Best-in-Class Automated Collateral Valuation
Automated valuation models (AVMs) offer an accurate, instant and cost-effective method for valuing collateral. Yet, intelligent as they are, no single AVM is ideal for valuing every property. Different AVM engines have inherent strengths and weaknesses, varying fulfillment rates, and a wide range of data source volume, reliability and currency.
These differences generate an unavoidable trade-off between fulfillment rates and accuracy because the pursuit of accuracy narrows AVM focus, while the quest for higher fulfillment rates can dilute accuracy. Additionally, AVMs require ongoing data refreshing and validation testing to maintain dependable accuracy levels and meet stringent regulatory audit requirements.
The Cascade Advantage
To manage these variables, we organize AVMs in a cascade arrangement. An AVM cascade selects the most appropriate valuation model from a group of individual AVMs. Once you enter a street address and ZIP code, property information runs through the AVM cascade, delivering results in seconds.
The GeoAVM™ Suite of automated valuation products and services from CoreLogic derives its name from our geopreferencing sorting system that delivers impartial accuracy by analyzing the historical accuracy of each AVM to determine an optimal cascade. By simultaneously examining potential factors that may include geography, price tier, property type, subject property factors and other variables, GeoAVM cascades reduce the time and money spent compared to more traditional valuation processes. In addition, our GeoAVM cascades allow lenders of all sizes to take advantage of the speed and cost benefits AVM cascades offer, while also helping them comply with the Interagency Appraisal and Evaluation Guidelines issued in December 2010 that describe AVM use.
In 1997, our company offered the first AVM cascade. Each year since, we have refined our processes, methodologies and models, increasing fulfillment rates to more than 90 percent and pioneering innovative approaches to heighten accuracy.
In 2010, we expanded our GeoAVM Core and GeoAVM Precision options to include the Freddie Mac Home Value Explorer® (HVE®), introducing GeoAVM Core Plus and GeoAVM Precision Plus. Freddie Mac was the first AVM vendor to participate in our nightly testing process, making HVE the first AVM to adhere to the standards required of AVMs included in our GeoAVM Core and Precision cascades.
GeoAVM Cascade Options
To meet your unique requirements, we offer six GeoAVM options:
GeoAVM Core—This cost-effective cascade delivers a powerful combination of fulfillment rate and high accuracy utilizing four industry-leading AVMs that we developed and maintain.
GeoAVM Core Plus—Cost effective and offering high accuracy and fulfillment rates, GeoAVM Core Plus expands and deepens coverage by incorporating HVE from Freddie Mac. As with all AVMs included in the GeoAVM Core option, HVE undergoes our nightly blind-testing process separately and as part of the cascade.
GeoAVM Precision—Created with interagency guidelines in mind, the GeoAVM Precision cascade offers a level of accuracy designed to meet the unique needs of bankers who intend to use an AVM in lieu of an appraisal for a funding decision.
GeoAVM Precision Plus—Designed to the same regulatory standards as GeoAVM Precision with the added benefit of including HVE from Freddie Mac to increase coverage, fulfillment rate and accuracy.
Nightly AVM Testing
Every night, we test our proprietary models against all recorded purchase transactions. This allows us to monitor our model performance as market conditions change.
Cascades are comprised of tables that tell the platform which AVM to call, based on specific property characteristics such as location. A key question is “How are the AVM tables established?” The easiest way to establish cascade order may not yield the best results. We developed an enhanced approach that establishes cascade tables conditionally, based on the order in which each AVM is called. Although it takes extra work to produce national cascades in this manner, it’s the right thing to do.