DS News - U.S. Bank

64 interior or exterior condition of the property or how the property has changed through construction or remodeling. Lenders would wonder: Is the home run down? Does it need repair? Was the kitchen updated? Investors pined for the value that could be generated by renovations followed by a flip or rental. All of these details were a mystery to models and set limitations on the automated process. is major pitfall is all changing with new technology intelligence. e use of AI and ML along with improvements in the breadth and depth of data available for modeling have greatly enhanced the AVMs' value to the industry. As a modeled value, the data available for the model to consume has a direct and meaningful impact on both accuracy and coverage. And pairing AVM values with transparent quality control tools, governance oversight, and measurable confidence scoring makes their future uses even more valuable. Today's valuations are not just about the count of bedrooms and bathrooms or the square footage, but rather consider multiple environmental factors such as distance to mass transit, elevation, and topography of the lot, local demographics, and outside influences of things like nearby rental or foreclosure properties. Mainstream AI, technologies like those used in products like Google Photos or various search engines, has already been commercialized to successfully identify differences when comparing images. But some AVMs are utilizing these types of technologies to compare past and present photos of a property or images of comparable properties to better understand the relationship of the different qualities in ultimate value estimations. ese tools provide lenders with the ability to forecast the property's value, through past-present analysis or comparable property analysis, without even entering the home. Today, instead of having to do their own research to find image comparisons, evaluators are using AI technology to assess the property's condition based on image classification and review, saving a great deal of time in the valuation process. It's a big difference from just a decade ago, when images of kitchens or renovations, for example, were manually compared by the appraiser and often led to purely subjective adjustments to valuations. AVM technologies will continue to find new ways to incorporate additional features that will improve their accuracy, reduce their delivery time, expand their use cases, and lower the cost of residential transactions. e technologies can also be leveraged as augmentation tools for the experts in the field today. As AVMs continue to improve upon their use of cloud-based architecture, expand their use of ML and AI, and as hardware becomes more powerful, lenders can expect the pace of the valuations fulfillment to accelerate. A PEEK INTO THE FUTURE e ultimate goal of residential valuation proptech is to enhance valuation techniques to shorten the time to a zero-day delay, while matching the expected quality of a human- only appraisal in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP). Additionally, it should collect and interpret data to enhance the customer experience and strengthen the engagement by delivering new ways to interact with the property and provide an edge to buyers, sellers, and investors. When evaluating what is needed, we should start with the concept of what is required to match the quality of a human-only appraisal. Today, with the exception of a few cases, a human must provide a valuation appraisal, whether by visiting the property or from a desktop armed with lots of data. Here are some additional ways technology's reach might affect the collection and interpretation of data relatively soon, assisting appraisers and automating processes: Real-time tracking: Advanced Smart Home devices will facilitate real-time data collection from inside homes. In the commercial space, proptech sensors are tracking the performance of elevators, boilers, and other equipment to help managers reduce operating expenses. In the residential space, Internet of ings (IoT) integrations with lights and HVAC are able to collect data on a home that can provide insights into the cost of ownership. Extending these sensor integrations into all appliances and other operating zones of a house will ensure regularly updated signals of wear and tear, and maintenance needs. Many things will be identifiable through the data, from structural issues arising from an earthquake, to seasonal changes due to weather patterns, to normal aging by use and time. New Scanning Techniques: Today appraisers using the Sales Comparison approach—the most common residential real estate appraisal method—to estimate the highest and best value of a property need to determine its physical attributes in order to ensure that the comparable AVM technologies will continue to find new ways to incorporate additional features that will improve their accuracy, reduce their delivery time, expand their use cases, and lower the cost of residential transactions. e technologies can also be leveraged as augmentation tools for the experts in the field today.

• Cover