AVM… What? Why You Need to Know What an Automated Valuation Model is

Automated Valuation Model: a tool every real estate sales professional should be taking advantage of!

If you don’t already know what an AVM is, it is essentially a statistical model that analyzes property data and provides an estimate as it relates to the value of a property.

AVMs are relevant to your daily job arranging mortgages for very obvious reasons: it is a very fast and accurate way to validate the value of a property or properties in a particular neighbourhood.

But wait - there is far more to AVMs than just that!

You see, with the introduction of Purview For Mortgage Brokers - a tool that enables mortgage agents and brokers to request AVMs – is rather recent, AVMs have been around far longer and historically have been used by banks and insurers as important data acquisition tool.

Ever wonder why, when you send a deal to a bank, from time-to-time they disagree on value without having requested an appraisal? Ever wonder how insurers, from time-to-time, will disagree with a value – without having requested an appraisal? In most cases, both likely reviewed an Automated Valuation Model - the examples can go on from there!

Of course all brokers have different tools and resources; some mortgage agents and brokers will count on what their client tells them with respect to a property value, some will pull comparable sales comps and some will look at an AVM. But which of these options is going to give the most accurate value, most consistent with what your lender and the insurer may surmise?

The beauty of technology is that it has leveled the playing field, giving mortgage brokers and lenders access to the same tools, thereby setting the stage for very powerful alignment. This means that you can ask clients for information, but then use technology to back it up with sales comps and an AVM.

At the end of the day, the lender has to agree with the value and finance your deals, so using the same tools they use ensures that you are working with the same information and prevents surprises, leading to more closed deals.

Furthermore, an AVM could reveal more equity than you may have thought was in a property, thereby enabling you to upsell your deal before it even makes it to the lender. Bonus!

Are AVMs accurate? Absolutely. Because they are fully automated, statistically valid and there is no emotion as it relates to generating a value – the AVM doesn’t like or dislike the property based on what they see. Instead, it analyzes cold, hard numbers. You can bet that with an AVM you will have a realistic idea of the value of your client’s home and that it will be consistent with the value that your lender will accept.

Don’t just rely on what your client tells you, or get stuck with a value that does not match your lender’s. Use an AVM to get a far more accurate picture. Call Purview For Mortgage Brokers today at 1.855.787.8439.