Why Mark Sennott’s Whitepaper Stopped Us Cold

At AVMetrics, we have to admit having mixed feelings about Mark Sennott’s recent whitepaper on AVMs. We’re quite grateful for his praise on our testing, which he describes as “robust, methodical and truly independent.” He echoes some of our key concerns:

  • AVMs perform very differently, so it is important to test before using
  • AVM performance changes more frequently than you’d think
  • Everyone should employ a cascade using multiple AVMs, because it dramatically increases the accuracy of the delivered results.

However, there was something quite disconcerting in Mark’s telling of how AVMs are being used. In Mark’s words:

In practice, however, the top performing AVMs, based on independent testing performed by companies like AVMetrics, are not always the ones being delivered to lenders. The reason: self-interest on the part of the AVM delivery platforms who also sell and promote their own AVMs.

This very troubling delta between posture and operating practice had to be confronted first-hand by one of the lenders for which I provide guidance. What at first blush appeared as a straightforward exercise for the lender in vetting a platform provider’s cascade against AVMetrics independent testing results, became a ponderous journey to overcome contractual headwinds against a simple assurance the provider would indeed provide the highest scoring AVM model per AVMetrics recommendations. This was not the first time I experienced this apparent conflict of interest.

Kudos to Mark for writing openly about a practice that many in the industry would probably prefer that he kept quiet about.