Deal or No Deal: How to Save Big by Identifying Equity Issues at the Application Stage

Equity certainly will result in ‘Deal or no Deal!’ In the past, brokers and agents may have depended primarily on appraisers, insurers or lenders to validate that the property value provided by their client was accurate. This was generally validated through an appraisal or through the use of AVMs (Automated Valuation Models).

Lenders have been using AVMs for at least the past 15 years to validate a property’s value before ordering an appraisal or submitting a deal to a lender. Why? Because like your closure rates with your lenders matter, your lender’s closure rates matter with their insurers and are also measured departmentally.

Deals that blow up because of discrepancies in property value or equity because there is less equity than initially presented can cost FIs big money in administration and operational costs. This is primarily the motivation behind use of AVMs – to get the facts faster.

Just as lenders have discovered that the cost savings in leveraging AVMs are considerable – agents and brokers have begun following suit in the past 5 years.

There are searches you can leverage in tools like Purview to validate registered mortgages and equity – but the AVM on its own will tell you more or less what the property is worth. Using AVM providers that currently service FIs also creates more alignment because you are dealing with the identical data as your lenders.

For example – a broker who enters the same criteria when generating an AVM in Purview For Mortgage Brokers will see the same value as a underwriter who enters the same criteria when generating and AVM in Purview For Lenders. This helps to eliminate issues with value discrepancies.

When is the best time to get an AVM? As soon as you start working a new client or deal. Just as lenders lose huge in administration and operation costs when a deal blows up – so do you!

Validating home equity issues at the application stage is by far the best way to save you and your lender time, improve your closure rates and avoid counting on deals that are just not going to happen because the equity isn’t there!

Quick tips: the only way to validate equity is to validate what a property is worth and what is owed against it. Just remember - while there are different ways you can go about validating a property’s value - validating encumbrances are another story. While uncovering a lien involves some digging and may even mean buying a Parcel Register*, validating registered mortgages is as simple as a quick search if you subscribe to the right tools.

Purview For Mortgage Brokers can help you validate equity information easily. Call us today at 1.855.787.8439.

*An official product of the Ontario government pursuant to provincial land registration statutes.