Saturday, September 30, 2017

Homequant Offers Custom Benchmark AVM

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Homequant Offers Property Tax Appeals AVM

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**Protest population must come from Same Group & Jurisdiction

Homequant Offers Custom AVM for Smaller Jurisdictions

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Friday, September 29, 2017

How Automated Valuation Modeling (AVM) Helps Assessment Rolls and Mortgage Portfolios

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When a Market AVM is developed using the recent arms-length sales, it generates an econometric solution (bottom graph).

As the model gets further fine-tuned, with outliers removed (not shown here), the model R-squared tends to approach .90 and the COD/COV falls below 10, thus convincing technicians to apply the model on to the assessment population in order to generate the assessment roll (or on to the mortgage portfolio to have it re-priced in line with the current market).

Link to our Trend-setting AVM Book on Amazon (Kindle/Paperback)

Our Custom AVM Offerings:

1. Market AVM

2. Office AVM

3. Auto Loan AVM

4. Sales Ratio Study

Thursday, September 28, 2017

East Coast Housing Markets Taper

Quick Review Series (# 2 in the Series)

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1. Y-O-Y growth rates remain positive. Boston leads. Atlanta & Boston beat Comp-10

2. Save Miami, M-O-M and Recent-4 growth rates are quite anemic

3. Lately, Atlanta and New York markets have turned negative

4. Extended (since 1/2016), Washington, DC market remains the weakest.

Data Source: Case-Shiller Housing Index as of 9-26-2017

Tuesday, September 26, 2017

An Illustrated Guide to Automated Valuation Modeling (AVM) - 100% Excel-based

What the Experts are Saying:

“First off, may I say congratulations and what a tremendous effort.

Our small appraisal business (by your standards) works almost solely in the Excel domain and we have patched together bits of code over the years which constitutes our AVM toolkit.

Your publication is therefore most welcome. More than that, it dumbs down so much of the process for the likes of us valuers. Practitioners with a basic understanding of AVM’s and a good grasp of Excel, will realize how effective your methods are at modelling, model testing and as a value and sales review tool." Mass Appraisal Director ...

“An Illustrated Guide to AVM in Excel is great book for those with a fundamental knowledge of Valuation Model Building.  It provides an excellent overview of the process and serves as a thorough check list of things to consider whether you are using Microsoft Excel or a Statistical Software package.” Chief Assessor …

Thursday, September 21, 2017

Issues that Make an Automated Valuation Model (AVM) Inefficient or Ineffective

Issues that Make an Automated Valuation Model (AVM) Inefficient or Ineffective

1.  Time Adjustment – Some practitioners use Number of Months Since Sale (NMSS) as an independent variable to ascertain the rate of growth (+/-) in the targeted price level (aka, time coefficient). While this is acceptable as a lead-up regression to generate the time-adjusted sale price (primary dependent variable), it is however unacceptable as an independent variable going into the valuation regression. The reason is simple: since NMSS would be missing in the unsold population (the model would be applied to), the application would fail. Ineffective modeling.

2.  Sales GIS – Testing the representativeness of the Sales GIS is not an easy proposition, forcing many practitioners to skip this sampling test. Sales GIS is often a function of market dynamics, deviating from the Pop GIS. Therefore, an untested Sales GIS paves the way for an inefficient AVM. That is why many practitioners tend to use “fixed neighborhoods” in the modeling process as they are more stable (do not succumb to short-term market swings) and broad-based (liquid enough to test sample representativeness). Inefficient modeling.

3.  Chasing Trophies – An AVM is not meant for the entire population. Trying to achieve a two sigma solution (95%) is generally more meaningful, leaving out the admixture of the unattainable 5% including the limited number of trophy properties. It is advisable to leave out those properties from the modeling spectrum altogether (modeling and application). Inefficient modeling.

4.  Chasing Tiny Bungalows – The flip-side of the trophies. Especially the waterfront ones (primarily land value). Inefficient modeling.

5.  Combining 2, 3 and 4-Family Homes – Modeling 2+ with SFRs is not prudent (mostly income-producing), despite being clustered in the same tax class or mortgage category. Mother-daughter set-up is not a technical two. Inefficient modeling.

6.  Synthetic Variables – (X * Y) ^ Z. Talk about explainability and decomposability! Inefficient modeling.

7.  Untested Models – Always a good practice to test the model on to a mutually exclusive holdout sample before being applied on to the population. The holdout sample must produce very similar results, both before and after the outliers. Inefficient modeling.

8.  Sales Complex – Sales complex, directly or indirectly (SP/SF, etc.), must not be used as regressors. Violates the basic regression assumptions. Ineffective modeling.

9.  Test of Optimality – Since the COD-based regression models do not test true optimality (is COD of 8 better than COD of 10?), an optimization process (Linear/Non-linear Programming) is in order. Inefficient modeling.

  Read our Trend-setting Book on AVM