As a trusted, nationwide Appraisal Management Company, Class Appraisal is well aware of the alternatives to determining a value; not just the approach an appraiser may use, but also whether to use an appraisal in the traditional sense of the word.
BPO’s, AVM’s or desktop valuation models – you may be familiar with one or more of these terms. The truth of the matter is that technology and data have brought us to a point where people have begun to ask if they need a traditional appraisal at all.
The National Association of Realtor’s put out an article last month titled, Rethinking Real Estate Valuations and Alternatives to Traditional Appraisals, in which they lay out a case to maintain the real estate appraisal as we know it, even though these newer alternatives may be more effective or lesser cost. The author notes that there may indeed be a time and a place for methods other than a traditional appraisal. There are quick to point out however that,
“…many in the industry, including the National Association of Realtors®, urge caution when waiving traditional, onsite appraisals for home purchase transactions to ensure purchases are based on sound financial principles and do not put undue risk on consumers or the market”.
The author then continues, citing interviews with representatives from a valuation service provider, a member of the American Society of Appraisers and a risk analyst from Fannie Mae, all backing the claim that caution should be taken when considering an alternative. As Ernie Durbin of Clarocity states, “Hybrid appraisals and broker price opinions are going to be part of future, whether anyone likes it or not[…] appraisers cannot let down their guard, and we must ensure that these are appropriate for the scope of work for the assignment – and that’s not for every transaction”.
Julie Jones of Fannie Mae weighed in on the matter as the organization has allowed certain properties to forgo a traditional appraisal –
“… Fannie’s property inspection waivers, or appraisal waivers, are available for mortgages and refinances that meet specific eligibility requirements, including those with lower loan-to-value ratios, single-family and condominium properties, principle residences and second homes, and when Fannie already has a prior appraisal”.
So it is clear to Fannie Mae that consumers may indeed be protected, even if a traditional appraisal is waived.
Whatever the case may be, and whatever the shape the future of valuations may take, there is one certainty: Class Appraisal will be there to deliver the best product to our clients and every borrower.