By KIMBERLEY HAAS
A new automated valuation model that recently hit the market uses a national property database, geospatial comparable data, and artificial intelligence to help users evaluate properties.
Altisource, founded in 2009, is a provider of services and technology for the mortgage and real estate marketplaces. Their NestRange AVM helps with valuations for originations and defaults.
The original AVM model was built as an in-house tool, according to Chief Strategy Officer and CTO Israel Meir.
“Early last year, we felt that we were at a pretty good place to package this up and offer it as a commercial system in addition to continuing to use it internally,” Meir said in a recent interview with The Mortgage Note.
NestRange was officially launched for public use on Dec. 5. It draws from a data set of more than 150 million properties including over 750,000 active property listings, according to a press release.
Meir said the system provides information valuable to financial services institutions, real estate professionals, property management firms, investors, and individual property owners.
“We get tremendous feedback from enterprise-level users on how good the data is and how easy the interface is,” Meir said.
There are three types of reports people can pull from the system.
The most basic reports provide a value for a property. More advanced reports provide comparables, information about neighborhoods, and market trends.
Interactive reports allow the user to replace comparables with better matches, helping them come up with a more accurate valuation.
“If you are a realtor and you know the neighborhood you are working in really well, you have the ability to go in and much more dramatically pinpoint what the value of the house you are about to put on the market should be if you play with the interactive system and kind of help the model come up with a more correct answer than if you just went and got an off the rack valuation,” Meir said.
Distressed properties can also be evaluated using NestRange, Meir said.
“This model specifically allows you to choose whether to generate the valuation for a distressed property or a non-distressed property and that is a big differentiator because if you think about a distressed property, those properties generally have a reduced competitive advantage in the marketplace because it is a property that is about to go into foreclosure or is already in foreclosure and potentially whoever owns the property right now can’t afford to fix the house to take care of it or it has been in neglect for a while,” Meir said.
Prior to joining Altisource in 2014, Meir worked as a principal at The Boston Consulting Group and as a head teaching fellow at Harvard University.
Automated Valuation Models became more popular during the COVID pandemic when making visits to properties was more difficult for professionals.
They are expected to continue doing well, but some realtors are saying that they should be seen as a complement to in-person valuations instead of as a replacement for them.
Anne Ewasko, a veteran realtor in Chicago, wrote that AVMs have not replaced human valuation estimates and will never compete with a comparative market analysis prepared by a realtor in a piece published by Chicago Agent Magazine this month.
Ewasko offered advice for realtors planning to use AVM technology.
“Take advantage of these useful information resources, but then show your value as an expert real estate home evaluator with detailed and accurate pricing derived from your CMA. You will impress your clients and boost their confidence in you,” she wrote.
Officials at the Consumer Financial Protection Bureau have been working to ensure computer models used to help determine home valuations are accurate and fair.
Both in-person and algorithmic appraisals appear to be susceptible to bias and inaccuracy, absent appropriate safeguards, according to officials.
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