Monday, September 29, 2014

Homequant.com Introduces REO and Foreclosure AVM

PRESS RELEASE

http://www.pr.com/press-release/584131

New York, NY, September 29, 2014 --(PR.com)-- Prime foreclosures and charge-offs are expected to stay elevated due to the continued squeeze in the Jumbo mortgage market, high incidence of short sales and the highly probable tsunami of HELOC defaults hitting the market in early 2015. If the HELOC hypothesis comes to pass, a new generation of REO and foreclosure (“Foreclosure”) AVMs geared exclusively towards that segment would be mandatory.

In fact, everyone from the traditional AVM houses to the listing services to the national brokerage houses has realized that the foreclosure markets are not short-lived or temporary. Actually, the overall housing market has become semi-permanently bimodal (primary and foreclosure), requiring significant back-to-the-drawing-board valuation re-engineering.

Under the traditional AVM development process only the recent arms-length sales (often aided by the discounted seasoned listings to simulate the most recent market) are used to create representative sales samples to develop Multiple Regression Analysis (MRA) models, which are then applied on to the populations the samples are derived from. In other words, the traditional modeling samples ignore all foreclosure and short sales.

However, to develop Foreclosure AVMs, the experts at Homequant derive modeling samples from the foreclosure-related universe only, to avoid having to distort the final values by applying some heuristic discounting factors. When the AVMs are developed as such, the final values are more in line with that segment of the market, addressing especially the sub-markets which inherently deviate from the median market.

Of course, to bolster the sample size, they often group and model multiple contiguous markets together; for example, if the local MLS covers three counties, they tend to model them together drawing all of their foreclosure and short sales into the mix. Obviously, it’s easier for them to generate sales samples in those Metropolitan Statistical Areas (MSA’s) where foreclosures are common or are elevated.

The lenders holding large inventories of REO and foreclosures (late stage) would also be better served with the proposed Foreclosure AVMs, not only to price their portfolios more accurately, but to prevent appraisal frauds as well. Those AVM values should be used as control values to trigger the Supervisory QC.

If you’d like more information about their Custom AVM solutions, or to schedule an interview with them, please email them at: contact@homequant.com

About Homequant
Homequant is the inventor of the comparables-based valuation of simulated subjects. The President of Homequant recently explained their invention: “There are roughly 90 million single family homes in the US and, on average, 3% of that universe annually sells. By inventing the concept of the simulated subject, we are able to value those 97% unsold properties by storing only the 3% sold data. The home valuation industry will soon recognize the significance of our invention.”

Homequant’s President published two books on econometric AVM.

Contact Information
Homequant, Inc.
Sid Som
718-314-4081
www.homequant.com

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