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An Automated Valuation Model (AVM) is a system for the valuation of real estate that provides a value of a specified property at a specified date, using mathematical modelling techniques in an automated manner. [1] [2] AVMs are Statistical Valuation Methods and divide into Comparables Based AVMs and Hedonic Models.
The sales comparison approach (SCA) is a real estate appraisal valuation method that relies on the assumption that a matrix of attributes or significant features of a property drive its value. For examples, in the case of a single family residence, such attributes might be floor area, views, location, number of bathrooms, lot size, age of the ...
Debt to assets ratio – The ratio of debt remaining on the property to the value of the property or asset. Internal rate of return – Technically speaking, it is the discount rate at which the net present value of future cash flows equals $0. In laymen terms, it is the rate of return received on investment in a given year adjusting for the ...
Capitalization rate (or "cap rate") is a real estate valuation measure used to compare different real estate investments. Although there are many variations, the cap rate is generally calculated as the ratio between the annual rental income produced by a real estate asset to its current market value. Most variations depend on the definition of ...
Ad valorem tax value – the value used for taxation purposes, determined by the collection of data through the mass appraisal process. The mass appraisal process applies the data collected through various sources to real property to determine taxable value. [4] Insurable value – the value of real property covered by an insurance policy ...
The fundamental premise of the cost approach is that a potential user of real estate will not, or should not, pay more for a property than it would cost to build an equivalent. The cost of construction minus depreciation, plus land, therefore is a limit, or at least a metric, of market value.