What accurately describes an Automated Valuation Model (AVM)?

An Automated Valuation Model (AVM) is primarily a technology-driven approach to estimating property values using algorithms and data analysis. It utilizes various data sources, such as recent sales data, property characteristics, market trends, and more, to generate a value estimate.

The key aspect that makes the correct answer accurate is the fundamental nature of an AVM itself. An AVM is not an appraisal because it lacks the personal inspection and analysis typically performed by a licensed appraiser. Instead, it generates property valuations based on statistical modeling and automated data processing rather than a thorough and individualized evaluation that an appraiser conducts.

This distinction is crucial in the field of real estate and finance, where understanding the difference between automated models and traditional appraisals has significant implications for property transactions, risk assessment, and valuation accuracy. Hence, while an AVM can provide valuable insights into property values, it does not meet the professional and regulatory standards required for a formal appraisal.