Korea Appraisal Board (KAB) has successfully developed the electronic system to assess real estate’s value automatically before it is submitted as a mortgage against a loan. Korea Appraisal Board is gaining momentum in its rise to be the nation’s No. 1 real estate market manager since it reached record-high profits through a tech-based turnaround.
KAB announced on Nov. 24 that it had successfully improved the Mortgage Value Automatic Assessment System to appraise the value of real estate to correctly reflect market value. The system appraises the real value of the real estate before it’s put against a mortgage by using some 100 million data points, known as Big Data, to evaluate the real market value of real estate.
What bank clerks have to do is to input information on real estate put up against a mortgage for a loan into the appraisal system to get the value of the real estate.
The system, being used by secondary financial firms such as Shinhyup Savings Bank from the end of last year, had to overcome accuracy problems, therefore it had been not been relied upon.
For the real estate whose real market value is 100 million won, the system came up with a range of 80 million won to 120,000,000 million. But recently, the system was upgraded to narrow the difference to 95 million won to 105 million won, much closer to the actual market value, improving the accuracy ratio of the system to 95 percent. KAB officials said financial circles provide loans amounting only to 60 percent of the mortgage value (LTV) and the mortgage pledged should cover 120 percent of the given loans. Bank officials rarely inspect the real estate put up against a mortgage, taking the appraisal values provided by the system as they are. The appraisal system is useful in preventing loan fraud.
KAB is in the middle of a project to further upgrade the system in cooperation with the Korea Advanced Institute of Science and Technology (KAIST) to develop an artificial intelligence appraisal system to be used by Internet banks and first-grade financial circles. President Suh Jong-dae of KAB said we would like to use the new appraisal system as the primary infrastructure for Fintech in Korea. Last year, the state-run agency gained its highest figure in sales at 137.4 billion won ($125.2 million), while net business profits were 15.5 billion won. According to KAB, its credit was rated “A” and selected as a recognizable public service provider by the government.
The fast-paced achievements were thanks to internal innovation that tested the traditional management system, KAB officials said. Prior to the turnaround, the KAB was staggering from a profit drop and strained company structure that recklessly expanded the business scope while less expertise followed. Since it handed over the appraisal sector to private organizations, the agency adopted high-end technology to provide precise real estate market data and maximize work efficiency.
Smartphone applications were newly developed in a bid for field investigation that cut down on 18.7 billion won of labor cost. Inaccurate data were severely revised and reflected to another real estate market watching application in order to offer quality information in real time.
KAB is now on track to develop an artificial intelligence-based property assessment system, expected to largely reduce 200 billion won of annual expense on assessment, the officials added.
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Kim Yang-soo, headquarters manager of the New Business Headquarters of the Korea Appraisal Board, L, holds a copy of the MOU on cooperation in the development of artificial intelligence-based real estate value assessment system after the signing on June 14. (Photos: KAB)
