Desktop appraisal software, and related products and services, continue to gain sophistication, integration, and comprehensiveness. While desktop appraisals will never entirely supplant appraisals that include a personal visit to the property, they have in many cases made that type of appraisal unnecessary. Indeed, appraisers can often use desktop capabilities to appraise a property in various ways, at speeds unimaginable a few years ago.
Uses of desktop appraisals
Desktop appraisals can determine the value of portable assets, real estate, and businesses, but they’re most commonly used for real estate. Through desktop appraisal software and services, an appraiser can aggregate publicly available information such as comps and tax records. Most experts agree that desktop appraisals are most applicable to homes in established, fairly densely populated neighborhoods where comps are reliable. They would necessarily be less accurate if the property being appraised were located in a volatile neighborhood where the character of the nearby properties are subject to frequent change—due to foreclosures or redevelopment, for example. Desktop appraisals are also less useful for isolated, rural properties, or for unusual custom-built homes.
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What’s involved in a desktop appraisal?
Desktop appraisals, as the term implies, do not involve visiting the property, taking photos and measurements, or looking for defects—although they often include information provided by a home inspector. Thus, they’re much cheaper than a full physical appraisal—usually about two-thirds cheaper—and much faster. Banks will often accept them as part of an application for a home equity line of credit, portfolio evaluation, or loan servicing, although they might insist on a full appraisal if a home purchase is involved. They are also useful as supplements to “exterior-only” appraisals.
Desktop appraisals often include a virtual exterior appraisal, since Google Maps is now so sophisticated that many properties can be examined by a “fly-around” on your computer screen.
The main drawback, of course, is that desktop appraisals are susceptible to inaccurate information. They have to assume that public information on square footage and other property characteristics is correct. They assume that the property is in average condition: not newly renovated, but not falling apart, either.
Desktop appraisals ordinarily are USPAP compliant, since USPAP doesn’t require the appraiser to make a physical inspection, nor does it specify who must inspect or photograph the property. (Indeed, USPAP doesn’t require photography, although sometimes the lender does.)
The future of desktop appraisals
Most market observers agree that desktop appraisals will become more prevalent as information available on the web continues to gain accuracy and completeness. However, there will always be plenty of properties on the market that will require traditional physical appraisals. Fannie Mae, however, does require at least a cursory physical inspection of the property. You do have to be a licensed or certified appraiser to issue a valid desktop appraisal.
Desktop appraisal software providers
Many software providers offer products and services to facilitate desktop appraisals and integrate them with other due diligence procedures. Shelton, Connecticut-based EDR, which was founded in 1990 as a provider of government records data, now provides a long menu of information to entities involved in property due diligence: environmental professionals, lenders, appraisers, corporations, law firms, insurance companies, government agencies, and real estate professionals. In addition to data, EDR offers workflow tools for data management in all areas of property due diligence and compliance.
“Our platform provides one place where appraisers can work faster, smarter, better,” says Gary Kulik, marketing manager of EDR. “Lenders use EDR services when they’re underwriting a real estate loan. They might have to order an inspection or a condition assessment. They can use the EDR platform to do anything from bidding out work to appraisers, to accessing a flood report: just about anything you can think of, in a very streamlined process. At the back end, we have a platform called PARCEL, where environmental consultants and appraisers can go to engage with the bank. The bank might send out an RFP, and maybe the appraiser responds through PARCEL. PARCEL produces reports that are in line with brand standards and saves the report writer the trouble of formatting and other administrative tasks. It also provides project managers with several layers of quality control.
“We’re building out that back-end system even further, allowing the appraiser to collect more information. They can also archive the information in a digital format, building up a database that they can use for future desktop appraisals: making those appraisals more accurate because they now have more historical data. You never have to go outside the system to order anything. We have more than 2,000 appraisal firms on our platform. We are the largest aggregator of environmental records in the country. For example, we have a proprietary database of dry cleaners and gas stations.”
ValueLink Appraisal Management Software allows AMCs, lenders, and appraisers to manage and track all their appraisal orders from a single location while maintaining regulatory compliance. They provide a cloud-based system accessible from almost any location, on various devices.
HomePuter.com includes the latest Fannie Mae, Freddie Mac, FHA, and VA forms, Lender/Client-specific forms, and AMC-specific forms; USPAP addenda; auto mapping; FEMA flood maps; census data; photo imaging; free signature scan, and other features. A compliance checker provides warnings and corrects errors.
alamode.com provides the TOTAL system, a form-filling facilitator that includes various data entry shortcuts and enhances the appraiser’s ability to reuse comps and spread an appraisal across many screens.
HouseCanary performs hybrid appraisals empowered by advanced strategies, using processes compliant with USPAP standards and supporting integration with third-party software tools. HouseCanary markets its services to lenders, capital markets operators, and owners of rental homes.
SFREP software includes features such as built-in tools for creating flood maps, as well as other charts and additions to appraisal reports.
ACI Analytics performs analytics and contains a listing database to facilitate property cost analyses. The company claims its services are highly compatible with other digital tools.
Bradford Technologies provides appraisal software that includes a fully integrated report processor and analysis tools that can handle almost any quantity of appraisal data.
Article written by Joseph Dobrian. Joseph Dobrian has been writing about commercial and residential real estate, and real estate-related finance, for more than 30 years. His by-line has appeared in The Wall Street Journal, The New York Times, The New Yorker, Real Estate Forum, Journal of Property Management, and many other publications. He is also a noted novelist, essayist, and translator. His website is www.josephdobrian.com, and he can be contacted at [email protected].