Toll Free
1.855.PURVIEW

Automated Valuation Models in 1-2-3

Automated Valuation Models (AVM) are becoming the norm with lending institutions across Canada. It is important that if you plan to integrate Automated Valuation Models into your workflow that you understand what an AVM is and what it is not. Often AVMs are confused with appraisals because they both deal with evaluating property value. However, they are actually completely different and should be used at different stages in the application/underwriting process.

pfl

An automated valuation model often comes before an appraisal and can be used in conjunction with an appraisal or a drive-by.

Why would a lender look at an AVM before ordering an appraisal? An AVM is best reviewed during the application stage – if the value isn’t there, there is no deal. There is no sense in wasting your time, your insurer’s time and incurring the cost of an appraisal (even if the expense is incurred by the client), if the value simply isn’t there. This happens often, as it is very difficult to know exactly what a property is worth and clients misestimate value every day (in either direction).

Should an AVM determine that there is even more value than initially estimated, this could present a valuable upsell opportunity to both you and the deal originator. It can also result in a reduction in deals where the numbers change multiple times after the initial deal is submitted because of information that was incorrectly estimated in the original application.

An AVM is not an appraisal and is not intended to be! In fact, the two complement one another and now you can see how they can be used at different stages in the mortgage application/underwriting process.

Take advantage of the time and money savings by using an AVM as well as an appraisal. Purview For Lenders has you covered.

Find out more by visiting https://lenders.purview.ca/.

 

Facebooktwittergoogle_pluspinterestlinkedinmail

Related Posts