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 PowerPoint PPT Presentation

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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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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

  • 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

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

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

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

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?

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

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

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?

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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