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Lenders in Canada invest significantly in underwriting tools to be able to ensure that when they fund a deal, they know what the value of the security pledged is. This occurs by investing in technology that facilitates the ability to pull comparable sales, run automated valuation models, as well as through drive-by and full property appraisals. These technologies and resources also come in handy on the back end of your operations with regard to collections and enforcement.

This addresses issues concerning assessing the value of security on a deal-by-deal basis. Equally as important is being able to measure the value of your portfolio as real estate is ever changing. Being on top of what is happening in key lending areas is critical when it comes to not only risk management, but also when it comes to your marketing.

Paying attention to real estate trends, not only regionally but also drilling down at the community level, makes you more competitive and able to react to potential issues before they become a problem.

Automated Valuation Models (AVMs) are one tool that lenders are now repurposing to add value both when underwriting individual deals as well as when looking at the big picture.

If you’re not already leveraging the use of AVMs in your underwriting or collection operations, or as yet unsure about what exactly an AVM is, it is a mathematically-based computer program that produces an estimate of the market value of a residential property based on analysis of public record data, property location, market conditions and real estate characteristics at a specified date.

Typically, the street address of the subject property is entered into the AVM system. The system in turn identifies the property, checks its location, size and other key features and searches its system’s database for the best set of comparables or indices to generate a value for the subject property.

An AVM can tell you how real estate is performing, not just by the individual property but also by province, city and even neighbourhood. This is where it can become especially useful when determining if entire areas are seeing a decrease in value, which could represent challenges when it comes to lending or managing risks to your overall portfolio or, if appreciating, meaning that it could be an area where you may want to concentrate more marketing dollars.

Making the most of the technology and resources that you have available makes good sense.

For more information about AVMs please visit Purview today at