Over the past few weeks and months, there has been a great deal of information, commentary, and opinion about COVID-19, or what is more commonly referred to as the Coronavirus. I have read and heard so much, that it feels difficult to separate the facts from the fiction and the commentary from reality. We have heard reports from around the world of the devastating impacts of the disease and comparisons to other pandemics. Is it as bad as they say, or is it not as bad as it sounds? The unknown can be as frightening as what we know for sure about the disease.
Local, state, and national leaders have mandated the closure of places where larger groups of people congregate, such as schools, churches, movie theaters, and restaurants. Many companies are requiring employees to work from home in order to mitigate the spread of the virus at the workplace and mandating ’social distancing’ to reduce contact between people. These are all very reasonable and appropriate precautions to take to keep citizens and employees safe.
Everyone would agree that appraisers should not put themselves in a risky or unsafe situation when completing an assignment. It is easy to recognize these kinds of scenarios when you open the basement door and see an old, rickety set of basement steps. In those kinds of circumstances, you can decide what is safe or not quickly, and work out what to do. No one would fault us for taking pictures and describing the situation in the appraisal report. But when, like Coronavirus, the threat to safety is invisible, what are we supposed to do? As appraisers, what are appropriate and reasonable precautions we can take to stay safe when performing our jobs during these times? We’re not currently able to completely avoid interior inspections for most assignments, (although I firmly believe we will one day as the result of developing technology and training). So, what might be an appropriate approach that allows us to continue working while maintaining a reasonable level of safety?
The Department of Veterans Affairs (VA) has announced a measured and thoughtful approach to assess the risks that might be relevant to upcoming interviews between homeowners, real estate agents and appraisers prior to the inspection. The guidance includes questions to ask prior to a scheduled appointment, such as:
- Are you having flu-like symptoms, such as fever, cough, or shortness of breath?
- In the last 14 days, have you traveled to a high-risk area for transmission of COVID-19?
- Have you been in close contact with someone confirmed to have COVID-19 or who is being evaluated for COVID-19?
In this unprecedented, modern pandemic, Fannie Mae, Freddie Mac, FHA, VA and USDA may also chose to adopt temporary policies that reduce requirements for interior inspections and necessitate only exterior or drive-by appraisals. The VA has already issued initial, short-term guidance that outlines guidelines for meetings with lenders, servicers and appraisers.
There is a basis in guidance issued to financial institutions that could guide an interim decision to move to drive-bys or desktops. The Interagency Appraisal and Evaluation Guidelines, which should be required reading and continuing education for all appraisers, provides clear standards for minimum levels of inspection:
“The appraisal report should contain sufficient disclosure of the nature and extent of inspection and research performed by the appraiser to verify the property’s condition and support the appraiser’s opinion of market value.”
Notice it doesn’t say how the inspection and research were performed, but rather focuses on ensuring the disclosure of enough detail on the appraiser’s inspection and research to support the valuation.
In the 2020-2021 edition of USPAP, Advisory Opinion 2 provides insight into the physical observation of an inspection performed by someone or something else and the requirement to identify relevant characteristics about the property.
“If an appraiser’s observations are limited to an exterior-only inspection from the street, then the appraiser must gather information on relevant characteristics from other data sources and/or use extraordinary assumptions. The data sources used are often the same sources used to gather information on comparable sales. For example, the size of the property might be obtained from public records, and other information might be obtained from interior photographs included in a listing of the property for sale, or information from the appraiser’s own files.”
Technology is also currently available that allows homeowners to take a video of their property and turn the video into high-quality, panoramic pictures that can be provided to the appraiser at the time of assignment and used by them to develop a better understanding of the relevant characteristics of the property. Verification with the homeowner and or real estate agent, when appropriate, will augment public records or MLS or other online sources available to assist the appraiser.
In summary, always take the appropriate precautions to stay safe, no matter what the visible or invisible threat may be. Be reasonable and use great care in your approach to assignments. Feel comfortable turning down assignments that present an unsafe environment. And, in times of uncertainty, always keep an open mind and be willing to change.
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