Technology Aims to Solve Home Valuation Uncertainty

Has the real estate market bottomed? Technologists at the Mortgage Bankers Association’s National Servicing Conference in San Diego talked about the importance of ascertaining a property’s true market value and how technology can play a role in getting that value.

“I have no doubt that Washington will again change the loan mod program to make it more effective, but I still think short sales and foreclosures will happen regardless. The problem is getting at the value of the property. Lenders are relying on broker price opinions here, but we at MDA DataQuick think that a way to objectively and quantifiably measure the value of the property to ensure the lender is making a good decision is needed,” said the company’s president John Walsh. DataQuick’s ValueSmart application uses a data set that is comprised of multisourced public records combined with new sales transactions added daily. In addition to estimated values, ValueSmart’s report function includes configurable property information. It also offers a confidence score that adds balance between hit rates and accuracy.

“Until you understand the value of the home, it’s hard to make a principle reduction,” added Mr. Walsh. “That complicates short sales as well. We provide collateral valuation. We validate the valuation and it doesn’t matter if the value is an AVM, a BPO, etc. We use analytics and data to test the prior validation that was done on that property. It is an open-box, transparent solution. Our approach is to combine data and analytics vs. just offering a new AVM. The market doesn’t need a new AVM.”

Given the problems of objectivity associated with BPOs alluded to by Mr. Walsh, Valligent, a provider of property valuation and risk management solutions, has released a new valuation suite aimed at breaking the mortgage industry’s dependence on broker price opinions, and restoring trust to the real estate market. The new product suite, DRiVE (Desktop Risk and Valuation Engine), is a more cost-effective and verifiable solution than BPOs.

“Over the past several years, our industry has witnessed a huge degradation in the quality of property valuations,” said Jeremy McCarty, CEO and chief valuation strategist of Valligent.

“Five million BPOs are performed every year, and while they are very inexpensive, a growing addiction to these inferior valuation products has contributed to the crisis of confidence we’re seeing in our industry today. We know there’s a better way. Our DRiVE solution represents an affordable approach intended to break the real estate industry’s BPO habit by offering the best analytics, the best data and the support of the best appraisers in the industry, who bring a true understanding of market metrics, collateral risk and accurate valuation.”

AppraisalWorld, a software developer and valuation services portal, has taken another approach to solving this problem with the release of an expanded version of its Collateral Valuation Report to credit unions nationwide. The Collateral Valuation Report is a streamlined report that states the value of a subject property with more detail and accuracy than a broker price opinion, but less detail than a traditional appraisal. It was designed as a more reliable option than the appraisal alternatives that rely on automated valuation methods and broker price opinions.

Each report is completed by a certified local appraiser who uses AppraisalWorld’s CompCruncher technology, an analytic platform that is the result of collaboration with numerous industry data providers that include Microsoft, Pictometry, Veros, Google, LSi (formerly Fidelity) and others. “It’s not just about the high level of data. The regression analytics, education and turnkey application combine to create a powerful solution,” said Jeff Bradford, AppraisalWorld’s CEO.

“Every one of our certified appraisers is a local expert in his or her market,” added Sylvia Kainz, chief operations officer for AppraisalWorld. “We make sure these appraisers have the experience and knowledge of local market conditions, as well as specific training on the Collateral Valuation Report product in their actual territories.”