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AVM Testing and Evaluation using AVM Performance Metrics
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Principles for Calculating AVM Performance Metrics
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Study: AVMetrics New Testing Methodology
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AVMs React to New Final AVM Rules
On August 16th, Jon Wierks from First American penned an article about how First American is reacting to the new AVM Final Ruling. The article made several interesting points:
1. First American has specifically enhanced its AVM, their testing, and some of their tools in anticipation of the new rules. For example, FA has invested in explainable AI (xAI) in order to address fairness concerns.
Newer AVMs, like our Procision™ AVM Suite, were designed to comply with current AVM guidelines and in anticipation of the new guidelines.
2. First American expects AVM users to be expected to take on their own testing responsibility, and this doesn’t just apply to banks.
…new guidelines, Quality Control Standards for Automated Valuation Models, requires mortgage originators and secondary market issuers “to maintain policies, practices, procedures, and control systems to ensure that automated valuation models used in these transactions adhere to quality control standards
3. AEI’s recent AVM study has drawn attention to the biggest issues with AVM testing, and our new testing techniques are advancing testing beyond any other innovation in a decade.
For several years, AVMetrics has been developing a blind testing system that it will roll out later this year. Rather than sending the same addresses to various providers each month and getting back their valuations, AVM providers will now value every property in the U.S. — more than 100 million valuations each month — and send this data to AVMetrics. The testing company will ingest this data and then blind test it against future sales and listing prices as they transact. As you would expect, this is a massive undertaking for AVM vendors and AVMetrics, but it will separate the AVMs that test well from those that actually perform well in real-world conditions.
Wierks’ conclusions are right on target with our beliefs that improving AVM accuracy, precision and confidence scoring are making them more useful to industry, and that appropriate testing is a prerequisite to their widespread adoption.