Real Estate Trends

Advantage AVM Cascade: Get Better Results and Lower Costs

April 22, 2019 - Posted by Kevin Ingles - Vice President Customer Development

AVM Cascade

An AVM Cascade could help your bottom line in a multitude of ways. Are you interested in reducing origination turn-times with limited additional risk to your underwriting process? Ever wonder how to reduce your average home equity origination costs? An AVM Cascade is a solution likely to improve results while lowering costs.

WHAT IS AN AVM CASCADE?

Many lenders use automated valuation models, known as AVMs, to estimate home values because they are quicker, more affordable, and more readily available than a formal appraisal. Each AVM uses its own program/methodology that automatically analyzes various data points to produce an estimate on the current value of a house or property. Data analyzed by AVMs can include the age of a home, market values, trends, historical data, property features, and more.

CHALLENGES OF MOST AVMS

Lenders that utilize AVMs tend to set up a cascade of at least three to five different AVMs. These cascades are frequently set up in the same order across a lender's entire lending footprint or at a minimum, set up state by state. One daunting and expensive task for a lender is to determine the order in which AVMs should be set within their cascade. To do so correctly and accurately, a lender should validate their AVMs to determine which ones produce the highest accuracy and hit rates in their lending area. Often, lenders rely solely on word of mouth, or worse yet, anecdotal data, creating an AVM cascade that provides mediocre results at best.  

THE ADVANTAGE AVM CASCADE

What if you were able to set up AVM cascades that differed county by county? What if you were also guaranteed, based on validation data, to have the AVMs that produce the best possible results in the lead positions of your cascades every time? This type of solution is now a reality through our Advantage AVM Cascade, and many lenders across the country are enjoying the tremendous benefits.

IN SUMMARY

The Advantage AVM Cascade solution ensures that the best possible AVMs are always in the lead positions of your cascades, guaranteeing the highest hit rates and accuracy rates. To a home equity lender, each AVM used to determine the value of a home equates to one less appraisal needed. By decreasing the number of loans requiring an appraisal, you will effectively reduce your average cost to originate a home equity loan along with the amount of time between application and closing.  

 

Lenders have always looked to, and trusted that, CSS will help them implement the best possible valuation solution.  Please contact us for answers to any questions you may have or to discuss how an Advantage AVM Cascade can benefit your lending institution.

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