Given the high costs and possibilities for fraud in the residential real estate appraisal market, the Automated Valuation Model (AVM) industry continues to play an essential role in the housing and housing finance markets. There are by now a large number of distinct AVMs available, and it can be very hard to identify and to choose the most suitable AVMs for a particular valuation challenge. While the very largest AVM users dedicate significant resources to this selection process, the vast majority rely on providers of commercial AVM “cascades” to aid in their choice among AVMs. The current discussion paper focuses on the technical underpinnings of available cascades, and provides a guide for users as to which technique is best-suited to particular valuation tasks. It also proposes simple next steps for cascade producers, regulators, and users looking to seed further improvements in valuation technology.
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