When an AVM Isn't a Suitable Valuation Tool
Lenders have placed their faith in Appraisal Management Companies (AMCs) for some time. This trust is well founded since AMCs are required to understand the nuances of collateral valuation on a national scale. AMCs act as the prudent risk manager and consultant on matters related to collateral valuation; a task that few lenders want to take on, nor do they have the resources to do so.
Based on the underwriting risk, lenders and AMCs work together to select the relevant valuation product for the lending assignment, recommending appropriate valuation products based upon the nature of the subject property, the complexity of the valuation assignment, and the nature of the lending situation. In the case of home equity lending, this means determining when and if an AVM is the appropriate valuation product for the subject property.
This white paper is the third in a series about VeroPRECISIONTM, a superior valuation alternative to the traditional AVM cascade approach. VeroPRECISION was developed specifically for distribution by Appraisal Management Companies for the home equity application. At Veros, our objective is to equip AMCs with an AVM decision engine that optimizes the AVM experience for the lender while leveraging the expertise and valuation acumen of the Appraisal Management Company.
Read on to learn more…
The first white paper entitled, "Choosing AVM Accuracy and Suitability over the traditional AVM cascade," addresses the notion that traditional cascade logic is about hit rate and not accuracy. Focusing on hit rate and relying on AVMs to value properties when they are inappropriate for AVM use results in a significant loss in valuation accuracy.
This second white paper entitled, "Are Properties Ever Unsuitable for an AVM?" focuses on properties that were deemed unsuitable for AVM use by VeroPRECISION. We valued these 107 properties with five independent AVMs and assessed their accuracy in relation to recent appraisals on the same properties. The results were eye-opening.
If you'd like to test the AI-powered AVM suitability tool or discuss how VeroPRECISION can help your organization, contact us today.
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