As published in Scotsman Guide's Residential Edition, December 2005.
Accuracy and credibility are key issues for everyone in the marketplace, from borrowers to lenders to Wall Street real estate investment trust investors. There are several tools, models and reports for value solutions on the market. But for us to keep up, our valuation tools and methods we use must change with the industry.
Mortgage professionals are the first to support the age-old theory that time equals money. But does faster mean better? Credibility often can be more important than speed. After all, what good is a quick report that analyzes bad data from the start and offers broad, sweeping ranges of value?
Until recently, the mortgage industry has had one primary valuation tool, the automated valuation model (AVM). However, a new method -- the appraiser-assisted valuation model (AAVM) -- is gaining increased attention and use.
The AVM is an electronic report produced from data analyzed, compared and entered into an electronic model that provides users with a value range and confidence level. The cost and speed of these reports make AVMs today's most used valuation tool.
Most AVM users simply are looking for a straightforward and credible subject-market-value opinion. But AVMs' reach is limited. They contribute no local-market knowledge, and they are based on computer-generated decisions that are not always sensitive to the nation's shifting lending markets.
The AAVM is a hybrid valuation model based on the joint contribution of the ap-praiser and a computer. It blends man and machine to create valuation tools that not only are electronic and timely but also feature the experience and local-market knowledge of a licensed appraiser. AAVMs are a great tool for loss mitigation, portfolio analysis and review, equity analysis, home-equity lines of credit, 125-percent loan-to-value programs, second-trust deeds, value verifications and streamlined refinance programs.
Page: 1 2 Next