Appraisal Options During The Coronavirus Pandemic

What Appraisal Options Are There During The Pandemic?

The rapid spread of the Coronavirus pandemic has introduced us to new terms and new ways of performing our jobs. Before the pandemic, no one knew or cared what social distancing was but now we know it all to well.

Appraisal Options During The Coronavirus Pandemic

Because social distancing is such an important way to curb the spread of the virus many of us have had to change the way we do business in order to comply with the government’s suggested protocol. We have been forced to find ways to do our jobs while at the same time limiting personal contact with one another.

To help real estate appraisers do this, Fannie Mae has issued temporary guidance on appraisal requirements, allowing appraisers to perform Drive-by and Desktop appraisals in addition to full interior inspection appraisals. You may be wondering what each of these types of appraisals is and how the appraiser performs them.

Appraisal Options

Listed below I describe exactly what each of these types of appraisals is and how the appraiser performs them.

Full Interior Inspection Appraisal – This is the traditional type of appraisal that most people are familiar with. An interior inspection, or observation, is the best option because the appraiser is able to view first hand the interior features and condition of the property.

In addition to viewing the interior of the home, the appraiser is able to measure the accurate square footage of the house. This is one of the most important benefits of a full observation because square footage is one of the biggest driving forces of value in single-family homes.

While the condition of the home is important for conventional loans it is even more critical for FHA loans and FHA appraisals. Appraisals done for FHA purposes require the appraiser to verify the operation of the electrical and plumbing systems as well as various other parts of the home. You can read more about what appraisers look for during an FHA appraisal in my previous posts.

During this time of the Coronavirus, many appraisers are limiting their interior observations to new homes and homes that are not occupied. This will limit their interaction with others which helps to halt the spread of the virus.

For those that choose to do interior observations with others present, the appraiser will hopefully follow proper protocol by using facemasks, gloves, shoe covers, and hand sanitizers where appropriate.

Drive-by Appraisals – A drive-by appraisal is just what it sounds like. It is an appraisal that is done where the appraiser drives by the subject property and takes pictures from the street of the front of the house, the street and the sales comparables or “comps” as they are commonly known.

The appraiser is able to observe the outside of the house and its condition as well as outside features. They are also able to look around the neighborhood and note the positive and negative characteristics of the area.

Because the appraiser does not go inside the house they do not have first-hand knowledge of the interior features and condition. In order to produce a credible appraisal, it must be based on accurate information.

To get the most accurate information the appraiser interviews the owner to find out about the special features of the home and whether it has had any updates or renovations. In addition, the appraisal must have accurate square footage information which the owner can provide from an old appraisal where the home was measured.

Desktop Appraisal – A desktop appraisal is one that is done without leaving the office. It is similar to the drive-by because it is based on second-hand knowledge.

Desktop appraisals are usually limited to properties that are selling or are listed for sale or that have recently sold. This is because the information would be more readily available online.

Regardubg pictures, the appraisal must have at a minimum a picture of the front of the house and street. Fannie Mae states that the pictures must be relevant which is code for meaning that the photo must reflect the current condition of the property. These can usually be obtained from the owner or agent if possible.

After collecting information about the property from knowledgable parties the appraiser then performs the rest of the appraisal just like they would the normally. The key here is to have credible information to base the final opinion of value on.

Appraisal Inspection Enhancements

These are the three types of appraisals that are being done during the Coronavirus pandemic. Two other options that I would like to mention that have come out of this crisis is the curbside appraisal and the virtual inspection.

These options are enhancements to the drive-by appraisal rather than additional appraisal products. The curbside appraisal option can involve taking a walk around the home to view it more fully. It can also involve measuring the house from the exterior to verify the square footage.

The virtual tour takes advantage of current technology by allowing the owner to walk around the house while using FaceTime or another similar app to show the appraiser the interior features and condition of the house. The appraiser can take screen shots from the tour or the owner can send pictures seperately.

As I said these two options enhance the drive-by appraisal so that the appraiser utilizes the most accurate information possible to provide the most accurate appraisal possible.

For the drive-by and desktop options the appraiser must perform due diligence in obtaining the most accurate information possible so that the appraisal is as accurate as possible. If the appraiser cannot obtain accurate property data then they cannot perform these types of alternative appraisals and some other option must be used.

Question

Do you have any question about what types of appraisals are being performed during the pandemic? Please leave a comment below and I’ll do my best to answer it. As always, thanks for reading.

Comments

  1. Did my first FaceTime inspection this morning…went rather well. I could see these procducts catching on for non-lender work, too.

  2. Thanks Tom. Some colleagues may not like the scope of work changing, but USPAP puts us in charge and we get to develop the scope of work for the assignment. I find myself grateful for this reality in today’s world.

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