Getting More from AVMs

Getting More from AVMs: Why Selection, Oversight and Governance Matter

Automated Valuation Models (AVMs) have become an increasingly important part of modern mortgage lending. By leveraging property, market and transactional data, they offer a fast and cost-effective means of assessing property value, helping lenders improve efficiency, enhance customer journeys and support digital-first lending strategies.

However, successful AVM adoption is not simply a question of selecting a provider and switching the service on. Understanding how models perform, where they perform best and how risk is managed over time is equally important.

Not All AVMs Are Created Equal

AVMs can vary significantly in their performance across different property types, geographical regions and lending segments.

A model that performs exceptionally well in one area of the market may deliver different results elsewhere. Factors such as housing stock, transaction volumes, local market conditions and the underlying methodology used by the provider can all influence outcomes.

For this reason, lenders should carefully consider whether an AVM's strengths align with their portfolio, risk appetite and lending strategy.

What Should Lenders Look For?

When assessing prospective AVM providers, there are several key areas that warrant consideration:

• Accuracy against physical valuation outcomes
• Performance across different property types and locations
• Confidence scoring and model transparency
• Stress-tested performance during changing market conditions
• Data quality and coverage
• System availability and resilience
• Commercial arrangements and contractual framework
• Professional indemnity arrangements
• Existing client base and market adoption

While no single measure provides the complete picture, collectively these indicators help lenders understand how a model is likely to perform within their business environment.

The Importance of Independence

Many lenders undertake extensive due diligence before selecting an AVM provider. However, the ongoing monitoring and governance of that solution can be just as important as the initial selection process.

As an independent valuation partner, Westmarq is not tied to a single AVM provider. Our platform integrates with all major AVM solutions, enabling lenders to choose the provider that best fits their requirements both today and in the future.

This independent position allows us to provide objective support, helping lenders assess performance, monitor outcomes and maintain confidence in their chosen valuation strategy.

Technology Works Best When Combined with Expertise

AVMs offer speed and scalability, but like any valuation methodology they have limitations.

Property markets can be complex and individual properties do not always fit a standardised model. Unusual characteristics, limited comparable evidence or rapidly changing market conditions can all impact confidence levels.

Where additional assurance is required, introducing professional oversight can provide an important layer of governance and control.

This is the principle behind Assisted AVMs (AAVMs), which combine automated valuation technology with professional valuation expertise. When confidence levels fall below agreed thresholds, cases can be escalated for further review, helping lenders manage risk while continuing to benefit from the efficiencies that digital valuation solutions provide.

Building a Future-Ready Valuation Strategy

For many lenders, AVMs are no longer an emerging technology - they are a core component of the valuation journey.

The focus is increasingly shifting from simply using AVMs to ensuring they are governed, monitored and optimised effectively over time.

By combining technology, independent oversight and professional expertise, lenders can build valuation strategies that deliver speed and efficiency while maintaining appropriate controls and confidence in valuation outcomes.