What Are Desktop and Hybrid Appraisal Products?
December 6, 2018 |
What happens when a client requests for “alternative appraisal products”? They may call it a desktop appraisal, an evaluation, a value-check, or any one of a myriad of catchy titles.
In a residential appraiser’s world of churning out URAR forms every day, this could be new territory.
- What is needed in a “desktop” or a “hybrid”?
When an order or quote request arrives, take a hard look at what that client is actually asking for. If details are not included on the order, call or email for complete details. Since an on-site inspection is NOT requested, what data sources are to be relied upon? What assumptions regarding the interior are appropriate and necessary? Is there a form or format including enough detail to produce a credible report? And what is the expected timeline for a report submission? There are many questions to ask before an appraiser accepts these assignments.
- What is the intended use of the valuation assignment?
Many appraisers remember when “drive-by” appraisals first came on the scene. There was balking back then, with concerns about the limitations of the assignments. Conversations took place between appraisers regarding the liability it might create. Some appraisers declined this work, while others embraced it as a new type of assignment. The latter hoped these would take less time than a full URAR format.
The intended uses of these drive-by assignments varied. They could provide collateral support for home equity line loans or give a foreclosing lender a preliminary valuation. This was the first time that many residential appraisers saw requests for a valuation product that was more limited in scope. It was up to the appraiser to decide if they had a comfort level with a “lesser” product than the URAR form.
- Who is being asked to provide these services?
Are appraisers being sought out who also provide full appraisals in the geographic area of the subject property? Or, as a few “processing” companies request “hybrid” appraisals, are they asking a home inspector, or a real estate agent, to walk through the property and send notes and photos to an appraiser who is waiting to value the property from their information? This is obviously concerning to the appraiser who may be considering this work.
- Geographic competency, required by USPAP, is a concern
Rumors are flying that appraisers are providing valuation services far from their normal territory. Yet, this work is not a “desktop review” of someone else’s work. Reviewers from far away routinely look over reports for credibility and support of values. That is not the case here, where the appraiser is providing valuation services. Rumors or no, the appraiser is responsible for geographic competency in an appraisal assignment.
- What about fees offered vs. time spent?
Companies offering these assignments may provide estimates of the time required to produce the product. They may maintain that the fees are the same or better than full appraisal work, based on an analysis of fees earned “per hour”. Only an appraiser can determine if this work is worth their time, based upon the scope of work requested. If the client is requesting these products but asking someone else to “walk-through” or “drive-by” the property, is it because appraisers’ fees are higher?
- Consider liability
There is a reason that lenders or AMC’s may request these products from appraisers – they may still need an appraiser’s signature. It is the responsibility of the appraiser to determine their exposure. Chat with your Errors and Omissions carrier to see if an appraiser’s routine coverage will extend to these products.
When FHA guidelines shifted in past years to include attic and crawl space viewing, many appraisers voiced concerns over the increased liability. A decision to decline the work, or to incorporate this larger scope of work had to be made. This scenario is similar to a “desktop” or “hybrid” appraisal, with regards to liability concerns.
- Consider USPAP compliance
Beyond geographic competency, the appraiser must consider USPAP compliance and react accordingly. A brief form or a few pages may not follow the requirements of Standard 2 in USPAP. The scope of work must be detailed enough to provide a credible value, with the burden on the appraiser to decide if this is true.
Careful consideration is advisable for appraisers who would like to provide alternative appraisal products, so that they are comfortable with scopes of work, fees, and liability.