As technology has evolved, so too have the abilities of lenders. In the old days, arranging a deal was much more paper-based. Remember the old Basis 100 days? Technology has changed the speed at which a deal can be arranged, making the entire process faster. Cloud-based applications like Expert have created the platform for the digital deal – where most of the transaction occurs digitally, without a phone picked up or paper exchanged.
While a deal can be arranged digitally, so too can many of your verification methods. Arguably one of the single most important numbers that can make or break your deal is the value of the security you will be financing.
The more you can do to suss out deals that have the value misrepresented, the more you can mitigate unnecessary underwriting costs and identify valuable upsell opportunities.
The pendulum swings in both directions. While a lack of value can kill a deal, more value than expected can create more opportunity. This is especially relevant in Canada with an ever-exploding real estate market where sometimes bidding wars and even contract assignments between the offer and closing date can cause the sale price of the property to sky rocket.
Traditionally, drive-by appraisals, full appraisals and sometimes even validation of value by insurers have been relied upon by lenders to evaluate property value. Often the appraisal will come after a deal has already had resources expended, including underwriting and issuing an approval or pre-approval.
We think that the validation of the property’s value is the first thing that should happen the moment an application is submitted.
The easiest way to achieve this is through an Automated Valuation Model (AVM). If you’re not using this type of technology currently in your underwriting operation, you may want to give this some serious thought. AVMs are currently relied upon by most major lenders and even insurers when it comes to validating a property’s value.
Accessing an AVM, at the click of your mouse, enables you to validate a property’s value without the need for other professionals. It is fully automated and available any time you need it.
There are different AVM providers that derive their data from different sources. The data source is critical as it bodes to accuracy. The best source of data is a provincial land registry. This is a great starting point for vetting potential vendors.
Integrating the use of AVMs into your workflow further supports the concept of the digital deal and makes your team faster and more efficient when processing deals.
At Purview, we have the tools that make validating property value easier – and faster – including an AVM with data derived from POLARIS.
Find out more by visiting www.purview.ca.