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Automated Valuation Models (AVMs) are now part of the routine.
With U.S. homeowners holding more than $30 trillion in home assets, many lenders are looking to the latest AVMs to improve the accuracy and efficiency of providing home equity loans to their potential borrowers.
Here are four ways how the next-generation AVMs can reduce risk, speed up decision-making and lower the cost of asset creation.
1. AVMs are getting smarter
AVM has been a “workforce” lending tool for over 20 years. However, recently, the availability of new data, additional computing power, and AI-based modeling and machine learning has made these AVMs more accurate, reliable, and useful. And the timing couldn’t be better.
Lenders and marketers are looking for better ways to process home loans, create more targeted marketing campaigns and engage more effectively with potential customers in a face-to-face environment.
At First American Data & Analytics, we have been at the forefront of developing the next generation of AVMs by incorporating advanced technologies to improve the methods that can be used to better support these initiatives while improving accuracy and timeliness.
For example, we update your data and bring a model that will give you a rating in each country every 24 hours.
The automatic control system controls the quality and evaluation of the data and continues to monitor and practice regularly to confirm the accuracy of the assessment of real estate on various geographical markets.
Finally, it was changed to a smart AVM, where you can do a lot of work in a short time.
2. State-of-the-art AVMs balance cost and risk
Unlike basic mortgages, HELOCs are usually low-cost or free products for consumers. As a result, lenders need to be as efficient as possible in originating these products to protect their margins.
Cost is one of the reasons why AVMs have traditionally been chosen as the valuation product for equity products by many lenders across the country.
While many banks and credit unions rely on AVMs, some institutions have been more cautious in the post-mortgage crisis, relying instead on hybrid appraisal products such as desktop and even full appraisals to take decisions.
A more advanced AVM offers new options to these lenders, especially Loran-to-Value (LTV) and HELOC customers.
Using AVM with asset condition or inspection reports provides highly accurate LTV reports that further improve decisions and reduce risk.
If the lender bears the cost of the real estate appraisal or passes the cost on to the customer, using the lender’s AVM to save money is a major benefit.
3. AVM is no longer a complete solution.
Most technological advances follow a similar trajectory. The original general solution to the problem has been nuanced over time, with certain customizations providing modified versions for more precisely defined applications.
Our new AVM -Suitable, precision, precision, this model of technological evolution and is designed to respond to the different needs of creditors and marketers.
Marketers who mine home value data to create an effective marketing campaign prefer an AVM like Precision Direct that provides accurate home values with high hit rates, bulk shipping, and pricing that provides a significant return on investment.
Additional data search and customization options allow marketers to target prospects by geography, credit balance, borrower demographics, and LTV rates, as well as hundreds of searchable attributes.
Consumer-facing companies that offer home value to attract customers, such as Precision Power, will appreciate AVM’s white-label solutions that provide full property coverage available through APIs with data embedded directly on their websites.
Lenders are looking to use AVM when it comes to lending and wants a highly accurate Lender Rating Classification model that is updated daily and offers fully compliant documents like Procision Premier.
In addition to creating tiers to suit customer needs, the Procision AVM family offers customizable discovery and compliance, and application options, along with a pricing structure that allows customers to tailor their AVM usage to more stringent budget settings.
4. New data possibilities are on the way
As we’ve seen, more data, machine learning, and more computing power have already further increased the value of AVMs, and improvements are ongoing.
For example, if you include geographical space data in AVM, you can improve your ability to understand unique features and external features, which are two categories that AVM is difficult to understand.
Improved imaging techniques and Drone views have the potential to capture the physical condition of the building and to provide a better vision of the exact shape and properties. These new features will be new to AVM.
Reference Source: Housing Wire
