Desktops, alternative valuation products (AVPs), and other limited scope appraisals are on the rise. While it is difficult to predict the future of the appraisal profession, the fact is, desktop appraisals are here now. And they’re becoming more commonplace. Many non-lender clients—and some lenders—are currently utilizing desktops and other limited scope appraisals for a variety of intended uses, including loan servicing, portfolio evaluation, and even home equity lending. Read on to learn what a desktop appraisal is, the basic types of desktop appraisals, and how these types of assignments may (or may not) impact the future of real estate appraisal.
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What is a desktop appraisal?
The term “desktop appraisal” is commonly understood to indicate an appraisal that is performed without the appraiser making any inspection of the subject property.
The adjective “desktop” indicates the appraiser is completing the appraisal assignment using the information that is available at the appraiser’s desk. Information about the subject property’s relevant physical characteristics may be gathered by an inspector and sent to the appraiser, or the appraiser may be responsible for researching the subject property’s relevant characteristics using public records or other readily available sources.
The desktop appraisal is the logical successor of the “drive-by” or “exterior-only” appraisal. Many years ago, when the interior inspection appraisal assignment was the rule, clients began asking appraisers to complete appraisals with an exterior-only inspection of the subject property improvements in certain situations (e.g., pre-foreclosure, HELOCs, or low-LTV refinance loans). Today, clients often ask for desktop appraisals in some of these same types of situations.
Is it an appraisal?
In a word, yes. While some appraisers look askance at desktop appraisal assignments, one thing is clear. Lenders and other clients who order desktop appraisals are specifically ordering “appraisals” from an appraiser. This service is part of appraisal practice and, according to most states’ laws, must be completed in compliance with USPAP.
Two basic types of desktop appraisals
The scope of work for a desktop appraisal can (and does) vary widely. Nevertheless, there are two basic types of desktop appraisals:
- The client engages an individual to make a personal inspection of the subject property and provides the inspection information to the appraiser; the appraiser is not required to research the physical characteristics
- The client engages the appraiser without an inspector, and the appraiser is responsible for researching the physical characteristics of the subject property from available sources (e.g., MLS, municipal property records, property owner, etc.)
The difference between these two types of desktop appraisals is based on where the information about the subject property’s physical characteristics is obtained.
Are desktops the future?
Some people on the fringe of the appraisal profession like to say that desktop appraisals are the future. Many of these individuals work for companies that engage appraisers to complete desktops, so their bias is obvious.
The future of the appraisal profession is open for debate, and there are no definitive answers. Are these types of assignments becoming more commonplace? Yes. Are these types of assignments going to take over and make the traditional interior inspection appraisal obsolete? Perhaps…or perhaps not.
Remember back in the 1990s when conventional wisdom held that the “drive-by” appraisal was going to take over and become the dominant type of residential appraisal? As we all know, that dire prediction never came to pass.
As an appraiser, you have the freedom to accept the types of assignments you want to complete, from clients you choose to work for. It’s your call.
Now that you’re clear on the difference between a desktop appraisal and a traditional appraisal, you may have additional questions, like: Is the appraisal developed any differently under Standard 1 of USPAP? Are different methods and techniques used? What does USPAP state about assignment conditions, such as instructions not to inspect the subject property? Can you accept an assignment under this type of condition? Get answers to these questions and more in our new online course: Evaluations, Desktops, and Other Limited Scope Appraisals.