Accuracy of the AVM
The most commonly used benchmark in measuring the performance of the AVM is Surveyor's valuations.
For example, a sample property can be valued using both the Rightmove AVM and a Surveyor:
- 3 Badger Lane, Durham, DH1 3LN
- Type: House
- Style: Detached
- Bedrooms: 3
- Surveyor valuation: £340,000
- AVM valuation: £324,500
The difference between these two valuations can be referred to as the "error".
|(AVM - Surveyor valuation)||=||- £15,500||=||- 4.6% "error"|
If this measure is replicated across a batch file, then a spread of "errors" can be plotted.
However, the valuation cannot be viewed in isolation. Each valuation provided by the Rightmove AVM has an associated confidence indicator, which translates directly to the forecast standard deviation:
|Confidence level||Standard deviation range|
|A||0 - 5%|
|B||5 - 10%|
|C||10 - 15%|
|D||15 - 20%|
|E||20 - 25%|
Thus, where Rightmove claim the valuation to have a confidence of "C", the true value can be predicted within confidence intervals, having a standard deviation of between 10% and 15%.
The Rightmove AVM has also been assessed by leading Ratings Agencies for the purposes of RMBS.
Standard & Poor's