Appraisal & Social Distancing
We just started the first quarter of 2020, and expressions like “social distancing” and the “new normal” are phrases that none of us thought would be directing our daily lives when we rang in the new year. For most of us, these last few weeks have challenged us to look at everything we do differently. We are working from home, ordering our groceries online, and trying to figure out ways to stay active and social under state-mandated quarantine conditions. Appraisers and the process of developing an appraisal are no different.
Some states have identified appraisers as essential services. However, this designation does nothing to protect the health and safety of the appraiser and occupants of a home. I think that most would agree that having an appraiser visit multiple properties across several counties is not the ideal situation under these circumstances. Imagine how bees pollinate fields and farmland. Now compare that image to thousands of residential appraisers going house-to-house across our nation. At this time, when everyone is being asked to self-quarantine to “flatten the curve,” appraisers, in the course of doing their jobs, may involuntarily be expediting the spread of COVID-19. Being identified as essential does not mean you carry on business as usual. How we have always done things, needs to be reassessed and modifications made to keep everyone safe during these unprecedented times.
Per the Interagency Appraisal and Evaluation Guidelines, a valuation should address the actual characteristics and physical condition of a property. It is not acceptable to base a valuation on unsupported assumptions. When an appraiser does not make a physical inspection, an institution should be able to demonstrate how the property condition and characteristics were verified. This requirement, along with the limitations of social distancing, will challenge the valuation industry to come up with new and innovative solutions to meet both of these critical obligations.
On March 17, 2020, The Appraisal Foundation released a FAQ that clarifies that an interior inspection completed by the appraiser is not a USPAP requirement. Per the FAQ, an appraiser is not required to personally inspect a property as long as the appraiser has a reasonable basis for their conclusions and can produce credible results. On March 23, 2020, the Federal Housing and Finance Agency (FHFA) granted the Government Sponsored Enterprises (GSE’s – Fannie Mae and Freddie Mac) flexibility to satisfy appraisal inspection requirements that reduce the need for an appraiser to inspect the interior of a home. Shortly after, The GSE’s released new flexibility options that allow for both a desktop and exterior assignment in place of the traditional appraisal process that requires the appraiser to visit the home to collect subject data personally.
Understanding these challenges and flexibility, Clarocity Valuation Services has officially launched QuickSurvey. QuickSurvey is a collaborative valuation process that fully integrates a regulatory compliant homeowner/occupant survey to replace an appraiser’s interior inspection.
The revised scope of work for the GSE alternatives removes certification #10, thus making third-party supplied information from an interested party acceptable data for analysis. In fact, Fannie Mae encourages appraisers to reach out to homeowners in a recently released FAQ regarding the new flexibility options. This extra step is one way to ensure that sufficient data is available to produce credible assignment results. This directive is vital since the GSE’s do not allow the appraiser to make extraordinary assumptions regarding the reliability of the data in their reports. If adequate information is not available to produce credible assignment results, the flexibility options are not available to complete the assignment. It is the combination of public records, MLS, street view, aerial view, and the recent information and photos from QuickSurvey that verifies the credibility of the data used in an appraiser’s analysis.
An appraiser can accomplish similar results by interviewing the owner over the phone and requesting them to send photographs. However, QuickSurvey goes an extra step and records the owner’s certified responses within a report, thus drastically reducing potential he said she said situations. This process also eliminates specific conversations regarding value between the appraiser and owner.
QuickSurvey checks all of the above regulatory boxes and concerns by engaging the homeowner or designated occupant to collect the data and photos used in the valuation. Rather than relying solely on phone interviews and notes, this process precisely documents what was submitted by the borrower. CVS even concludes the process with a certified signature of the individual completing the QuickSurvey to provide an extra layer of legal documentation. All submissions are quality control checked for completion, accuracy, and Appraiser Independence Requirements (AIR) before being released to the appraiser.
Developing new and innovative solutions to meet unique client circumstances is nothing new for CVS. Over the last decade, CVS has delivered highly credible valuations and appraisals through tech-enabled collaboration. Our proven process allows for highly dynamic and relevant workflows enabling our clients to continue to meet their valuation needs. With the concerns of COVID-19 in mind, CVS has created a regulatory compliant process that protects both the appraiser and occupants of a home. Through the use of technology, valuation in the reality of social distancing is achievable, affordable, and highly effective.
QuickSurvey is a social distancing solution for all traditional appraisal products, as well as BPO’s and CVS’s alternative MVP appraisal products. Feel free to contact me at firstname.lastname@example.org if you have any questions or if you are interested in incorporating QuickSurvey as a compliant workflow for any of your valuation needs.