As 2025 comes to a close, digital innovation has its roots in housing finance. What started as a push toward modernization is now simply how the industry operates. Recent studies indicate that more than 80% of lenders are investing in automation to work more efficiently and create a smoother experience for borrowers [1].
However, the conversation has started to shift. It’s no longer just about adding new technology but also about making the most of what’s already in place. Automated Valuation Models (AVMs) have been a cornerstone of this shift, offering reliable insight that helps lenders make faster, smarter decisions.
For mortgage originators looking ahead to 2026, the next challenge is clear: how can we take this technology a step further? How do we build a valuation process that’s not only efficient but also resilient and cost-effective?
That’s where AVM cascades come in.
What Exactly is an AVM Cascade?
An AVM cascade is an intelligent, automated valuation workflow. Instead of running multiple AVMs at once, it applies a lender’s specific business rules to select and execute the most appropriate AVM for each transaction.
The process is designed for maximum efficiency and accuracy:
- Analyze the Request. The system first reviews the property type, location, and loan characteristics against your pre-defined business rules.
- Fulfill the Request. The system runs the first (highest-ranked) AVM. If a “hit” occurs (a successful valuation), the process stops, and billing occurs for that single AVM. If “no hit” occurs (and thus no charge), the system automatically runs the second-best AVM in that area. This continues down the prioritized list (usually 3) until a hit occurs. If the entire list is exhausted with no hit, the result is “no hit,” and no charge is incurred.
This intelligent, sequential process ensures the highest possible fulfillment rate while controlling costs, as you only pay for the first AVM that successfully returns a valuation. It creates a more robust and flexible process that gets the most value out of every valuation request.
Why Cascades are a Smart Move Now
In a dynamic market, a sophisticated valuation strategy provides a clear competitive advantage. AVM cascades can enhance your operations in three potential areas:
- Broader Coverage: While a top-tier AVM provides excellent results, no single model can perfectly value every property in the United States. By leveraging a portfolio of best-in-class AVMs, a cascade intelligently selects the ideal model for properties that may be challenging for a single AVM, such as rural, high-value, or other unique homes. This improves your overall valuation success rate and cuts down on exceptions that may slow things down.
- Smart Risk Management: A cascade allows you to implement a nuanced risk policy that aligns with modern regulatory expectations. You can design different AVM workflows for varying loan products, demanding a higher confidence score for a high-LTV jumbo loan than for a routine portfolio check, for example. This demonstrates a robust and well-documented valuation process, consistent with interagency guidance on credible methodologies [3].
- Fine-Tuning Cost Control: Every valuation that gets flagged for a manual review or escalated to an Evaluation or Broker Price Opinion adds significant expense and can delay your internal workflow. A well-designed cascade resolves many of these requests automatically by using the most cost-effective valuation that satisfies your risk requirements, reserving more expensive methods only when truly necessary.
Choice and Control with VeroSELECT
At Veros Real Estate Solutions (Veros), we believe in empowering our clients with flexibility. Our industry-leading VeroVALUE AVM stands on its own as a premier valuation solution, trusted by industry leaders for its exceptional accuracy and nationwide coverage.
Our VeroSELECT allows you to deploy VeroVALUE as a powerful standalone tool. It also gives you the power to incorporate it into a sophisticated AVM cascade with a grouping of other high-performing AVMs. With VeroSELECT, you can:
- Build a custom cascade that starts with the strength of VeroVALUE and layers in other Veros and 3rd party vendor models to meet specific goals.
- If you build a customer cascade, set your own business rules, confidence score thresholds, and decisioning logic.
The choice is yours. VeroSELECT supports your strategy, whether it’s centered on a single, top-tiered AVM, such as VeroVALUE, or a multi-layered intelligent AVM cascade.
Looking Ahead to 2026: Building a Resilient Strategy
A high-performing AVM is the cornerstone of a modern valuation process. By enhancing that foundation with an intelligent cascade strategy, you create a system that is more resilient, efficient, and precisely aligned with your business goals. It represents the next step in optimizing your operations for the challenges and opportunities of the market ahead.
Ready to explore how a more dynamic valuation strategy can benefit you? Contact us today.
Sources:
[1] Based on data from various mortgage industry technology surveys, such as the STRATMOR Group Technology Insight Study.
[2] Figure represents a generalized industry average for AVM performance across diverse, nationwide property portfolios. Actual performance varies by AVM and geographic area.
[3] Reflects principles outlined in the Interagency Guidelines for Appraisals and Evaluations, which require regulated institutions to have policies and procedures for credible valuations.
