Three little letters can be a major game-changer for lenders: AVM, otherwise known as an Automated Valuation Model.
Whether you have heard these three letters before or not, an AVM gives lenders more capabilities than you might currently be using.
Read on to see exactly how it can transform your lending operation.
What is an AVM?
An Automated Valuation Model gives you an estimate of a property value in real-time, almost instantly. The value estimation comes from a mathematically based computer program that uses analysis of public record data, property location, market conditions, and real estate characteristics at a specified date.
The AVM system uses the property’s street address to check location, size, and other key features then searches its database for the best set of comparables or indices to generate an estimated value.
How an AVM gives lenders an edge over the competition
Lenders who use an AVM can estimate equity faster and identify upsell opportunities. They can also validate a deal much more quickly, ensuring that only the most viable go through.
By using an AVM, lenders can:
- Estimate property value as soon as a client comes to them.
- Source opportunities in their area.
- Monitor their current portfolio for changes and opportunities.
An AVM can help you know more, faster, which will in turn allow you to act much quicker and mitigate risk along the way. This will help make you more efficient and profitable — and in turn give you a competitive advantage.
When should you use an AVM?
For lenders, because AVMs are so fast and inexpensive, they have a wide range of uses.
One of the most common is at the mortgage application stage. It is often in a lender’s best interest to make sure that the deal is viable right from the start. An AVM can help you assess that.
Beyond assessing a deal’s viability, AVMs are also useful for estimating available equity and potential for other home equity products — so they mitigate risk and help identify upselling opportunities.
Another popular time to use an AVM is during the collateral adjudication stage in conjunction with a fraud check to help assess risk related to the mortgage.
Lenders can also use AVMs post-funding to provide an ongoing value assessment of their overall lending portfolio.
Benefits of an AVM
An AVM does not replace a full property appraisal. However, there are several benefits an AVM provides that makes it a great addition to your mortgage lender toolbelt. These include:
- AVMs are available online, often 24 hours a day.
- Time savings. AVMs are generated instantly and in real time, so you can instantly determine risk or estimated equity.
- Cost savings. AVMs cost significantly less than a full appraisal, making them effective for determining a deal’s viability without investing a lot of resources.
- Make full appraisals more effective. An AVM can flag a potential issue that should be investigated further for due diligence.
- AVMs are objective and unbiased.
How to access an AVM?
The number one thing to consider when using an AVM is the data source.
You have to ensure that the data in your AVM is up-to-date and comprehensive. If it is not accurate or current, your deals could be compromised.
At Purview, our AVMs use only the timeliest and most verified data. This means that you can trust the information you are seeing is as accurate as possible.
Our AVMs are accessible online, 24/7. Use them to estimate value, equity, and more.
Learn more about available features by calling 1-855-787-8439 or visiting www.purview.ca.