Black Knight, Inc., has launched CA Property Condition AVM, an automated valuation model (AVM) developed by Black Knight Collateral Analytics, which factors in the condition of real estate properties to help determine more accurate property values, the company announced in a release.
Although property condition can have a significant influence on property value, it is not a widely used variable in automated pricing models because determining property conditions can be challenging, the company said.
First, property condition is relative, and although property characteristic data may be available for a subject property, property condition data typically is not available. Second, property condition can be subjective, which may yield a wide range of values. Finally, the data is “noisy” – meaning much of the data cannot be understood or interpreted by user applications.
“To develop the new AVM, the Black Knight Collateral Analytics used residential sales data that includes public records, Multiple Listing Service (MLS) records and proprietary data. This combined data produces hit rates – the percentage of properties valued by the AVM – of approximately 95 percent,” the company said.
The millions of records contain typical physical attributes (living area in square feet, baths, bedrooms, etc.) and key indicators of property condition. Black Knight Collateral Analytics then normalizes the data for consistency in quality of information and to improve data reliability.
The CA Property Condition AVM uses this data to automatically calculate estimated property values based on the condition of the property. The new AVM uses proprietary and unique logic to return values for six potential property conditions: excellent, very good, good, average, poor and very poor. This gives an indication of the value estimates for each of these property conditions, according to the release.
In addition to providing more accurate values, the CA Property Condition AVM can help companies minimize physical property inspections and provide values when physical inspections aren’t possible.
The new CA Property Value Condition AVM is available through direct website access, through an application programming interface (API) or through batch process.
“Historically, AVMs have provided a somewhat one-dimensional picture of valuation by assuming the vast majority of properties are in average condition,” Black Knight Collateral Analytics Executive Vice President/Managing Director Mike Sklarz said in the release. “CA Property Condition AVM represents the next generation of AVMs by expanding the view of a property through more comprehensive, current data and improving the accuracy of property values by automatically taking property condition into consideration.”