Archive for the 'Automated Valuations Models' Category

January 14, 2019

When it comes to determining property valuation, many of today’s real estate professionals are turning to online tools.

It makes sense. Online property value technology is faster and more convenient than a full appraisal. (Note: online property valuation is a nice complement to an appraisal but shouldn’t replace an appraisal entirely.)

Depending on the information source, online technology can be extremely accurate and provide you with an abundance of information at the click of a finger.

But as online evaluations grow, so too do the tools available for the task. What property evaluation technology is best to use? We turned to the reviews for what users had to say.

  1. MPAC Assessment

The Municipal Property Assessment Corporation determines property assessments for municipal tax purposes. It can be useful for real estate professionals determining a property’s value.

That said, MPAC has its limitations. For instance, the tax value can be very different from the appraised value.

“Many clients look at the Assessed Value (which is often publicly available online on your municipality’s website) and assume that the number provided represents the current market value,” wrote Calvert Home Mortgage Investment Corporation.

“While there are a few instances where the Assessment might equal the current value, it is important to understand that this would only be a coincidence as both values are unique and are done for different purposes at different times.”

The definition of market value can assume a hypothetical and perfect market — not taking into account fluctuations or extenuating circumstances.

The Bottom Line: While MPAC can be a good tool in your property value wheelhouse, it shouldn’t be the only tool that you rely on.

  1. emili

emili is the Canada Mortgage and Housing Corporation (CMHC) decision system for mortgage insurance. It can automatically consider key factors such as the borrower, the property, the market, and the overall risk.

There is one thing that is important to know. If you are using property valuation tools to comply with mortgage stress testing, unfortunately emili is not enough.

emili does not provide a value for a property being financed. Instead it evaluates an area and, based on the value in that area, agrees or disagrees with the value stated on the application. This means that when emili agrees or disagrees with a value, you are not actually obtaining the value of the specific property being financed.

The Bottom Line: While emili has its uses, it shouldn’t be your only online property valuation tool.

  1. ca/MLS

Realtor.ca – the former Multiple Listing Services — is a well-known listing advertising site. But that is where it’s limited. It does not display historical or sold data.

According to reviewers, Realtor.ca:

  • Has limited search functions.
  • Doesn’t always show the newest listings.
  • Isn’t always up to date – some of the listings may have already sold or sold conditionally.
  • Shares incomplete listing info. Public listings don’t include property taxes, number of days on the market, and more.

The Bottom Line: Realtor.ca continues to be a good tool for advertising listings and real estate marketing, but it shouldn’t be used as a property valuation tool. For one thing, it doesn’t always show the most complete listing data. But for another, it is limited. You can only find properties currently on the market — you can’t search for properties that are not yet listed.

  1. GeoWarehouse

GeoWarehouse is Teranet’s property valuation solution, powered by the Province of Ontario Land Registration Information System (POLARIS).

We have worked hard to create a database that is accessible, comprehensive, accurate, and up-to-date. But don’t just take our word for it. Here’s what others have to say:

Elle Peterson, Sales Representative, Kenora Home and Cottage Realty Inc.

“I have found that the GeoWarehouse reports have helped me to be successful in real estate by using the neighborhood sales report when showing clients recent sales in their area.

“GeoWarehouse reports have been helpful in providing the survey of the land and in identifying neighboring lots, as well as in getting particulars on these lots such as who owns them. This is valuable to a buyer, so he/she will know in advance who their neighbour would be. It also helps a seller to have an idea of property lot lines in the event there is no survey.

“I have had success with clients in using the GeoWarehouse reports, specifically the property details to show the particulars of a property including the legal description and how much the property sold for and when it last sold.”

Asghar Jafri

“GeoWarehouse’s map is up to date and it helped me find the location easily. I could not find the same location in TREB’s maps.

“I was able to get a comparables report easily. The report gave me a quick list which I used to hone in on the best comparables.”

Brian Wilson, Broker of Record – GlobeCorp Realty, Brokerage

“I use GeoWarehouse regularly to help me in preparing valuation reports for my clients, both buyers and sellers. It is an invaluable piece of the pie in helping to determine what properties in the area have sold for and helps to form a better picture for my clients about the value of their property (or prospective property). GeoWarehouse has enabled me to provide a higher level of service to my clients, and as such I’m seen as a better educated service provider (REALTOR). Thanks to the GeoWarehouse team!”

Gail Johnson, Sales Representative – Prudential Town Centre Realty Inc., Brokerage

“Your GeoWarehouse on-line course says it all. GeoWarehouse makes my job easier because the database is:

1- Convenient – access the system, with varying degrees of support, for up to 24 hours a day 7 days a week.

2- Timely – Title Data contained in the GeoWarehouse database is current to within 2 to 3 weeks and Parcel Registers are delivered directly from the POLARIS database.

3- Flexible – you can search records by Owner Name, Address, Instrument or PIN or search aerial maps; and

4- Reliable – data is derived from the POLARIS database.”

See more reviews of our GeoWarehouse system here: https://www2.geowarehouse.ca/testimonials/

If you would like to try GeoWarehouse for yourself, get in contact today. We’ll walk you through the features and explain exactly how it all works to help you determine the most accurate property value available.

Call 1-866-237-5937 or visit www.geowarehouse.ca.

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November 23, 2018

The Canadian real estate market is in a state of fluctuation, which can make determining a listing price difficult to say the least.

Between rising interest rates, mortgage stress testing regulations, uncertain house prices, increased competition, and the like, there are many factors that might be affecting your usual process for determining property value.

That said, there are several practices that you can use to set a listing price no matter what is happening in the Canadian housing market. Here are our top picks.

  1. Assess the Property Details

This is step number one because it should be on your list regardless of market conditions. You need to understand the property details. For instance, what year was the home built? What data is included in the Land Registry?

In order to start thinking about your listing price, you need to know the answers to these questions and more.

  1. Get an AVM

You may have considered getting an appraisal done — this can be a great idea. But have you thought about an automated valuation model (AVM) report as well?

An AVM report can confirm home value, ownership, and other details quickly and efficiently. It can estimate property value by comparing and analyzing property characteristics against public record data.  It doesn’t replace an appraisal, but it is a good companion to one.

While an AVM can’t review interior and exterior property conditions, some include street view imagery that can help identify issues with exterior conditions, such as property boundary discrepancies. It’s great to leverage automation and historical data analysis to generate the latest information on pricing and ownership and create a big picture report.

  1. Consider the MPAC Assessment

MPAC is the largest assessment jurisdiction in North America. It determines revenue requirements, municipal tax rates, and property tax collection for the Government of Ontario.

An MPAC assessment isn’t always the same as a property appraisal, and often listing prices are different from MPAC’s valuation. That said, it is still valuable information that can be used in your determination.

  1. View the Sales History

Along with the property details, you will also want to consider the sales history. While today’s market may be very different from the last time this house sold (particularly if it is an older home), that data is still important to review.

  1. Look Up Comparable Sales

One of the best ways to determine home value is to see how comparable properties are selling. You can get a real-time view of what similar houses have sold for and use that to set your listing price.

You can also narrow your search by neighbourhood to specifically understand the area where you are selling. Certain regions will be more desirable based on factors like school proximity, parks, shopping areas, and the like. This will stay in style even with a market shift.

  1. Use a House Price Index

The Teranet-National Bank House Price Index is released every month with up-to-date information on house prices across Canada. This digs into 11 different markets and the house price trends those regions are experiencing.

This is important for you to know when making your assessment.

  1. Examine Market Insights

In a shifting real estate market, you want to stay on top of the latest real estate trends. For instance, if you know that condos are some of the most popular dwelling types for millennials, and you are trying to set a listing price for a condo in an area that appeals to millennials, that will help make your decision.

The Teranet Market Insights Report is released regularly and contains data that you can use for your property valuation needs.

While it may be simpler to set listing prices during non-turbulent housing market conditions, it’s still possible to do so in more uncertain times. Be sure to do your due diligence and assess information from multiple sources. Trends can change so fast that you need to stay on top of the data.

Luckily, GeoWarehouse makes it easy to stay informed up-to-the-minute. Our property reports take data from the Province of Ontario Land Registration Information System (POLARIS), so you can trust the reports you receive are accurate and timely. They are also available almost instantly, so you can make a decision with the latest figures.

Learn all about our GeoWarehouse reports today. Call 1-866-237-5937 or visit www.geowarehouse.ca.

Want more information on determining a listing price? Download our free eBook, Digital Property Evaluation in 1-2-3! Get your copy here: http://www2.geowarehouse.ca/property-evaluation-general/.

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Working with appraisers is a big part of any real estate professional’s job, and while we’re always talking about how to leverage the resources available through an automated valuation model (AVM), appraisers can play an important role in the process.

AVM reports can be used to mitigate risk by confirming value, ownership and other factors quickly and efficiently. However, that doesn’t mean the appraiser is out of the picture! What are the key differences with automated valuation model vs appraisal? How does each one work? Better yet, how do they work together?

Let’s take a look at each and how combining both an appraisal and an AVM can maximize potential and minimize risk.

First, an AVM is just that – it’s automated and does not involve an on-site property inspection. AVMs estimate property value by comparing and analyzing property characteristics against public record data. While an AVM can’t review interior and exterior property conditions, some include street view imagery that can help identify issues with exterior conditions, such as property boundary discrepancies. It’s great to leverage automation and historical data analysis to generate the latest information on pricing and ownership and create a big picture report.

The main difference between an automated valuation model versus an appraiser is that an appraiser can look at both the interior and exterior condition in greater detail than any AVM. They also have a more intimate knowledge about sales of comparable properties in close proximity to the property in question.

What are some of the things working with appraisers can bring to the table that you can’t get with an automated valuation report? An appraiser can…

  1. Tell you if the house is really there! A computer can’t drive by a house to see if it’s actually located where it’s supposed to be, is the actual house it claims to be, or even if it has a roof.
  2. Advise if unique property features might add to or detract from market value. An AVM can only provide an estimated value; it can’t account for nearby amenities that may impact value, such as schools or railroad tracks, for example.
  3. Clarify what makes the comparables comparable. A computer can’t find out why a property is on the market, for example.
  4. Provide more info on the local sales market trends than an AVM can.
  5. Find out if there is a conflict of interest.

Finally, an appraisal is completed by a human, which can make all the difference in closing a deal.

Sure, AVMs are less expensive than on-site appraisals, and saving money is one key factor in their appeal. Plus with the resources an AVM has to offer immediately available at the click of a mouse, they also save busy real estate sales professionals time

Appraisals are based on the knowledge and opinions of a trusted, professional appraiser who has experience on their side. While the objectivity of AVMs aren’t prone to human error or bias, they can’t provide the level of detail and experience that an appraiser can bring to the transaction. Instead, they offer you the ability to get accurate, objective, data-driven numbers, something you can’t get from an appraiser.

At the end of the day, the convenience of AVMs is great, but they become even more powerful when coupled with an onsite appraisal. When the deal looks viable, you can’t go wrong by combining the resources and information provided by both an appraisal and an AVM.

With an AVM, you can quickly confirm basics such as financing challenges, property value and property title issues. Once you feel confident enough to proceed, you can then call in an appraisal to confirm the details and raise any issues on the property conditions an AVM cannot perform.

Coupling the powerful resources of a program that uses AVM technology, such as GeoWarehouse, with working with appraisers can help you mitigate significant risk on deals. By beginning with an AVM report you can quickly determine if an in-person, on-site appraisal is even required.

Haven’t you heard about GeoWarehouse? It’s a powerful program that thousands of real estate sales professionals are using to help mitigate risk. You can learn more at www.geowarehouse.ca.

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September 20, 2016

protect-your-deal-smYou’re working on a deal with a 60-day closing. You work your way through the entire process, negotiating all required documents and aligning all required professionals. Closing day is approaching, but then boom, you hit a snag. The only way to predict your revenue is to know that all the deals that you are working are solid.

While some situations are completely out of your control, like a sale being conditioned on the buyer selling their home, or a buyer coming down with a serious case of buyer’s remorse, many of the reasons that deals fail are well within your control. Here are some of the challenges and how you can overcome them.

Buyer Financing Challenges

Buyer financing challenges can occur for a variety of reasons. Sometimes a mortgage pre-approval is issued and then the client’s information changes or they have difficulty providing the information requested by the bank. Other times, the client incorrectly estimates their equity, leading to a smaller down payment than originally anticipated and even difficulty covering closing costs. The best way to overcome buyer financing challenges is to work closely with your broker partners to better understand what they will be looking for to close the mortgage and work with your client to meet these requirements as early in the closing process as possible. Want to strengthen relationships with your broker partners and create more alignment? Ask them what they need. What is required on every deal? Proof of down payment? Proof of income? The list goes on… Why not ask your client for this documentation at the mortgage pre-approval stage? Another step that you can take if the buyer is also selling their home or the proceeds for their down payment are coming from the sale of another property is to search the property in GeoWarehouse. You can validate the value of registered encumbrances to estimate the equity they will have available.

Disagreement Over Property Value

Gone are the days of a formal appraisal being required on all deals and hello are the days of Automated Valuation Models (AVM). Ever wonder why the bank often doesn’t order an appraisal? Over the past 2 decades, banks have come to rely on AVMs, which are essentially automated property valuations that generate a property value estimate. The buyer and seller can agree to whatever value they want, but if the bank runs an AVM that disagrees with the value then the deal will come to a grinding halt. The best way to overcome this challenge is to run your own automated valuation of the subject property in GeoWarehouse. Especially in hot urban markets like Vancouver and Toronto, it is not uncommon for bidding wars to push a property’s value far above what may be considered market value at the time of the offer and acceptance. Anticipating discrepancies in value enables you to prepare your client to have more down payment or plan in the event the bank doesn’t want to offer full financing.

Property Title Issues

Property title issues such as other people on title, the presence of liens, strange transfers or discharges, undischarged mortgages and many other title-related issues can emerge and quickly delay, and even prevent deals from closing. Don’t wait for the real estate lawyer to uncover these types of challenges – at this point you will be so far into the process that you will have incurred significant time and expenses, as will the other professionals involved in the transaction. Want to ensure that there are no title issues existing on your deal? Check the Parcel Register* first. This will reveal who the legal homeowners are, the type and percentages of ownership, registered mortgages, liens and more. You can quickly access a property’s Parcel Register* through the GeoWarehouse Store in GeoWarehouse.

Predicting revenue means anticipating/estimating what new business you want to bring in, and, just as importantly, that the business you have on the go is good business. Going above and beyond the call of duty for both your client and professional partners, from day one, makes it clear to all that you are a professional who maintains a strong commitment to getting the deal done!

Have you heard about the New GeoWarehouse? It’s coming soon and if you want to learn more visit www.earlyrelease.geowarehouse.ca.

*An official product of the Ontario government pursuant to provincial land registration statutes.

 

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