Property Valuation
What is an 'automated valuation model' (AVM) and what are its limitations in Oregon?
AA physical inspection of comparable properties by an appraiser
BA computer-generated value estimate using statistical analysis of property data and comparable sales, with limitations due to lack of physical inspection and data gaps✓ Correct
CAn appraisal method approved for all federally-backed loans
DA valuation performed by the county assessor using field visits
Explanation
AVMs (like Zillow's Zestimate) use algorithms to estimate value based on public records, comparable sales, and statistical models without a physical property inspection. Their limitations include inability to assess interior condition, recent improvements, or unique property features.
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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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