Oh the Irony: Automated Valuation Models Used Most by Banks But Even More Useful to Private Lenders

How ironic: a tool that has typically been used most by many larger lenders is actually much more useful to private ones! After all, as a private lender, it tends to hurt a bit more each and every time you lose a deal – whether through losing it before it funds, or worse, after it has been funded and blows up.

Larger lenders have deeper pockets and tend to assess the performance of their portfolio as a whole, looking for trends. However, you may not be viewing your portfolio that way and more on a one-by-one basis – especially when dealing with much lesser volumes.

The more time and money you put back into your pocket by identifying problem deals earlier in the application stages and mitigating losses on deals that go into default, the better off you’ll be in the long term.

You have likely heard of AVMs - Automated Valuation Models - probably most often in the context of finding upsell opportunities, investigating deals and mitigating risk, but they have a lot of other uses. In this blog we will look at how you can use them at the application stage and also when a deal becomes a problem after it is already on the books.

Not clear on these? In a nutshell, an AVM or Automated Valuation Model is a report you can generate to evaluate what a property is worth.

At the application stage, you can use this to immediately determine if there is a discrepancy in the value of a property, either making it not worth ordering an appraisal or pursuing or identifying more equity and an opportunity to upsell your deal.

Once a deal has gone sideways - or you think one is about to - you can use an AVM to get a current estimate of what the property is reasonably worth, which will make a major difference on how and what enforcement remedies are the most sensible to deploy.

Some providers of AVM reports, Teranet’s Purview For Lenders for example, offer additional capabilities as well so that when you request an AVM you can also validate who is on title or any registered encumbrances.

So now you see why so many larger lenders have historically relied on AVMs - but also why these are so valuable to private lenders. And, this is a tool readily available to you – whether you are big or small! The positive impacts of implementing AVMs into your workflow can be felt most by smaller lenders where each and every deal means a lot!

Want to know about Automated Valuation Models and how they are beneficial to your daily strategies? Call Teranet today at 1.855.787.8439.