In today’s complex real estate, mortgage and securities markets, it can be challenging to simultaneously navigate evolving market conditions, new regulations, and under-pressure margins. That’s why it’s important for organizations to use best-in-class valuation solutions that not only help to streamline your operations but can also mitigate risk and increase profitability.
When evaluating your existing valuation tools, it’s critical to assess whether they support five key pillars that will help you offer objective, consistent and reliable property valuations.
1. Comprehensive data
How robust is the data your automated valuation models (AVMs) leverage? And do they leverage the right kind of data? The more public records data your AVMs can pull from, the stronger your valuations can be. It’s also important that your valuation solutions pull from the most reliable data sourced directly from county assessor and recorder offices so you can deliver the most reliable results to your borrowers.
Best-in-class valuation solutions will also be able to incorporate the most important facets of U.S. property parcels when delivering a valuation, like tax assessor, deed, mortgage, pre-foreclosure and foreclosure, and assignment and release records.
2. Proven methodologies
In a perfect world, it would be easy if lenders could find one proven valuation method and stick with it in perpetuity. Unfortunately, that isn’t how it works.
Valuation providers can use advanced modeling and proven methodologies to provide lenders with the most objective, consistent and reliable property valuations. That means deploying best-in-class methodologies that deliver rapid results based upon the specifics of a subject property, its neighborhood and custom client criteria. When determining whether your own valuation solutions and support teams are serving your needs, determine whether your AVM models are continually updated and refined based on testing performance, client feedback and changing market conditions. If they aren’t, it’s reasonable to ask for more.
3. User & performance testing
Frequent and focused testing is paramount in figuring out whether your AVMs are consistently offering the strongest valuations possible. Ignoring this type of iterative testing can slowly erode not only a business’s profit margins, but borrower confidence as well.
Regular and consistent testing can determine how your AVMs stack up against others in the market by examining factors like the percentage of outliers. It’s also key to benchmark your AVMs with property-level accuracy metrics like the Forecast Standard Deviation (FSD), so your borrowers can be confident the AVM providing their property value has been rigorously tested and statistically validated for accuracy.
4. High-performance technology
Valuations are just one part of the larger real estate picture, and lenders can gain new efficiencies when they use valuation solutions that operate with the bigger picture in mind.
The right valuation software can seamlessly deliver consistent valuations at any point of the real estate, origination, servicing or capital markets workflow – all automated, integrated and securely hosted. When lenders can tailor valuations to meet the current needs of a borrower’s journey, it simplifies the valuation strategy across workflows and helps mitigate risk, decrease costs, streamline operations, support regulatory compliance and identify new opportunities for growth.
Lenders looking to offer best-in-class valuations should ask themselves whether their technology is mindful of the holistic real estate journey, rather than sticking with valuation software that doesn’t account for the realities of a loan’s life cycle.
5. Expert support & customization
Valuation technology is only as good as the support behind it.
Lenders would do well to consider a provider that offers expert consultation and flexible delivery options that provide best-fit valuation solutions for any scenario. Look for support that includes configurable logic based on your business rules and waterfall options, including value range, variable selections, thresholds, confidence score parameters, FSD, geographies and more.
ICE can help you simplify your valuation strategy with a comprehensive suite of best-in-class valuation and collateral risk management solutions that can help you seamlessly manage risk, decrease costs, increase efficiency, support regulatory compliance, and deliver consistent valuations across your workflow. Plus, ICE offers expert consultation to identify the solutions that are right for your business.