Practice briefing – Automated valuation models (AVMs): their role, their advantages and their limitations

Abstract

Purpose: The current state-of-the-art recognises three traditional valuation approaches. The current division is not sufficient to explain systematically all features that drive the development and usage of automated valuation models. Design/methodology/approach: This practice briefing reviews existing valuation approaches, their pros and cons and more critical other automated valuation aspects or features; both based on a literature review. Findings: This paper discusses and lists the six critical aspects or features, besides the valuation approaches. Practical implications: This paper reveals the list of aspects or features that are important to consider when designing an automated valuation model. Originality/value: This practice briefing discusses the inclusion of a multitude of aspects when considering an automated valuation model design.