It argues that cascading is firmly established as best practice in the US market, and predicts that the AVM market in the UK has now reached sufficient maturity to embrace the same approach.
UKValuation’s CEO, Mark Witherspoon, said: “There are clear benefits to a lender which elects to use multiple AVMs. The main benefit is as a risk management strategy. Using multiple AVMs has become common practice in the US, and the reasons why are fairly straightforward to understand.
“Using a cascading AVM system enables lenders to select the best AVM for every request, to rank AVMs by looking at a variety of different statistical performance metrics and to define ‘cells’, for example split by geography and property type, to better segment AVM performance.
“This way, multiple AVM usage enables lenders to achieve greater accuracy than from a single AVM, and it also creates the ability to custom-define cells based on individual customers’ risk preferences. In this sense, a cascade effectively becomes an ‘AVM’ in its own right.”