Property Valuation
What is 'automated valuation model' (AVM) technology and its limitations in Delaware?
AA state-of-the-art appraisal method replacing traditional appraisals
BComputer models that estimate property values using statistical algorithms and public data — useful for initial screening but limited in accuracy, especially for unique properties, rural Delaware areas, and markets with few comparables✓ Correct
CA government program automating Delaware's property tax assessments
DA software tool used by Delaware real estate agents to price listings
Explanation
AVMs (like Zestimate) use algorithms and public data to estimate value quickly and at low cost. Limitations: they cannot account for property condition, recent updates, unique features, or hyperlocal market nuances.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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