A valued future

While the bulk of the process has found sound IT solutions, valuation applications have remained well behind the pace, with the humble fax machine still the chief gatekeeper to final approval.

Automating a task traditionally dependent on human input has brought with it many challenges. However advances are being made with the presence of valuer panels and the growing acceptance of automated valuation models, or AVMs, as a critical tool in streamlining the approvals process.

As Adrian Winskill, the national sales manager at Valuations Exchange explains: “The key concern for the valuations industry has been to develop the most straightforward solutions for lenders – effectively bridging the gap in the loans process.”

Valuations Exchange is one of several companies to introduce a panel, or network, of valuers that can be engaged by any lender for faster results. Valuations Exchange’s work is characterised by new online tracking systems that ensure the client is always informed of the progress of the loan, making the application process far smoother.

According to Winskill, a lack of online connectivity has held the industry back in the past. But the introduction of new software is starting to effect serious change right across the board.

Valuations, quick smart

Market newcomers like RP Data, for example, have introduced, and are continuing to develop, platforms that will use stored property information in a database to generate almost instantaneous valuations. However the product does have its limitations.

“The RP Data-Rismark Indicies is modelled on AVM systems currently used in the United States – using stored data on properties and their features to produce accurate valuations,” says RP Data CEO Graham Mirabito.

“The key function of AVMs at this point in their introduction to the Australian market is to augment the assessment process and to act as an additional support for mitigating the risk associated with lending,” he says.

The AVM, or valuations index, currently offered by RP Data is becoming an increasingly valuable tool for the industry, with 500 plus brokers using the system, as well as the Reserve Bank of Australia.

The software currently has a small margin of use as a standalone application, but many brokers are starting to see it as an essential add-on to their business. The data collected by RP Data and the index’s tools can be used to reduce application times, provide estimates for customers, as a research tool and as a means of detecting fraud.

As Andrew Durden, business development manager with software solutions company LoanWorks, explains, it is the centralisation of these essential functions that will have the biggest impact.

“Valuations are the hardest part of the loan process. The implementation of an electronic system will give people a cheaper and faster solution and allow them to follow a request’s progress,” Durden says.

For lenders, this means faster, cheaper and more accurate approvals and an opportunity to boost customer service with updates and estimates while the valuation takes place.

Still in the works

Despite the promising inroads AVMs are making, traditional valuers won’t be made redundant just yet, according to Greville Pabst from WBP Property Group. Pabst says there’s still some way to go until automated valuations become accepted practice.

“Technology requires significant resources and capital to acquire and develop so the infiltration of such products may take some time,” he says.

Pabst says electronic assessments at this point in their development are best used for loans with lower LVRs.

“We are still quite a way off from having these new generation products replacing the accuracy of a full valuation, which involves internal and external property inspections and full analysis,” he says.

Alongside cost, concerns over quality and accuracy have also been raised, given the capacity for human error in data entry. These concerns are already on software developers’ radars, says RP Data’s Mirabito.

“Data quality and consistency must be monitored by the industry to ensure that a false economy isn’t created through incorrect or inconsistent information,” he says.

In the future, it is hoped that AVM’s will not only help speed up process times but also act as a universal watchdog for the Australian mortgage industry. Risks are slowly being reduced in the lending scene, but it will still take time, vigilance and understanding from industry members.

Mirabito says the best approach for the industry is for lenders to use both traditional onsite valuations and the newer desktop valuations to improve the loans process.

“The most important thing for the future of valuations in Australia is for people to understand when the technology is appropriate to apply,” says Mirabito.