What Is My Home Worth? How to Use Free Automated Valuation Models
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- 11 min read
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Jacob Burdis, Contributing AuthorCloseJacob Burdis Contributing Author
Jacob Burdis, PhD is a professional dabbler with experience in entrepreneurship, educational technology, digital language learning, product management, and real estate investing.
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Sam Dadofalza, Associate EditorCloseSam Dadofalza Associate Editor
Sam Dadofalza is an associate editor at HomeLight, where she crafts insightful stories to guide homebuyers and sellers through the intricacies of real estate transactions. She has previously contributed to digital marketing firms and online business publications, honing her skills in creating engaging and informative content.
Homes are more than just places to live; they’re financial powerhouses. The average homeowner sits on $307,000 in home equity, the third-highest average ever recorded by real estate data analytics provider Cotality. If you’re wondering how much your home is really worth in today’s market, you might have considered using an automated valuation model — free tools that provide a quick estimate of your property’s value.
These online platforms use high-tech algorithms and loads of data to estimate your home’s value for free. While it’s possible to get a ballpark valuation using these free online tools, you need to understand how they work and what their limitations are so that you can use them appropriately.
In this guide, we’ll help you understand the ins and outs of free online valuation tools and AVMs. For expert insight, we spoke with Sandi Bates, a top real estate agent in American Fork, Utah.
What is an automated valuation model (AVM)?
An automated valuation model is a tool that uses a machine learning algorithm to compare your home against a massive dataset of other homes to estimate its value. It processes a wide array of publicly available and user-sourced data, such as property type, size, general location, and comparable property sales, to provide an immediate value estimate at the click of a button.
If you’ve been exploring home value websites, you’ve probably noticed that the same property can have different estimates depending on which tool you use. While each tool follows the same general AVM approach, they also use their own proprietary data and models to estimate values.
We can attribute the discrepancies that you notice to variations in the approach to building the model and the type of proprietary data, such as user-submitted information or website analytics, that each tool uses.
AVM vs. CMA vs. Appraisal: How each estimates your home’s value
When it comes to figuring out your home’s value, there’s more than one way to do it. You can choose AVMs for a quick online estimate, comparative market analysis (CMAs) from real estate agents to see how your home stacks up against recent sales, and appraisals for an official, in-depth valuation. Knowing the differences can help you pick the right tool for your needs and avoid surprises down the line.
Free AVM estimate | CMA | Full Appraisal | |
Who determines the valuation? | Automated computer algorithm | Real estate agent | Licensed appraiser |
How does it work? | Finds similar homes from public records and historical sales data to estimate your home’s value | Analyzes recently sold comparable homes to provide a value estimate | Uses comparable property data, a walkthrough to evaluate the condition, and sometimes, a calculation of its construction cost or potential rental income |
What does it include? | Value estimate with limited information about how it came to the value | Value estimate with a list of comparable sales and market insights | A detailed report, including the method the appraiser used and a list of recent, comparable properties |
How long does it take? | Estimate available immediately | Same day or a few days | Appraisal report takes 6 to 20 days |
How much does it cost? | Free (though some commercial AVMs exist mostly for lenders) | Often free | Anywhere from $350-$550 |
How accurate is it? | Ballpark accuracy, limited to publicly available data | Moderate; depends on the agent’s expertise and data | The most accurate way to determine your home’s value |
When should I use it? | In the beginning, to get an idea and start making plans | In the beginning, when setting a listing price and understanding the local market | As part of the sales process, typically required by the buyer’s lender |
AVM benefits and limitations
The primary benefits of AVM tools are their cost and immediacy. Because the process is fully automated, it takes minimal time and processing power to compare your home against hundreds and thousands of other similar data points to generate a ballpark estimate.
One of the main approaches to any valuation model is to look at what comparable homes sold for, and AVMs can do this faster and more scalably than any other approach.
According to Bates, “Getting an online valuation is a good first step to get a ballpark number to act as a springboard or starting point in the home-selling process.”
But she also warns that setting expectations based on these estimates could lead to disappointment. “Sometimes people call in with unrealistically high expectations for their home’s value and are disappointed to see what actual similar homes are selling for.”
As Bates mentioned, there are multiple reasons to approach the AVM valuation with caution. First, an AVM valuation is only as good as the data it has access to. Multiple data points may be either too difficult to obtain in an automated fashion, incomplete, or inaccurate.
Bates describes one such example: “In non-disclosure states, such as Utah, [AVMs] lack actual data from the sale of a house, including the sales price. We’ve also seen these estimates significantly undervalue homes because the public record often doesn’t include the basement square footage in its property information.”
Other limitations to the data AVM estimates include:
- Home’s condition, including needed fixes and overall cleanliness
- Recent upgrades, such as a remodeled kitchen or bathroom
- Certain factors about the home’s location
- Specific location on the street, for example, a busy street or a cul-de-sac
- Access to nearby public transportation
- Quality of the local school district
- Zoning, such as short-term rental and accessory apartment ordinances
- Special views or level of neighborhood walkability, providing access to parks, beaches, trails, etc.
- Community factors such as local laws or news coverage
- Local hype, such as large employers coming to the area or movie sets
- Unique home features, including distinct amenities or architectural style
CMA benefits and limitations
A CMA is a valuable tool for homeowners and buyers because it provides a snapshot of a property’s value based on real sales of similar homes in the area. One of the biggest benefits is that it’s usually free when working with a real estate agent, and it helps sellers set a competitive listing price while giving buyers insight into fair market offers.
They highlight market trends, like whether homes are selling above or below asking price, which helps guide negotiations. However, CMAs do have limitations.
They rely on the agent’s expertise and the availability of accurate, recent comparable sales. If you have a unique home, a CMA might not fully capture its true value since it depends on recently sold, similar properties. That means your home could be worth more or less than the estimate suggests, especially if there aren’t many comparable homes nearby.
Overall, CMAs are best used as a guideline rather than a definitive valuation, giving you a solid starting point for pricing or offers, but not replacing a professional appraisal.
Full professional appraisal benefits and limitations
A full appraisal is the best way to get a trustworthy, accurate valuation for your home. Where the AVM approach relies fully on data and science, the appraisal approach leverages both science and art. Bates explains, “There are no two homes that are exactly alike, so you need a professional with experience to know which adjustments to make.”
A full, professional appraisal will always be performed by a trained, licensed appraiser. Typically, a homebuyer will pay for the appraisal required by the lender as part of the purchase process.
Each state has a vigorous process for appraisers to receive initial and ongoing training specific to the real estate market and the laws of the state. They are trained to use multiple qualitative and quantitative data points to determine a fair, accurate value.
There are a few different methods that appraisers use to value a home:
- Sales comparison approach: The sales comparison approach involves an appraiser finding comparable homes that have recently sold and estimating the value based on similarities and differences between the comparables.
- Cost approach: Sometimes, for new homes or homes that have few comparables, the appraiser will estimate what it would cost to rebuild the home from scratch.
- Income approach: This method is mostly used for investment properties, focusing particularly on the home’s ability to generate income.
Here are the major factors appraisers look for when performing a full appraisal:
- The property characteristics, such as property and home size, age, number of bedrooms, functional layout, etc.
- The general condition of the home and its structure
- Any improvements and upgrades that affect the value
- The home’s location and neighborhood
- Special considerations, such as accessory dwelling units or energy efficiency
Alternative valuation approach: hybrid and desktop appraisal
During the early stages of the COVID-19 pandemic, on-site appraisals were considered a safety hazard. For home sales and transactions to continue with confidence, these alternative appraisal methods appeared that minimized the need to be on-site for the appraisal:
Desktop appraisal is similar to a full appraisal in every way except that the appraiser doesn’t physically visit and inspect the property. The appraiser will still use proprietary data from the market and comparables, including pictures, videos, and any other information about the subject property, to determine the home’s value.
This type of appraisal is somewhat less expensive than traditional appraisals, but it can also miss any unique home characteristics that could affect the overall value.
Hybrid appraisal is a combination of the desktop and full appraisal approaches (hence the term “hybrid”). In this approach, the hired appraiser does not conduct a property inspection but hires a third party to do so and provide detailed notes. The appraiser then uses these notes, along with the other market and sales comparison data, to determine the home’s valuation.
The benefit of this approach is the speed of the appraisal report. Inspectors require far less training, so getting the inspection report is much faster than if the appraiser did it personally. Again, the sacrifice, in this case, is how well the appraiser can account for the property’s condition and unique characteristics without seeing them in person.
What’s a confidence score in AVMs?
A confidence score in an AVM is a number that tells you how reliable the estimated home value is. Think of it like a “trust meter” for the model’s evaluation.
It’s calculated by looking at factors like the quality of data available, the number of nearby comparable homes, and the consistency of recent sales prices. The higher the score, the more confident the AVM is that its estimate is close to what your home would actually sell for.
For example, imagine an AVM estimates your home is worth $350,000 with a confidence score of 85%. That means the model is pretty sure the actual market value falls close to that number, maybe within a few thousand dollars. On the other hand, if the confidence score is only 50%, the AVM is less certain, and the actual value could be quite a bit higher or lower.
A lower score doesn’t mean the AVM is useless. It just signals more uncertainty, so you might want to double-check with a professional appraisal. In short, the confidence score helps you understand whether you can take the AVM’s number at face value or treat it more like a rough ballpark.
How can I find and use a free AVM estimate?
There are many free consumer-focused AVMs or home value estimators (HVEs) available online. A simple Google search will reveal dozens of options from reputable providers. Because there are so many fast, free options, we advise you to try multiple tools in order to best triangulate your ballpark estimate.
Each provider incorporates its own algorithm and proprietary data into its model, so your particular property may get a higher valuation from one provider over another. Because none of the AVMs are very transparent about how their model works or which exact data points they are using, you will have to do a bit of trial and error.
Using an online home value estimator is quick and easy. Here are the simple steps:
- Go to a reputable real estate website with a home valuation tool.
- Enter your property address. Answer property-related questions if prompted.
- Review the automated estimate provided.
- Explore additional data like nearby sales and local market trends.
- Use the results as a starting point.
How does HomeLight’s free home value estimator work?
HomeLight’s Home Value Estimator is a great option that includes a unique approach to valuing properties. We’ve done a lot of analysis and iterations to determine the right combination of publicly available, proprietary, and user-submitted data to produce more accurate value estimates.
The process includes a short questionnaire with seven questions that have been proven to increase the accuracy of your home valuation estimate. The tool asks for simple information, such as the property’s condition and the year it was built.
Another way to find out how much you could fetch for your home is by requesting a cash offer from HomeLight’s Simple Sale platform. After answering a few basic questions, you can receive a no-obligation, all-cash offer for your home within 24 hours.
If you accept, you can close the sale in as few as 7 days and choose your move-out date — no repairs, showings, or agent commissions necessary.
Having a full-time Realtor® with experience and access to the multiple listing service (MLS) is best for a reliable CMA. We aren’t appraisers, but we can usually get very, very close.
Partner with a top agent to determine your home’s value
After receiving your online home value estimate from HomeLight, we will connect you with top local real estate agents who can provide a comparative market analysis (CMA) for your home. An experienced agent can bypass the limitations of AVM tools to get you an accurate idea of your home’s value to help you list it for the right price.
According to Bates, “Having a full-time Realtor® with experience and access to the multiple listing service (MLS) is best for a reliable CMA. We aren’t appraisers, but we can usually get very, very close.”
Use HomeLight’s Agent Match tool to connect with a top local agent in your area. The best agents can combine the art and science of home value estimates.
Free AVMs are a great first step
While automated valuation models aren’t the same thing as “online appraisals,” they can help you get a quick ballpark estimate of your home’s value that you can use to start exploring and making plans. However, as soon as you get serious about selling your home, we recommend consulting with a top agent who knows the local market and buyer trends in your area.
Frequently asked questions about free AVMs
AVM stands for Automated Valuation Model, which is basically a tech tool that estimates a home’s value using data and algorithms. It looks at things like recent sales, tax records, and local trends to give you a number quickly. Think of it as a fast, digital snapshot of what your home could be worth.
Free AVMs are a great starting point if you just want a ballpark idea of your home’s value. They use public data and algorithms, so they’re not perfect, but they can give you a rough estimate before talking to an agent. Think of them as a quick snapshot, not a final answer.
There’s no AVM that’s 100% perfect, but some are more reliable depending on the data they use. Zillow’s Zestimate is relatively accurate for homes on the market, with half of them coming within about 1.8% of the final sale price. Off-market homes are a bit trickier, with a median error rate around 7%.
On the other hand, HomeLight’s Home Value Estimator asks a few simple questions about your property to factor in important details that can affect its value.
No. Free estimators, like AVMs, are great for getting a ballpark idea of your home’s value, but they don’t consider all the details a professional appraiser would. For serious real estate decisions, like selling, refinancing, or getting a mortgage, you’ll still need a licensed appraisal.
It depends on what you need. AVMs are fast, free, and convenient, but appraisals are more accurate and thorough because a professional inspects the property in person.
Technically, no, they don’t provide official appraisals. But many real estate agents will do a comparative market analysis to give you an idea of your home’s value. It’s not legally binding, but it’s usually pretty close to what an appraiser might say.
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