MISMO®, the real estate finance industry's standards organization, today announced the release of the Automated Valuation Model (AVM) Testing Guidance and Best Practices, a best-practice guide that gives lenders a standardized method for testing automated valuation models.

The guide sets out a repeatable process for two related tests. Accuracy testing establishes how close an AVM’s values come to market value, and Common Confidence Score testing establishes whether a provider’s confidence scores are calibrated to the accuracy they claim. It covers how to select benchmarks that reflect actual business use, how to identify and mitigate data leakage, how to match values to the right point in time, and which metrics to calculate for central tendency, dispersion and outliers.

The guide is written to be used two ways: to direct testing carried out in-house by lenders, or to set requirements when commissioning testing from a third party and reviewing the results. Without a standardized approach, lenders have faced inefficiencies and higher costs testing AVMs independently.

“Testing an AVM is no longer optional, but until now every lender has had to work out for itself what good testing looks like,” said Brian Vieaux, President of MISMO. “That has fallen hardest on smaller institutions, who often concluded the safest path was to avoid AVMs altogether and pay for more expensive valuation products. This guide gives the mortgage industry one method to work from, so the question shifts from how to test to what the results show.”

The AVM Testing Guidance and Best Practices was developed by the MISMO Automated Valuation Model Development Workgroup (DWG), which brings together AVM providers, testing firms, lenders, investors and other subject matter experts. The Workgroup is led by co-chairs Carla Nott, JPMorgan Chase, Erica Vigen, Clear Capital; and vice-chair Reena Agrawal, Veros Real Estate Solutions. It is the same Workgroup that developed the AVM Common Confidence Score Standard and Guidance, published in April 2026, which this guide provides a method to test against.

The AVM Testing Guidance and Best Practices has achieved “Candidate Recommendation” status, indicating that the work product has achieved broad industry consensus and is ready for implementation. MISMO encourages lenders, AVM providers and the 3rd party reviewers that support them to download and review the guide.

MISMO’s work to solve key industry challenges is made possible through the support of its members, champions, sponsors, and lenders (via the Innovation Investment Fee). To learn more about MISMO and opportunities to participate, visit MISMO.org.