Summary
As part of the asset liquidation team at a private equity asset manager, our customer considers all angles to maximize return on every asset in his portfolio. HouseCanary helped his team determine prices for liquidation assets by providing retrospective automated valuation models (retro AVMs). These models backtested home sales prices without bias from home prices incorporated after the sold date.
The Challenge
Our client’s liquidation team needed HouseCanary values to compare directly to actual sale prices, to inform future pricing of liquidation assets. “We wanted to get a larger dataset, and we wanted to see how it worked historically instead of just going from this month on.” Our customer had plenty of transaction data on sold properties, but pulling HouseCanary data on those addresses would return current values. He wanted to match HouseCanary values to actual sale prices, without bias from newer information, in order to inform future pricing.
The Solution
HouseCanary developed retroactive automated valuation models (retro AVMs) for 1,500 distressed homes our client had sold in the last year. Our automated valuation model analyzed data from MLS and county assessor records, mortgage records, search and social data, and house/parcel data, excluding information after a certain date. This provided a snapshot of one point in time, as if our customer had pulled HouseCanary values at time of sale.
The Results
Given a sizeable sample of back-dated values in an easy-to-read format, our client could look at average past differences between HouseCanary values and sale prices. For example, if HouseCanary’s retro AVM values were a percent difference from what their sale prices were, they could then apply that rule of thumb to determine list prices in the future. With that information, our customer’s liquidation team was able to fine tune their pricing model with HouseCanary in the mix. “The long-term impact will be greater efficiencies, better pricing transparency, and better execution in the long run.”
Pricing Distressed Properties
Our customer, a leader at a globally integrated asset manager specializing in distressed mortgages, is always looking for ways to fine-tune his internal valuation model. “HouseCanary has been a source of more efficient data on property, including valuations. They’re very helpful in terms of any special requests that we have, and we’re glad of the relationship.” Like many major asset managers, our client draws from many data sources to triangulate values for assets in their portfolio. “Not many other companies supply data at a block level, and also not many companies have the coverage nationally that HouseCanary does.”
Our customer and his colleagues trust HouseCanary to provide decision-driving data:
- Valuations
- Value forecasts
- Value within block
- School information
- Hazards
- Property details
