Automated Valuation Models: How Accurate Are They?
ADS Team
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August 22, 2026
about 1 hour ago
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In short: An automated valuation model estimates a property's value statistically from recent comparable sales, property attributes and market trends. Lenders accept AVMs for low-LVR, low-risk lending because they are instant and free - but they cannot see condition, renovations or aspect, which is why they are rejected for higher-risk lending.
Key takeaways
- AVMs are statistical estimates, not inspections.
- Accepted mainly for low LVR refinances and equity releases.
- They carry a confidence score; low confidence triggers a full valuation.
- They systematically miss renovations and unusual properties.
The three valuation types
| Type | Method | Typically used for |
|---|---|---|
| AVM | Statistical model | Low LVR, existing customers |
| Desktop | Valuer reviews data, no visit | Moderate LVR |
| Full inspection | Valuer attends | Purchases, high LVR, unusual property |
Where AVMs fail
- Renovated properties - the model sees the last sale and attributes, not the new kitchen.
- Unusual properties - acreage, heritage, mixed use, few comparables.
- Thin markets - small suburbs with few recent sales.
- Fast-moving markets, where the comparable data lags.
Each estimate carries a confidence score. Below the lender's threshold, it escalates to a desktop or full valuation automatically.
If the number comes in low
- Ask which valuation type was used.
- Request an upgrade to desktop or full if you have renovated.
- Supply evidence - recent comparable sales, renovation invoices, photographs.
- Try another lender; different lenders use different AVM providers and get different answers.
Frequently asked questions
Can I order my own AVM?
Consumer estimates from property portals use similar techniques but are not what lenders rely on. Only the lender's valuation counts for lending decisions.
Why did two lenders value my property differently?
They use different providers, different models and different data cuts. A material difference between lenders is common and is a legitimate reason to shop.
Do I pay for a valuation?
Many lenders absorb the cost for refinances as an incentive. Purchase valuations are more often charged, sometimes bundled into an application fee.
Related reading
- LVR and Equity: Worked Calculations
- Refinancing Your Home Loan: The Complete 2026 Process
- Why Home Loan Applications Get Declined: The Top 12 Reasons
Sources
- Property valuations — Australian Property Institute
- Residential property price indexes — Australian Bureau of Statistics
Information current as at 2 August 2026.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice. Consider whether it is appropriate for you and seek advice from a licensed credit representative before acting.
Any interest rate shown is an example only and is not an offer of credit. Where a rate is quoted, the applicable comparison rate is available from the relevant lender and should be considered alongside it.
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