Journal article
Automated ‘Valuation’ Models for Mortgage Security - examining their use on the Sunshine Coast
Australian and New Zealand Property Journal, Vol.41(5), pp.265-273
2011
Abstract
The use of automated valuation models (AVMs) as a means of providing an estimate of value for residential property mortgage security purposes has gained popularity in mature economies worldwide including Australia. The attraction of the technology is both the speed with which valuations can be processed as well as the significant cost savings when compared with a traditional valuation. Following a review of property valuation and property finance literature in relation to the development and use of AVMs, semi-structured interviews were conducted with five registered valuers in order to gauge their exposure to the technology and to ascertain their opinions in regards to the use of AVMs. The results of the research found none of the valuers interviewed had used AVMs nor did they know of any valuers that had used the technology, although some of them had used or were familiar with electronic valuer reports (EVRs) which is another desktop assessment method. The research concluded that AVMs were most likely to be used by lenders to quickly process loans that have a low risk profile. Also the number of loans processed in this way could be expected to increase over time. Considering the level of exposure many Australian lenders have to residential mortgages, the relaxation of conservative and prudential banking practices including full valuations was not considered to be a wise move by the majority of the research participants. The concern was that by allowing the market to self regulate this may not ensure satisfactory governance. It is important to qualify the limitations of this paper. By nature valuation theory is a global topic and much of the literature review findings were drawn from international papers. However the interview sample consisted of only five participants within a limited geographical setting being the Sunshine Coast. It therefore needs to be made clear that this research should be taken as an exploratory study rather than a definitive overview.
Details
- Title
- Automated ‘Valuation’ Models for Mortgage Security - examining their use on the Sunshine Coast
- Authors
- Judith Mannix (Author) - University of the Sunshine Coast - Faculty of Business
- Publication details
- Australian and New Zealand Property Journal, Vol.41(5), pp.265-273
- Publisher
- Australian Property Institute
- Date published
- 2011
- ISSN
- 1834-5662
- Organisation Unit
- University of the Sunshine Coast, Queensland
- Language
- English
- Record Identifier
- 99449463502621
- Output Type
- Journal article
Metrics
4 File views/ downloads
816 Record Views