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AVM in mortgage terms is an Automated Valuation Model, which is an automated process that can provide instant property valuations on residential properties. AVMs provide time and cost savings for our clients, making them a great tool for time-sensitive cases.
AVMs are completely digital, meaning if the property is eligible there is no requirement for a physical valuer to view the property and write up a report. AVMs are generated using powerful algorithms and market data to estimate the value of a property. If an AVM figure can be generated, the result will be displayed instantly.
Not only does this save time, but it also saves paying an upfront valuation fee which depending on the value of the property, could be a huge saving.
Benefits of an AVM for a mortgage
On average, where a physical valuation takes place, the number of days waiting for a valuation report is 11.
When using an AVM, there is no wait as the value is provided instantly. If you have a case that needs to complete quickly, this is a great way of ensuring no days are lost waiting for a valuation report to be returned and reviewed.
The average valuation fee on single residential properties is £393 (although this fee can be a lot more on higher value properties). With an AVM, there is no fee to pay as they are FREE. This provides an instant upfront saving.
How can I proceed with an AVM for a mortgage?
We have access to some lenders who can offer AVMs on single residential properties. There are certain criteria that must be met for an AVM to be used, a few of these points are below:
• Single-unit residential properties and small HMOs (maximum 5 beds) valued on a single-dwelling basis
• No properties above or adjoining commercial premises
• No converted flats
One of our lenders can also accept multiple properties on one loan, providing all properties can proceed using an AVM.
Unfortunately, not all properties will be eligible for an AVM and this will ultimately be determined by the market data which is available in the area. The software reports a statistical ‘confidence level’ which has to work on both the value and rental figure.
If there is not enough data to support the valuation, the AVM will still give a value but the ‘confidence’ will be low, meaning lenders can insist on a physical valuation taking place or reducing the loan-to-value.
How can Advocate Finance help?
If you have BTL properties that you think could benefit from an AVM for a mortgage, or a case that needs to complete quickly, please get in touch and we can determine whether your properties are eligible for an automated valuation.
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