scooter
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Post by scooter on Aug 25, 2023 21:55:18 GMT
Almost invested in this at 8.51%, then I read:
"This property has been valued via an Automated valuation model (AVM). Automated valuation models (AVMs) are statistically based computer programs that use real estate information such as comparable sales, property characteristics, and price trends to provide a current estimate of market value for a specific residential property. An AVM report provides a written summary of the results."
I haven't seen this on loans previously, but haven't been investing for a while. What do people think. Can this type of valuation really be acceptable, or is it no worse than the human kind?
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rocky1
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Post by rocky1 on Aug 26, 2023 2:58:55 GMT
as long as its a RICS avm every thing should be sound.it might be acceptable to the platform and borrowers its not their money they are playing with.whatever next automated updates on the progress/non progress of development loans.
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dave4
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Cynical is a hobby not a lifestyle
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Post by dave4 on Aug 26, 2023 7:12:38 GMT
as long as its a RICS avm every thing should be sound.it might be acceptable to the platform and borrowers its not their money they are playing with.whatever next automated updates on the progress/non progress of development loans. You could be correct reading some of the reterm and late updates of late, all they need is Cbgt sign out.
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Post by uksoul on Aug 26, 2023 12:48:46 GMT
Almost invested in this at 8.51%, then I read: "This property has been valued via an Automated valuation model (AVM). Automated valuation models (AVMs) are statistically based computer programs that use real estate information such as comparable sales, property characteristics, and price trends to provide a current estimate of market value for a specific residential property. An AVM report provides a written summary of the results."I haven't seen this on loans previously, but haven't been investing for a while. What do people think. Can this type of valuation really be acceptable, or is it no worse than the human kind? There have been several loans with this automated valuation system. It eliminates the need for a physical assessment and is faster way of obtaining an evaluation, it is increasing in use within the real estate industry. Critics highlight the accuracy of the valuation depends on the amount of data that has been inputted.
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Post by Ace on Aug 26, 2023 13:27:46 GMT
From a quick look at the valuation report, it seems that there is no comeback if the valuation is wrong. The valuation comes up with a range from recent(ish) "valuation" and sale prices of "similar" properties in the same vicinity. The value used seems to be roughly in the middle of the calculated valuation range. K is quoting an LTV of 75% based on that central figure. However, there seems to be no input related to the condition of the property. Without any information as to the condition it would be safer to assume the figure at the bottom of the range, which would give an LTV of 83%. Is the rate high enough for this?
Further, the Hometrack website states:
"We regularly test AVM performance against surveyor valuations across c.75% of the mortgage market. 80% of our valuations are within 10% of the surveyor’s recommended value."
Ignoring the fact that we don't know whether this particular property is within that 75% of the mortgage market that they are regularly testing...
1 in 5 of these AVM valuations are not within 10% of the surveyors recommended value (which may also not be the actual sales value). Combined with the possible LTV of 83%, that gives very little wriggleroom for administration fees if things go wrong. Is the rate high enough for this?
I won't be putting any significant cash in loans with high LTVs where the security has been valued using the AVM system.
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scooter
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Post by scooter on Aug 26, 2023 14:49:18 GMT
Thanks everyone for your thoughts.
I have a list of red flags which I don't via from, no Second charges, no leasehold, nothing in tiers, nothing higher than B1 and I am adding this to the list. The way the valuation is done is pretty much what I would do from Zoopla, and that is not good enough.
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Post by Ace on Aug 26, 2023 15:57:50 GMT
Thanks everyone for your thoughts. I have a list of red flags which I don't via from, no Second charges, no leasehold, nothing in tiers, nothing higher than B1 and I am adding this to the list. The way the valuation is done is pretty much what I would do from Zoopla, and that is not good enough. That sounds like a very sensible policy. The only point I'd quibble over is "nothing in tiers". I find that tier 1 loans on Kuflink are often their best value offers. E.g. if we take the loan being discussed here, a 75% LTV loan (if we trust the AVM valuation) at a compound rate of 8.51% to lenders. Compare that to the G*****d CA8 Tier-1 loan at the same compound rate to lenders (8.51%), but an LTV of just 35.21%. The only other loan on offer at the moment with a rate of 8.51% has an LTGDV of 70%. There are other factors to consider, of course, but at first sight, the tier 1 loan seems to be the best value offer by far.
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rscal
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Post by rscal on Aug 26, 2023 17:59:31 GMT
Thanks everyone for your thoughts. I have a list of red flags which I don't via from, no Second charges, no leasehold, nothing in tiers, nothing higher than B1 and I am adding this to the list. The way the valuation is done is pretty much what I would do from Zoopla, and that is not good enough. That sounds like a very sensible policy. The only point I'd quibble over is "nothing in tiers". I find that tier 1 loans on Kuflink are often their best value offers. E.g. if we take the loan being discussed here, a 75% LTV loan (if we trust the AVM valuation) at a compound rate of 8.51% to lenders. Compare that to the G*****d CA8 Tier-1 loan at the same compound rate to lenders (8.51%), but an LTV of just 35.21%. The only other loan on offer at the moment with a rate of 8.51% has an LTGDV of 70%. There are other factors to consider, of course, but at first sight, the tier 1 loan seems to be the best value offer by far. Where there are 3 tiers tier 2 works well from the selling point of view (IMO) but there are fewer loans like that. BTW Kuf makes it easy to see the average loan:
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Post by Ace on Aug 26, 2023 18:18:27 GMT
That sounds like a very sensible policy. The only point I'd quibble over is "nothing in tiers". I find that tier 1 loans on Kuflink are often their best value offers. E.g. if we take the loan being discussed here, a 75% LTV loan (if we trust the AVM valuation) at a compound rate of 8.51% to lenders. Compare that to the G*****d CA8 Tier-1 loan at the same compound rate to lenders (8.51%), but an LTV of just 35.21%. The only other loan on offer at the moment with a rate of 8.51% has an LTGDV of 70%. There are other factors to consider, of course, but at first sight, the tier 1 loan seems to be the best value offer by far. Where there are 3 tiers tier 2 works well from the selling point of view (IMO) but there are fewer loans like that. BTW Kuf makes it easy to see the average loan: I'm not clear on how or whether those stats are skewed by auto-investments.
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