AVM vs. Horse Property

Automated Valuation Models (AVM) are commonly used by lenders to substantiate appraised values. I recently was asked to reconsider my opinion of value based on an AVM purchased by the client. The subject property was a custom home on a two acre site. It was zoned for horses and had several out buildings.The AVM estimated the subject’s value to be $77,000 less than my appraisal. The primary comparable sales used by the AVM were taken from a nearby tract development. The failure of the AVM to distinguish the differences between custom properties on acreages and similar size homes in a tract subdivisions is evident in this case. The AVM did not take into consideration the differences in land use and the associated market appeal of each type of these properties. This case re-emphasizes the importance of having eyes on the property, to evaluate the market appeal, size of a site and other important amenities.