent upgrades, or unique features unless those changes are already recorded in public data. Take a home in Phoenix that had a full kitchen and bathroom remodel in 2024. If those renovations haven’t made it into public records, an AVM could severely undervalue the property.
AVMs Assume All Homes Are Average
Most AVMs assume that all homes are in average condition, and that’s a problem. They won’t adjust the value for damage, disrepair, or upgrades like new flooring, fresh paint, or high-end appliances. Likewise, they often overlook things that make a property truly unique like a premium view of Camelback Mountain or a lot backing onto a greenbelt.
AVMs also struggle to capture local market nuances. Even something as small as being on the right side of a school district boundary can affect a home’s value but a generalized algorithm might miss that entirely.
Why a Professional Appraisal Matters
A certified or licensed appraiser performs a hands-on, in-depth evaluation of the home. This includes a physical inspection of the interior and exterior, measurements, photographs, and condition assessments. The appraiser then selects the most appropriate comparable sales and applies adjustments based on real-world experience and professional judgment.
Appraisers employ their specialized expertise and professional judgment to meticulously select comparable sales and make informed adjustments based on a multitude of factors, including the property’s condition, location, unique features, and current market nuances. This in-depth market research and analysis allows appraisers to consider intangible factors and current market sentiment, aspects that AVMs, relying solely on recorded data, typically cannot capture. This human insight allows appraisers to consider factors that AVMs simply can’t like current market sentiment, micro-neighborhood trends, or intangible features that add value.
Appraisals are also held to strict industry standards, including the Uniform Standards of Professional Appraisal Practice (USPAP). This regulatory oversight ensures transparency, consistency, and a higher level of trust in the final value opinion.
If you’re relying on AVMs to understand your home’s value, you might be missing critical information. Reach out today to schedule a reliable, in-person appraisal.
