The use of the Automated Valuation Model (AVM) is becoming more common, relied upon by mortgage agents, brokers and lenders across Canada. This is for three main reasons: cost, convenience and accuracy. An AVM is generated automatically, usually through a desktop or mobile application.
An AVM will generate an estimated value of a property using information regarding how the property in question compares to similar properties sold in the area. Different AVM providers derive their data from different places. Using a system that derives its information from public record data and considers property location, real estate characteristics and market conditions is advantageous.
The interesting thing about AVMs is that the information contained within them can be leveraged in many different areas of a financial institution – so while you may use AVMs in your underwriting department, you could be maximizing your use of this tool and using it in collections, enforcement, marketing and even when doing overall risk assessments of your portfolios.
For example, in collections/enforcement, you can look at the overall picture as it relates to your receivables against the value of your portfolio. You can also drill down at the deal level and look at an individual property’s potential sale value against what is owed and even validate other assets that the debtor has. Furthermore, in marketing, you can use AVM data to assess entire neighbourhoods or cities to uncover trends that may cause you to decide to move around your marketing dollars.
There are many advantages to AVMs, which explains their popularity.
- Cost: They are significantly less expensive than appraisals – AVMs help to optimize the use of ordering full appraisals as they help to give you a preliminary picture which could change your decision to proceed with an appraisal.
- Convenience/time savings: Most AVMs are generated online which is very convenient as they can be accessed with the click of the mouse, 24 hours per day.
- Accuracy: AVMs are objective – no opinions or exceptions are possible. Valuations cannot be swayed or influenced by emotions or personal prejudices. The process is totally automated and relies on data.
Maximizing the use of tools in your operation that provide you with higher level, macro-type assessments and decisions, as well as help to support your employees being more efficient when selling or underwriting new business, makes you more agile, efficient and competitive overall.
At Purview For Lenders, we have those tools – ones you can rely on.
Find out more about our Automated Valuation Model by visiting https://lenders.purview.ca/ today.