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Attn Lenders: Your Automated Valuation Model (AVM) Is as Accurate as The Data Source
Automated Valuation Models (AVMs) deliver a variety of benefits.
However, when it comes to AVMs, a quick Google search is enough to tell you that there are a number of options available on the market.
With all the information floating around online, we have created this blog post to help you understand what options are available and what you should keep into consideration while choosing an AVM.
Different Types of AVMs
There are different types of AVMs available today, some of these are based on one model while others use a combination of different models. The most common models include:
- Price Indices Model – Repeat sales data is used to create and establish house price indices for specific geographic areas. This is used to arrive at the current valuation.
- Property Data-Driven Model – These statistical models use information such as property attributes and compare them with other comparable properties over a pre-determined time period to provide the current value.
- Tax-Assessed Value Model – As the name suggests, the valuation is based on tax assessments.
What Do You Need to Access an AVM?
Generally, all you need is the street address of the subject property.
The AVM then uses the address to identify the property, check its location, size, and other relevant information, and compare it to similar properties to generate the value.
What Information Do AVMs Provide?
This really depends on the AVM you opt for. Some AVMs just produce a property value. While this serves the basic purpose, AVMs have the potential to do much more.
For instance, the AVM from Purview not only gives you the property value but also provides additional, relevant information such as:
- All legal homeowners.
- Registered mortgages.
- Sales history.
- Aerial imagery.
Does Data Source Matter?
Yes! It absolutely does. The quality and accuracy of the AVM depend on the data it uses.
As a lender, you need to make sure that the information you are receiving through the AVM is up to date. This is vital for your portfolio management as well as assessing individual deals.
When it comes to data sources, there are a number of options available such as municipalities, government, local MLS boards, real estate associations, and private enterprise.
So, how do you know which source is the best?
Well, that has to be a source that is updated almost instantaneously and is comprehensive. Land registry, for instance, is a great source because it includes updated information on all property transfers, mortgages, and liens.
In Ontario, Teranet is the exclusive provider of the province’s online property search and registration system called Province of Ontario Land Registry Information System (POLARIS).
As Purview uses this source to provide information and reports to our users, you can get access to accurate information pertaining to the property’s sales history, registered mortgages, ownership, and more.
Choosing an AVM Provider
To choose an AVM provider, here’s a quick look at what you need to consider.
- What information do you want? Is it just the property value or you need more out of your AVM solution?
- How important is data accuracy for you?
- Do you require additional features such as fraud check reports, neighbourhood sales reports, and sales history reports?
Answering these questions can help you select an AVM that fits your requirements and if you’re looking for all this in one tool, you can opt for the Purview AVM.
Powered by up to date data, it can help you do a more accurate market analysis, mitigate risks, close more deals, and gain operational efficiencies.
Have further questions about AVMs or want to access the Purview AVM? Call us on 1-855-787-8439 or visit www.purview.ca.« Back to Blog