Summary
This document is an AVM Testing Guide and Glossary that outlines various methods and considerations for testing Automated Valuation Models (AVMs). It discusses the importance of rigorous testing for AVMs, especially as they become integral in high-stakes lending scenarios. The guide details different benchmarks such as sale price, contract price in purchase appraisal, and refinance appraisal valuation, along with their pros and cons. It emphasizes the risks of potential gaming of tests by AVM providers and highlights the necessity for lenders to understand how to conduct AVM tests effectively. The document also provides a step-by-step methodology for conducting AVM tests, including selecting vendors, preparing benchmarks, and calculating error rates. Furthermore, it includes a glossary of terms related to AVM testing, ensuring that users have a comprehensive understanding of the terminology and metrics involved in the testing process.
