appraisal today conference san francisco august 6 2004 vicky cassens zillioux managing director
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The Future of Residential Appraisal – The AVM Dilemma

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Appraisal Today Conference San Francisco August 6, 2004 Vicky Cassens Zillioux Managing Director. The Future of Residential Appraisal – The AVM Dilemma. In the Beginning…. Automated Valuations – They have been around longer than we think

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appraisal today conference san francisco august 6 2004 vicky cassens zillioux managing director
Appraisal Today Conference

San Francisco

August 6, 2004

Vicky Cassens Zillioux

Managing Director

The Future of Residential Appraisal – The AVM Dilemma

in the beginning
In the Beginning…

Automated Valuations – They have been around longer than we think

  • County Assessors have been using these products for many years
  • First developed to accurately value homes for tax purposes
  • Accuracy was important to eliminate time and money spent on reassessments due to homeowner appeals
  • Models were developed on a county basis with much of the necessary information readily available as model inputs
  • Neighborhood idiosyncrasies were identifiable due to limited geographical coverage
  • This is not really an appraiser issue
price index models make the scene
Price Index Models Make the Scene

University research brings the development and use of price index models

  • CSW – the Wall Street Model
  • MRAC – also targeted wall street
  • Price Index modeling addresses the issues of limited data available to the commercial enterprises
  • Primary focus was for portfolio valuations in the investor community
  • Not yet introduced into lending
  • This is still not an appraiser issue
automated valuations move into lending
Automated Valuations Move into Lending

The first models are developed for the residential lending market in California – early to mid 1990’s

  • Initial models are “hedonic”
    • Initial take on price index models is that they are not accurate enough for individual valuations
  • First American develops Value Point
    • More like appraiser emulation with regard to comparable choices and radial searches
  • HNC develops AREAS
    • Neural network model that attempts to identify neighborhoods and improve comparable search methods
  • Much of the time was spent selling the concept rather than the products
  • Now its becoming an appraiser issue
not always an appraisal replacement
Not Always an Appraisal Replacement

Models are being used in all parts of the lending process…

  • Prequalification
  • First Mortgage (portfolio lending)
  • Home Equity
  • Wholesale review
  • Quality control
  • Default and foreclosure
  • Portfolio valuation tracking
  • Internet marketing
the reality check
The Reality Check

AVM’s are here – Like it or not

  • Only the monopolies get to win the fight
    • AT&T and the Gopher search engine
  • So what happens now?
  • What are the choices?
    • Forget about it and go on with the way you are doing business
    • Complain about it and go on with the way you are doing business
    • Find out what your clients are doing
    • Figure out what the appraiser related tools are
how many avm s are out there today
How Many AVM’s are Out There today?

Sizing up the competitive market

  • There are 15+ AVM models out there today
    • ValuePoint 4 – First American
    • Basis 100 – Now First American
    • ValueSure – Fidelity
    • CSW – Fiserv
    • Value Wizard– Trans Union/Banton
    • HVE – Freddie Mac
    • MRAC – Basis 100/First American
    • ValueFinder – Landsafe/Countrywide
    • Do you see the trend here…..
    • Q-Value – Real Info
    • VeroValue – Veros
    • Net-Value – C&S Marketing
understanding your client
Understanding Your Client

Do you know who your client is?

  • Do you know what they need in today’s market?
  • Do you understand their competitive environment?
  • Mortgage broker? What does he need?
  • Lender? What does he need?
  • Borrower? What does he need?
understanding your market
Understanding Your Market

Do you know…

  • What the Fitch press release said about AVM’s
  • What everyone else said about the Fitch press release
  • What the leading mortgage publications are that will give you information about the lending industry
  • Which appraisal chat websites are worth the time and which are not
  • Who the current appraisal management companies are and what they can offer
  • What appraiser assisted AVM products are out there
  • What is going on out there in the lending community
who gets to win
Who Gets to Win?

There doesn’t have to be only one winner…

  • How have you handled competition in the past?
    • Customer service – quality work, fast turnaround
    • Client relationships
    • Understanding customer needs
  • Is this really so different?
  • Professionalism – understand the big picture in the industry
  • Everyone needs to move with their market – As a client, how do you expect your doctor/dentist/accountant/attorney to react to technology in their market?
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