Automated Valuation Model (AVM)
What is AVM?
AVM stands for Automated Valuation Model and is typically referred to as a report that estimates the value of a property based on historical data of properties and projection of property values. In layman terms, AVM is an automated appraisal which takes seconds to generate a value estimates versus a manual appraisal which takes days to complete.
Similar to appraisal, AVM is more or less is a subjective measure relative to the data and methodology that were used. This means that the estimated value and confidence score may vary among the different AVMs and does not mean that one AVM is more valid than the others in all cases.
The underlying assumption in selling AVM is that lenders accept AVMs or that they can be convinced that AVMs has reached a maturity level where the valuations are accurate. AVMs are gauged primarily on their accuracy (confidence score) and hit rate (coverage). Confidence score is evaluated with respect to trustworthy benchmarks, such as an arms-length sales prices and conformity of the property. A low confidence score usually means the subject property was in a non-conforming area or exhibited physical characteristics that were not found in many of the neighborhood sales. Low confidence scores may be found in areas where property sales data is sparse and sales exhibit a somewhat larger range of values. The hit rate is the ratio of AVM values delivered for valid property addresses submitted.
AVM'S Available
Home Value Explorer
Home Value Explorer (HVE®) is a Freddie Mac Automated Valuation Model (AVM) tool that simplifies the mortgage process by streamlining the collateral valuation cycle. For over 15 years Freddie Mac has effectively employed AVMs internally for its own risk and portfolio management. AVMs have become an integral part of today's mortgage market and AVM technology has advanced the world of automated valuation services from novelty to necessity.
In nationwide tests conducted by large wholesale lenders, HVE consistently performs at the top in the areas of coverage, accuracy, and reliability. HVE actually encompasses several models rolled into a single product, for one low cost. When you use HVE you benefit from Freddie Mac's unique proprietary algorithm that blends multiple model estimates returned by the repeat sales model and the hedonic model. We call this our combining process.
Today, AVMs are efficient, effective, and essential tools for staying competitive. AVMs expedite processes, lower costs, and minimize risk. When choosing an AVM, it's important to consider coverage, vendor reputation, current technology, accuracy, and price. Freddie Mac's dedicated team of modeling experts continues to improve and enhance the HVE tool.
HVE is a tool with many uses:
- Supports many lending functions such as:
- Second mortgages
- Home equity loans/home equity lines of credit
- Loss mitigation
- Supports processes related to purchase, sale, or construction of homes
- Supports processes related to evaluating insurance needs
- Supports Quality Control (QC) processes
CASA provides AVM services to eight of the nation's top ten banks, delivering fast, statistically accurate home valuations. These leading institutions, and many others, trust CASA for applications that include appraisal substitution, collateral scoring, customer retention, appraisal QC, direct marketing, collections and loss mitigation, portfolio due diligence and more.
CASA leverages a very large, meticulously filtered property records database and multiple, market-specific analytic approaches to estimate current market values for individual residential properties.
While the algorithms that comprise this unique system use several inputs that an appraiser does - for example, comparable sales, home characteristics and time adjustments - CASA does not emulate the traditional appraisal process. Rather, CASA is engineered and continuously calibrated to be the optimal, fully-automated property valuation solution for meeting lenders' rapidly evolving needs.
Unlike most AVMs, the CASA system calculates property value estimates in real-time. This processing technique - which still renders CASA value estimates in seconds - serves to further enhance the accuracy, hit rate and safety of the service for our lender customers.
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Basis 100 services the top 20 commercial banks in the nation today including Washington Mutual, IndyMac Bank, and Country Wide. PASS and HPA cover over 1300 counties in 45 states.
PowerBASE 1.0 (PASS)
Provides current market value estimations in online, real-time fashion for residential properties. These valuations are suitable for use in a variety of contexts from loan origination to secondary marketing and loan servicing. Valuations are available in incremental service levels that allow the best-fit of technology to the business application.
HPA
Powered by MortgageRisk technology, is an automated valuation model known throughout the industry for generating precise, immediate and reliable residential property valuations. The powerful technology behind this model uses a hedonics/location-based/indexing methodology to create a statistically solid home valuation tool.
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How is AVM Used?
- Automated underwriting and origination
- Pre qualify
- Collateral scoring
- Appraisal QC
- Loss mitigation
- Portfolio valuations
- Marketing programs
- Evaluating insurance needs
As an example, an appraiser may use an AVM to make sure that his appraised value for a property is reasonable. A lender may use an AVM to make sure that the stated value of the property that comes from the broker/consumer/appraiser is accurate, just as the lender would pull its own credit report on the consumer to make sure that the broker’s credit report is not fraudulent.
Depending on the lenders underwriting the loan, certain AVM can sometime be used to replace an appraisal on a loan because it is cheaper and reduces the amount of time needed to close from days to seconds. AVM are typically accepted by lenders on refinances or HELOC where there is less risk involved.
How do i Sign Up to use AVM?
To sign up is simple just call 800-352-5882 or Click here to sign up via the internet and ask your sales representative to sign you up for avm access thru the CreditAPI interface, it is quick and easy. Try it today!