FSD (forecast standard deviation)
FSD (forecast standard deviation) is a statistical measure that scores the likeliness that a valuation is accurate. Most AVM confidence scores are based on the calculated FSD produced along with the value prediction. The FSD can be used to determine a highly probable value range around the property’s value. The FSD is typically based on a measure of the spread or deviation in possible estimates that the model found while attempting to conclude a final value estimate. With this metric on each valuation, a modeling team can then measure how correlated these standard deviations are with actual AVM errors and build a model to predict any future AVM error. The result of this model produces the FSD, which can be communicated in various ways. The most common way is as a decimal value (e.g., 0.07) or as a percentage (e.g., 7 percent). The lower the FSD, the better quality/accuracy of the AVM. This percentage is sometimes turned into a confidence score by subtracting it from 100 percent (e.g., an FSD of 0.07 or 7 percent is a confidence score of 93 percent).