Lenders, Realtors, appraisers and homeowners need property valuations to qualify loans, determine market values for sales, check the accuracy of assessments and for other purposes. But none of them maintain a central database of property values. Therefore vast sums are spent on redundant efforts. For the lender, each time a new loan applicant seeks a loan, a new appraisal is requested. Appraisals are time-consuming and expensive (Consumer price is often $300 - $400 per appraisal).

LIMITATIONS OF CONVENTIONAL METHODS

Replacements for or supplements to conventional appraisals are increasingly being sought, because the conventional appraisal environment has certain features that limit usefulness.

The conventional appraisal fulfillment environment includes:

• Manually acquired Property characteristics data (from direct observation, paper, or inefficient automated document systems)
• Paper Reports produced
• Communications via voice- in person or by telephone
• Document Delivery via automobile, or at best, FAX
• Manual Filing Systems

Each appraisal user faces problems because of these limitations of the conventional environment. The fundamental problem facing lenders, for example, is that:

• they need new ways to compete in the marketplace
• today's appraisal processes and procedures are largely manual, time-consuming and costly
• inconsistent and derivative valuations are of limited value to lenders, and can even jeopardize regulatory compliance

Local government assessment authorities gather and maintain property information to set property taxes. Property characteristics are identified and maintained on all properties within each jurisdiction (most jurisdictions have automated this to some ex tent). This public data can be used to predict a market value as an alternative to expensive appraisals.

Merely automating some of the conventional processes provides advantages in process speed, but it doesn't improve the process. However, automation is a step in the right direction, and even greater improvements are possible.

Enter the evaluation. In the appraisal process, experienced professional assessors use their expertise to determine a value based on the characteristics of the subject property. When the behavior of the buyer/seller market is modeled, and then applied to property characteristic data, the result is mass evaluations- The Automated Valuation Model, or AVM.

Where banking legislation specifically requires an appraisal, nothing can be done to eliminate the appraisal monetary costs. However, great efficiencies can be realized where legislation permits an alternative to an on-site appraisal, and evaluations a re now permitted in place of appraisals for over 60% of all real estate transactions. Where an appraisal is required, valuations can provide an important information component in support of the physical inspection.

Firms that have automated data in other areas have made some attempts at this. They have applied statistical techniques developed for other purposes to the conventional appraisal process to produce modeled valuations. They have sped up the processes so mewhat, and they have processed in large batches, but they have sacrificed reliability and accuracy.

So, banking laws have allowed automated methods for some time. But the industry has not taken advantage of the technology that can improve valuations, because reliability and accuracy have been questionable...

Until now!

REASA has used the elements of the appraisers' judgement and the best data to develop The Superior AVM.

REASA hasn't just automated the old processes of the conventional valuation environment or applied inappropriate models. REASA appraisal experts have carefully combined established appraisal principles with elements of statistical and econometric model ing, and have applied geographic and economic data to produce the REASA evaluation, the very best product for use by the professional and the layman, alike.

The REASA AVM system leaps ahead of the conventional appraisal environment to take advantages of technology combined with the best appraisal principles, and it does it expertly.

WHY REASA?

Under the REASA system:

• Data is now stored in electronic form, is managed online with unlimited server capability and is easily and rapidly delivered over the Internet in clear, useable form
• Communications are instantaneous
• Valuations are stored in efficient, searchable databases
• Reports are provided on-line, immediately
• Additional features are available, using imaging, EC/EDI products and advanced modeling techniques

INCREASING THE CASH VALUE OF INFORMATION

Accurate and dependable information has obvious value to the user. More importantly, the REASA system adds value to the information because it is now timely. Under conventional systems, valuation data that is needed to qualify a loan can take weeks to receive. This is much longer than other required data, and it causes unnecessary delays in the loan approval process. Under the REASA system, the data is available within seconds.

REASA also adds value to the information with:

• A statistical approach and method that is superior to any other resource
• Products developed using the worthwhile components of the conventional appraisal environment, including Sales
• Comparisons
• An easy-to-use access and delivery system
• A tool for instantaneous valuations within US Controller of the Currency valuations rules
• Dramatic Cost Savings

THE "SALES COMPARABLE" APPROACH

In an effort to improve speed and efficiency in estimating property values in the real estate industry, a technique known as The Sales Comparable Approach is often employed. The Sales Comparable Approach, however, rarely uses sufficient data, and s eldom uses it properly.

It is inefficient because estimates are derived from very small samples. Extensive information that is available is disregarded in the classic Sales Comparable Approach. In addition, the sample that is used is highly localized and highly selecti ve.

The REASA Statistical Method improves on the Sales Comparable Approach because it uses more "comparables", it incorporates more information from a wider applicable geographical scope, uses a more efficient analytical framework and it adjusts econom etrically. Yet it still retains the strengths of the traditional appraisal approach

REASA VALUATION VS. CLASSIC APPRAISAL

• REASA Valuations consist of a review of valuation data already collected. Classic appraisals collect the same data over and over; that is inefficient,
• REASA Valuations are updated automatically with changing market conditions Classic appraisals rely on manual updating
• REASA Valuations provide unbiased support for all loans Classic appraisals may be influenced by circumstances

USE REASA WITH CONFIDENCE.

Because our Modeling Is Superior, and because we use the Most Current Data available, the REASA Improved Models are The Best.

Form the lender perspective, with REASA:

• Valuations are economical
• Valuations are timely, so
  • Loan application processing is more convenient to both borrowers and lenders
  • Lender Production Increases
  • Underwriting Costs are Reduced
• Valuations are more accurate, are Supportable, and are Defensible, so
  • Lender has a Complement to Credit Scoring
• Quality Control is Greatly Improved

The unique REASA system provides a data quality description and a location index with each valuation.

Contact REASA to learn about our specialty consulting support and our other products.