In the second quarter of 2020, during the early stages of what would become the largest global health crisis experienced in over a century, the GSE’s instituted COVID-19 related appraisal flexibilities to ensure the continuation of origination activities independent of the ongoing pandemic. These flexibilities allowed an engaged appraiser to benefit from an alternative path used to obtain information regarding a subject and its improvements. The Enterprises weren’t entirely prescriptive on how this virtual data capture would happen, but they did require the appraiser to credibly identify a Quality and Condition rating for the dwelling. This forced change in approach, due entirely to external factors, appears to have been a primary driving force behind the current rollout of the Desktop Appraisal initiative, likely because the performance of the transactions originated using the flexibilities was commensurate with volume that was originated using traditional appraisal workflows.
So why would we need a Desktop Appraisal option available as part of the GSE’s standard operating procedures? With the pandemic waning, and with fewer concerns regarding disease transmissibility as a result of an onsite inspection, why would there still be a need to support this type of product and process? Is it because the lenders are attempting to pay considerably less for an appraisal than they would have if they’d engaged an appraiser for a traditional URAR? Although this may come as a surprise, the answer is a definitive NO! Instead, the primary reasoning for this initiative is specific to process efficiency, and speed to closing for eligible transactions. When appraisers can eliminate the time they would’ve otherwise spent driving to and from subject property’s and comparables, they can focus their attention entirely on appraisal report development, yielding greater scale from the available appraiser workforce.
Is the inclusion of a Desktop Appraisal offering detrimental to the appraisal profession? Does it diminish the role an appraiser has in the mortgage lending process? There’s quite a bit of conjecture in the blogosphere that may lead some to think so, but in reality, the expansion of product offerings an appraiser is able to support further strengthens the appraiser’s position as a critical component to safe and sound lending practice. Appraisers weren’t relegated to the backburner in favor of an algorithm-only approach. They haven’t been removed from the process entirely. They have simply been offered an opportunity to provide a new type of product their client base is requesting.
Why should appraisers embrace Desktop Appraisals? Well, there are a couple of reasons that immediately come to mind. (1) It allows far greater flexibility for appraisers as it pertains to their ability to travel more freely, without having to sacrifice their ability to work while doing so. As an example, when I was working in production many moons ago, I was unable to enjoy any semblance of an extended vacation due primarily to the fact that I would not be able to generate any revenue while doing so. With Desktop Appraisals, an appraiser could easily remain productive, continuing to generate a living even if they find themselves physically distant from their market coverage areas, whether their absence is due to a scheduled vacation, or other factors beyond their control. (2) By eliminating the need to physically inspect each subject property, an appraiser is able to spend more time producing appraisal reports instead of driving for the vast majority of their days, which reduces their ability to produce reports and incurs greater costs, both from wear and tear on their vehicle and from exorbitant fuel prices.
Desktop Appraisals are officially here to stay, and from my perspective, that’s a very good thing! Remember, any advancement in the mortgage lending arena that includes appraisal modernization and retains the appraiser as the primary resource that’s used in the capacity of an independent third-party, opining on value potential and collateral risk, is GOOD for the appraisal profession as a whole. We as appraisers must adapt to the everchanging environment we find ourselves in, since failing to do so could lead to our untimely demise. Don’t just accept change, EMBRACE IT, as the alternative could have far more longstanding and damaging impacts on the industry we all know and love.
