Business Challenge
I want to integrate an AVM into our mortgage origination and risk management processes, but no single AVM is reliable enough for all property types, value ranges or geographic areas. They also require constant data refreshing and validation testing.
Solution: Automated Valuation Models (AVM)
Automated valuation models (AVMs) have come a long way since they were first introduced in the 1990s. Today they offer an accurate, instant, and cost-effective method for collateral valuations. Yet, as intelligent as they are, no single AVM is ideal for valuing every property. Different AVM engines have inherent strengths and weaknesses, varying hit rates, and data sources that range in volume, reliability, and currency. These differences generate an unavoidable trade-off between highest hit rates and greatest accuracy because pursuing accuracy narrows an AVM’s focus while the quest for higher hit rates can dilute accuracy. Additionally, AVMs require regular data refreshing and validation testing to maintain consistent, dependable accuracy levels and to meet stringent regulatory audit requirements.
To manage these variables, CoreLogic created and honed four proprietary AVMs that can run independently or as part of a sequenced group (cascade). Each of our core AVMs uses a different analytic engine, but all draw from our Industry-leading property and transaction database.
Automated Valuation Model (AVM) Product Highlights
This database is updated daily and covers:
- More than 10,000 government and proprietary data sources, including listing price information
- 99.7 percent of the U.S. population
- Tax assessor data for more than 3,050 counties
- More than 142 million properties
- More than 500 million historical transactions
Each night, we blind test all four core AVMs against actual purchase data to validate their accuracy; and our team of dedicated AVM developers leverage the test results to retune each AVM. This scrupulous testing and maintenance ensures each AVM stays abreast of current pricing trends.