The extent to which an AVM’s valuations approximate actual market values. Analysts usually examine a model’s overall accuracy through two different types of metrics – measures of AVM bias and measures of AVM precision.
AVMetrics has a new method of testing AVMs. The goal is to avoid the process of "anchoring," which is when AVMs adjust their valuations based on listing prices. Our new method is a dramatic innovation that will level the playing field for all the AVMs.
We have mixed feelings about Mark Sennott's whitepaper. He echoes our concerns about why AVM testing is important, but he reveals that AVM test results are NOT determining which AVMs are used.
AVMs are great, but using them properly requires being careful to follow the rules set by the OCC. This paper outlines how to outsource AVM validation and stay in "compliance" with regulators' requirements.