One of the core services of brokerages and their agents is pricing property. In the olden days, it was less scientific than it is right now. On an individual property, agents deliver CMAs or BPOs. Today, using MLS data, brokers are now automating their services. Sometimes this service is called Automated Valuation Modeling, or AVMs.
There is a healthy and robust marketplace for AVMs in the financial services industry. Banks want to know the debt-to-equity ratio on homes they hold mortgages on. They also want to use AVMs as a method to validate home appraisals. Government uses AVMs to make monetary policy surrounding affordable housing and interest rates. Of course, the government also wants to make sure that their sponsored entities like Fanny Mae and Freddie Mac are making healthy loans. Insurance companies want to use AVMs to calculate property insurance rates and claims. Investment analysts use AVMs as a measure of the health of the real estate market that correlates to an exhaustive set of predictors on where stock prices are going for both individual companies, as well as sectors of companies. Largely speaking, brokers have been cut out of this marketplace.
Historically, the financial services industry has been fed AVMs that are based upon public record data. As industry experts understand, public record data lags behind MLS data by weeks or even months. Moreover, the detail of the property tax record is simple, and does not take detailed housing features into account. The National Association of REALTORS® worked with the Continue reading