Wednesday, February 25, 2015

How AVM Helps Improve Portfolio and Assessment Performance

(Click on the image to enlarge)
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When a Market AVM is developed using the recent arms-length sales (FYI - those sales are generally backed by appraisals), it generates an econometric solution (bottom graph).

As the model gets further fine-tuned (not shown here), the r-squared tends to approach .90, at which point it can be applied on to dated mortgage portfolios / prior assessment rolls in order to have them re-priced / re-assessed in line with the market.

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