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Integrating automated valuation models (AVMs) with valuation services to meet the needs of UK borrowers, lenders and valuers Mary Lou Downie & Gill Robson School of the Built Environment Northumbria University Newcastle upon Tyne Funded by the RICS Education Trust
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Integrating automated valuation models (AVMs) with valuation services to meet the needs of UK borrowers, lenders and valuers Mary Lou Downie & Gill Robson School of the Built Environment Northumbria University Newcastle upon Tyne Funded by the RICS Education Trust & RICS Residential Professional Group
Research background and issues Where we began: AVMs, an international perspective, Downie & Robson (2007) for the CML This took us to AVMs in the UK The research focus: Integrating AVMs with valuation services to meet the needs of UK borrowers, lenders and valuers • Lenders’ valuation policy & valuation process management • Current & future AVM use by lenders & valuers • Implications for borrowers Education Trust
Using AVMs: how do they impact on the RICS? • RICS professional standards • Education & training for valuers • Information for borrowers • Liaison with stakeholders Education Trust
Research conducted 2008-9 • International literature review • Interviews: • Valuation & panel management companies • Credit risk & valuation managers at Building Socs & Banks • CML, AVM companies, PI insurers • Online survey • RICS Residential Professional Group: 473 responses • Correspondence with consumer groups Education Trust
What we found • Low risk lending + multiple other uses • AVM expertise concentrated in lending organisations • 22% of survey valuers have used an AVM, 64% have not • 39% want to use them to supplement valuations, 28% do not • 72% expressed willingness to learn more about AVMs • Negligible acknowledgement of AVMs in consumer information • Valuation fee transparency Education Trust
Non- inspection Inspection Valuation and survey levels Does RICS guidance match current valuation & survey? Possible future Research Findings: Current Valuation & Survey Current valuation and survey Detailed consumer advice No detailed consumer advice No detailed consumer advice Time/cost Level 3 Signingfor FSA Valuer checked AVM Level 2 AVM Level 1 Drive by New Desktop Not in Red Book In RICS Red Book Education Trust
How might the RICS respond to IT enabled residential valuation? • Work with stakeholders on a selection from this menu: • Limited response • Issue policy statement about AVMs • Amend Red Book • Information Paper • Improved consumer information • Education and training Education Trust
Any questions? Time/cost Level 3 Signingfor FSA Valuer checked AVM Level 2 AVM Level 1 Drive by New Desktop Education Trust