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64 Feature By: Jon Wierks "Necessity is the mother of invention." is old proverb best sums up the story of how automated valuation models (AVMs) have evolved from their humble beginnings to today's industrywide acceptance. e year was 1994, I went to work for a small appraisal company in Southern California. For those who can remember that far back, appraisal processes—and especially the collection of prior comparable sales searches (comps)—were tedious and time consuming. MLS listings were almost totally paper-based and finding the right comps could take up to an hour searching microfiche and other sources. e process was broken and something better was needed, but what? Armed with a mission to invent a new solution, a couple of us within our own appraisal company set out to build a tool, not to value properties, per se, but to simplify identification and scoring of comps. What started out as an in-house project to improve efficiency eventually became one of the first AVMs —Valuate, which launched in 1995. at first AVM model required county-level property data to be accessed via telephone modem, connecting to mainframe computers for each individual comp search. at process could take five minutes for each search. e model would score the comps and the appraiser would pick and adjust the comps used in the final valuation. As poor of an experience as that might sound today, it was considered revolutionary at the time—perhaps too revolutionary. EARLY CHALLENGES Most independent appraisers never adopted early models like Valuate because they didn't want to spend the money, they were leery of the technology, or they simply felt more comfortable to keep doing it the traditional way. Our AVM did give us a competitive edge versus other appraisal companies in one area: responding to mortgage brokers who would call and say, "I've got a deal working and need to know whether the property can value at $200k?" While that doesn't sound like a problem today, in those days there was no easy answer to that unless you were either a skilled local real estate agent or a certified residential appraiser. What started as an idea to assist the appraisal industry soon blossomed into a very real and compelling opportunity for the lending industry. Lenders needed a tool for their underwriters to quickly validate the appraisal value and give those underwriters confidence that the value was in the acceptable range. While the original AVM models let the appraiser choose and adjust comps, lenders did not want their own underwriters to be able to manipulate comps. As a result, that functionality was blocked. Lenders required an AVM model that provided more of a blind (or non-human influenced) comparison and value, and we were quick to meet those requirements. Soon after, our company introduced our first commercially available AVM, ValuePoint, which had a full graphical user interface and could perform the valuation without human assistance. is meant that nonappraisers could use and understand it. e ValuePoint model was licensed by First American as part of First American's emerging property data solutions division. First American was so impressed they eventually bought it. By this time, our company had become 100% committed to AVM development and was hard at work creating another game changing solution. In 1997, we released our newest model, the PASS AVM. We licensed the public record data in bulk and created a proprietary database that could leverage high-speed mainframes, cutting response time to less than a second. For the first time, an AVM was accessible to any user on a self-serve basis, on a website, in real-time with delivery in seconds, not minutes, and required 64 AVMs: THEN, NOW, AND IN THE FUTURE The history of automated valuation models through the eyes of a 25-year industry veteran.

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