FSD (forecast standard deviation)

Definition of 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).