Property Valuation 

Lightstone Automated Valuations

Lightstone is the leading supplier of Automated Valuations for the major South African banks and other lending institutions.  At the core of this service is Lightstone's Automated Valuation Model (AVM).  The AVM is a statistical model which estimates the value of existing residential properties throughout South Africa.  It has been developed in line with global best practice and refined over a number of years for the specifics of the South African property market.  The model is back tested monthly and has been consistently improved using new statistical approaches and enhanced data supply.  The Lightstone AVM has been independently reviewed and validated by KPMG and has been rated for use in South African RMBS transactions by both Fitch Ratings and Moody's.  It has also been reviewed and validated by our banking clients for use in origination and revaluation of existing portfolios for capital, provisioning and risk management.  

In addition to the Automated Valuation, Lightstone also provides indicators of valuation accuracy through proprietary accuracy and safety scores which ensure that the AVM is used most effectively in conjunction with desktop and physical valuation processes.  

Lightstone also provides a suite of property risk metrics to assess property and area risk and for use in Loss Given Default (LGD) calculations.  These metrics assist lenders to optimise their market exposure given their risk appetite.  

These metrics include:

• Area Exposure - an estimate of the market share that a lender has in each micro-market
• Risk Quality Grade - a measure of the average quality of security in each micro-market based on average credit scores, distressed sales values, price appreciation and liquidity
• Distressed Sales Factor - a measure of the average discount to market value that a property is likely to trade at in the event of a forced sale

Risk Differentiated Property Valuation Process

While the Automated Valuation Model can be used as a standalone application, it is normally best deployed as part of a 'risk differentiated' valuation approach combined with desktop and physical valuation processes.  This approach ensures that the simplest and least risky valuations are conducted effectively using the ADM or a desktop valuation, while complex or more risky valuations are conducted by physical valuers.  This is illustrated below:

Lightstone enables clients to implement a risk differentiated valuation strategy through the use of a number of systems and services that ensures a consistent approach to each step of the valuation process. 

Lightstone EZ Val

The Lightstone Valuation System enables clients to set valuation strategy according to their marketing and risk priorities.  Specifically, clients determine which valuation types should be processed via the AVM system and which should be sent directly for a physical appraisal.  They also select any Lightstone metrics that should be taken into account in the risk assessment process and set the statistical rules for AVM and desktop decisioning.  As the system is web-based, it is free of legacy issues and can easily interface with any type of mobile device, e.g. PDA, laptop, smart phone, etc. 

The key benefits of the system include:

• A single technology platform across the entire valuation process
• Complete, reliable management information 
• Consistent property structures and definitions 
• The dynamic rules engine enables real-time changes in valuation strategy
• Device agnostic system increases physical valuer effectiveness