Why is random sample testing of model output required of institutions using AVMs?
Correct Answer
B) To detect estimates drifting away from actual prices
Why this is correct: Random sample testing compares AVM estimates to actual sale prices or independent appraisals to detect systematic error (drift) as market conditions change. Random sampling ensures unbiased detection of accuracy loss. Why the other choices are wrong: "To confirm the vendor holds a valid state licence" is not the purpose. "To ensure every property is valued at least annually" is impractical and not the goal. "To identify which appraisers reviewed each output" is unrelated to testing for drift. Exam tip: Random sample testing is a key quality control step to catch model drift before it affects many valuations.
Why This Is the Correct Answer
Why this is correct: Random sample testing compares AVM estimates to actual sale prices or independent appraisals to detect systematic error (drift) as market conditions change. Random sampling ensures unbiased detection of accuracy loss. Why the other choices are wrong: "To confirm the vendor holds a valid state licence" is not the purpose. "To ensure every property is valued at least annually" is impractical and not the goal. "To identify which appraisers reviewed each output" is unrelated to testing for drift. Exam tip: Random sample testing is a key quality control step to catch model drift before it affects many valuations.
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