When COVID-19 reached the United States and stay-at-home orders were put in place nationwide, many industries and professions, including real estate, shifted to working remotely.
Realtors were no longer showing homes in-person – instead opting for virtual showings with their clients. The appraisal process, one of the first components of the home buying process that estimates the value of a home, was no exception.
Originally put in place as a temporary emergency measure to the health risks of COVID-19, the Federal Housing Authority gave permission to appraisers for optional “desktop appraisals.”
In the traditional sense, an appraiser is hired by a mortgage lender to perform an inspection of a home's interior and exterior conditions. An appraisal considers several factors including the location, building site, structure of the home, square footage, condition and amenities. The findings are then reported on a standard Fannie Mae and Freddie Mac form called the Uniform Residential Appraisal Report.
With robust databases available online, the shift from a traditional in-person appraisal to desktop appraisals is giving appraisers the ability to virtually inspect a home in a timely and accurate manner and some in the industry are confident in this new trend.
Now that restrictions have been lifted in most of the country, many appraisers are still valuing homes without ever setting foot on a property. While this is far from the standard, desktop appraisals are becoming more common throughout the industry. While not inspected, desktop appraisals must continue to meet all the requirements of the Uniform Standards of Appraisal Practice (USPAP).
In March, mortgage giants Fannie Mae and Freddie Mac began accepting desktop appraisals nationwide for all eligible transactions – making it apparent that this trend may be here to stay.
I strongly encourage an in-person appraisal, but remote appraisals do have some advantages. One of the biggest reasons is a shortage of appraisals and with the remote model, an appraisal can be done quicker than an in-person while helping fill the void of the current labor crunch. While most listings have numerous pictures, the biggest hurdle to desktop appraisals is the requirement that, in addition to pictures, a floor plan showing the room layout must be provided to the appraiser and the appraiser must be confident that it is accurate.
If you’re looking to buy or sell, having the property appraised by a licensed or certified appraiser is an extremely critical component of any transaction. It ensures a lender isn’t letting a homebuyer borrow more than the home is worth and protects the homebuyer from overpaying for a home. When you’re ready, make sure you’re including an experienced appraiser in your next transaction.
Richard Exton is a real estate appraiser in Middle Tennessee. He currently serves as the Principal Appraiser at Mainer and Exton and is a past president at Greater Nashville REALTORS®.
