Enterprise risk management and collateral valuation services company Veros Real Estate Solutions has released a dearth of information and research which found that after an internal study, they found substantial evidence pointing toward the lack of racial bias in its valuation product VeroVALUE Automated Valuation Model (AVM).
According to Veros, this information is important, not just about its findings, but so that interested parties can perform their own quality control checks to see what went into this research.
The AVM uses a vast amount of data and predictive models to produce specific valuations. The study was conducted across five major metropolitan areas due to their diverse cross-section of racial profiles: Atlanta, Chicago, Houston, Los Angeles, and Philadelphia.
Specifically, the study utilized neighborhood racial compositions to determine if a correlation existed between the percentage of Black, Hispanic, Asian and White populations and the number of properties in the area that were undervalued or overvalued by more than 15%.
According to Veros, the findings across all five cities revealed no evidence that its AVM has any racial bias baked into it. It additionally found that the proportion of properties undervalued by more than 15% had no correlation with the proportion of Black or Hispanic populations in a neighborhood.
“It is crucial to utilize professional-grade AVMs that can help identify potential racial bias in home valuations and to flag concerns of potential undervaluation of minority-owned properties,” said Eric Fox, Chief Economist at Veros. “Proven solutions like VeroVALUE give the housing market a precise, accurate and non-biased solution that is built on quality data.”
The full research report can be found here. A webinar on the findings will be presented on Nov. 16 titled “Combating Racial Bias in the Mortgage Industry Through Data, Technology, and Diversity”. Click here to register for the webinar.