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What is an Automated Valuation?

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We have access to Hometrack for our clients who provide AVMs (Automated Valuation Model) to 13 of the top 15 mortgage lenders in the UK.

What is an AVM?

A tool for finding a current value on a property. They tend only to be used on established housing that is a single let or your main residence.

They are as good as the data held in the system and as they are usually free with the lender, there is no right of appeal. If it’s lower than you expect then you can have the option to pay for an internal valuation with some lenders.

The key figures within the AVM are the estimated capital value, the capital value range, the confidence level, and the estimated rental value and gross yield

Estimated capital value

This is the most probable sale price of the property in average condition when sold on the open market and is based on market information on sales and mortgage valuations for similar properties in the local area at the date of valuation.

Capital value range

This is the range of values within which the subject property is likely to fall. It takes into account additional factors such as aspect and plot size. There is a 68% probability that the value of this property will fall within this range.

Confidence level

This provides an indication for the accuracy of each valuation and is banded into high, medium and low. A high level indicates that the valuation is likely to be more accurate.

Estimated rental value and gross yield

This is the most probable rental value per month when let on the open market. This is based on available market information on rental levels. Gross yield is the rent expressed on an annual basis, as a percentage of the estimated capital value.

They should be much quicker than a traditional valuation and this week we have seen five AVM’s completed for clients within 24 hours of instruction. All came in at the values required, so crossing fingers does work!

Some lenders will also use a drive buy (valuer in car looking though window) or a desk top (more research by valuer ) for additional information. This tends to be on more complex properties.

Searchlight Finance Limited is registered in England and Wales No.07929050 Searchlight Finance Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 743220. The FCA do not regulate Business Buy to Let Mortgages or most Commercial Mortgages and Bridging Finance. ICO Number Z3109319. Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.