About Our Automated Valuation Models (AVM's)

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FAQ's:

Q:   "Where do you get the information to put into the regression formulas?"

A:   A copy of the city of Madison property record data was purchased by our office encompassing all the different parcels and use types.  We then combined the different databases information into one special data set that included the information most valuable to appraisers and owners.  This hybrid data set is the source of the information we use to develop the regression formulas.

Q:  " I can get my assessment for free from the city assessor, why would I pay for another estimate of my home's value?"

A:  Assessment values have been used for some purposes for many years.  A good example of this is for very low loan to value lending.  If the loan to be made is less than 1/2 of the assessed value, many lenders will simply use that figure to establish their Loan to Value ratio.  City assessments are, by statute, based on the previous year's value, with the attendant real estate taxes to be paid the following year.  The effective date or our regression models is July 1, 2000.  Assessors have a very large number of houses to value and do make use of regression models themselves to some degree.  Our regression formulas attempt to estimate the value as of this year and so include whatever changes inflation and some qualitative components such as neighborhood and style may have affected.  The assessment values are quite close to our estimates for some classes of housing and locations but can be as much as 40% lower for other properties.  Very few assessments were found to be significantly above the regression model estimates.

Q:  "I put an addition on my house last year.  Will your estimate pick that up?"

A:  If the city records have been updated with the new square footage, the change in effective age and so on, then the model should indeed include what value increase can be expected on resale.  One of the nice things about having our own copy of the city records is that if you can tell us what has been added to your house, we can simply change the property record information for your parcel and then run the regression again with the updated information.  If you can give us accurate information on your request, we will try to provide you an updated estimate using the new building or finished area and an estimate of how much the effective age of the improvement may have declined.

Q:  "We just added a small concrete patio off the rear door, my value should have increased by $300 since that what it cost!"

A:   As with most things in life, its generally not as simple as adding up everything that may have been done to a house to determine the present Market Value.  Most houses have a series of differing characteristics that make them individual.  Taken as a group, however, they tend to yield a similar overall value.  One house may have porches, another a formal garden, yet another a multi-level deck, purchasers may be looking for a certain group of traits, but typically have a limit to what they will pay since not all characteristics of a house will be as valuable to them as to the owners.  Put directly, most regression formulas have between 3 and 8 factors that, taken together can predict at least 90% of the sale price.  These 3 to 8 factors are the data utilized in the regression formulas to estimate the value.  We have developed a somewhat specialized Quality formula component that is the final step in the regression process that takes into account several factors including popular styles, hot neighborhoods and the like.

Q:  "If I buy this $20 estimate, does that mean I can be assured of that conclusion if I have you do a traditional full appraisal?"

A:  No guarantees!  These valuations are by nature generalizations and traditional appraisals look only at a few recent and hopefully very similar transfers.  However, we have been using these AVM estimates in house for several months now and generally speaking the regression estimate is a few per centage points below what a traditional full appraisal concludes.  This is consistent with the fact that the market generally continues to increase in value over time.  Also, there can be errors in the city data or some aspect to your house that is unique enough that it can not be estimated in a statistically based manner. We will credit the payment you made for the AVM estimate against the full appraisal fee if we preform that service within 90 days of your AVM estimate.

Q:  "Can I use this service to get comparable sales I can go look at myself?"

A:  For the initial period, we will not be providing the "best sale comps" with the $20 service.  If you wish us to locate what we think are the best sales, you can email us a request for that service with a brief description of your home and we will provide you with an estimate  Comparable for lake homes, for instance, are much more difficult to locate than conventional ranch houses in a tract development.  Also, the city records have sales only up to the date the copy was made for us.  Any comparable service we provide will make use of the Madison Multiple Listing Service and other data sources we maintain or subscribe to.

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At United, we are committed to using the new Internet technologies as well as our large reserves of experience to help people acquire timely and useful valuation information at a reasonable cost.  That's why we are consultants as well as appraisers.  We will be continuing to bring new services online in the future as the technology and our own knowledge continues to advance.  We would like to have you on our emailing list for our annual update service.  If you are interested in that or other services we can provide, please feel free to us contact in any manner you are comfortable with, we have 24 hour voice mail available for all our associates, or use traditional mail, email or fax if you like.

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The United Team