Every so often, I get messages from homeowners who receive emails with a shiny “estimated home value” attached. Recently, a seller sent me a screenshot of one of these reports, and it reminded me how important it is to explain why those numbers aren’t the full picture.
What is an AVM?
An Automated Valuation Model (AVM) is a computer-generated estimate of a home’s value. It uses public records, comparable sales, and statistical formulas to come up with a number. Websites and companies use AVMs to give consumers a quick idea of what their home might be worth. On the surface, it sounds convenient. The problem is that AVMs do not actually see your home.
They do not know about your upgraded kitchen, the peaceful water view from your patio, or that your property sits across the street from a community park instead of a busy road. They also do not understand the subtle differences within neighborhoods.
Why They Miss the Mark
Here are just a few reasons why AVMs often get it wrong:
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Radius pulls: Many AVMs use a wide radius around your home. That means they sometimes pull sales from outside your neighborhood, even if those homes are in a completely different market with different demand.
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Anomaly sales: Every market has them. Sometimes a seller gets a “unicorn” buyer who overpays because of a strong emotional connection to the property. That one lucky sale can skew the data.
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Low ball sales: On the flip side, a home might sell low because it needed significant repairs or the seller was under pressure to move quickly. An AVM does not understand those backstories, so it treats the sale the same as every other.
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Timing: AVMs often do not account for how quickly the market shifts. The value from three months ago may not reflect today’s reality.
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Condition and updates: Algorithms cannot walk through your home. They do not know that your property has new flooring or that your neighbor’s house still has its original roof.
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On-market influence: Once a home is listed, many AVMs shift their value estimate based on the asking price. That does not mean it reflects actual market value. True market value is what a buyer is willing to pay.
What Really Determines Value
The real story comes from activity in the marketplace:
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If your home is priced higher than buyers are willing to pay, even a glowing AVM number will not generate showings or offers.
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If you have no showings, that is a clear sign the price or presentation has missed the mark.
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If you have 40 showings and no offers, that is also feedback from the market.
Buyer activity is the pulse of the market, and it tells us far more than a computer-generated estimate ever could.
The Builder Factor
We also have to consider what local builders are doing. When the market slows, builders start offering heavy incentives such as lower interest rates, help with closing costs, higher commissions, and more. These incentives can shift buyer attention away from resale homes and flood the market with attractive alternatives. In times like this quarter, builders are pulling out all the stops to move inventory, and that absolutely affects your home’s value and position.
The River Analogy
I often tell clients that the real estate market is like a river. It has creeks and bends, twists and turns, rapids and waterfalls, even times of drought. It is always moving and always changing. An AVM is like a photograph of one small section of the river, frozen in time. But the river keeps flowing, and the only way to navigate it is with someone who understands the current and the terrain.
Why You Need Us
That is where we come in. At Rocks Realty, we study the market daily. We understand not only the numbers but the stories behind them. We know how buyers respond when they walk into your neighborhood, which updates actually matter, and how your home compares to others on the market right now. We also know how to read the signals, whether that is no showings, too many showings without offers, or builders competing for buyer attention with major incentives.
An AVM can give you a number, but it cannot give you the story. The story is what sells homes, and that story can only be told through experience, local knowledge, and the pulse of the market.
👉 At Rocks Realty, we are here to guide you through every twist and turn of the river. If you have been relying on AVM emails or online calculators, let’s talk about the real story behind your home’s value.
