Buzz: Can we have your background in the appraisal industry?
Ryan: I started appraising in 2003 and I am a Certified Residential appraiser based in Sacramento, California. I sit on the board of the Real Estate Appraisers Association of Sacramento and I’ve been running the Sacramento Appraisal Blog for over eleven years now.
Buzz: How has the coronavirus pandemic impacted your day-to-day life as an appraiser?
Ryan: This has been a whirlwind as it’s changing the way I do my inspections, but on top of that I’ve had an incredible amount of extra questions lately. Each week I find myself spending multiple extra hours answering questions from people wanting to know what the market is doing and how to talk about it. This has also propelled me to up my game for pulling daily stats, and that’s been a fascinating ride as I feel like I’m on the cutting edge of communicating trends. On a personal note it’s been challenging to complete work quickly because I have so much on my mind these days.
Buzz: In what ways have you been able to still adapt to the new challenges being thrown at you?
Ryan: I only do private work, but this has definitely disrupted my business. Mostly everything on my desk for court is simply on hold right now because the courts are closed. A few weeks ago I made the decision to not enter homes, so that has certainly changed the way I’m valuing properties right now and it’s also adding a tremendous amount of communication to each phone call or email as I explain what an inspection looks like with me not going into the home. I’ve found some clients haven’t been okay with this idea, but over the past 10 days or so most prospective clients have been very open to the idea of a more “digital inspection” so to speak. In California, we’ve been sheltering in place now for over two weeks, so I think that is helping me because people are taking social distancing very seriously. At first I wondered if business was going to stop completely as the first week into the pandemic was incredibly slow as I turned down most work, but these past two weeks it’s been very busy.
Buzz: What are differences between an in-person walkthrough and a video walkthrough?
Ryan: The obvious difference is I am not actually physically walking through the interior of the property, so I’m, in a sense, at the mercy of what the person shows me. So far I’ve been in my car in front of the house and the owner or occupant walks me through with a smart phone camera. We’ve used either FaceTime or Google Duo depending on whether the occupant has an iPhone or Android. Since I don’t physically see the property, I cannot capture everything I normally do such as smell or maybe some smaller physical depreciation that might cause me to probe further. This is not a perfect system, but I tend to leave most homes feeling like I have a good enough sense of the property. In my mind it’s better than a traditional exterior-only because I’d personally rather have more information than not.
Buzz: Is there anything appraisers should be worried about when doing a video walkthrough? For example, could someone hide a major defect from you or how do you verify the home they are walking you through is the right one?
Ryan: I am very skeptical of a video walkthrough done by a big data company having a borrower or occupant film the home. I hope and plan to never do that because I could be shown only what the person wants me to see. What I am doing is different because I’m like a director in charge of a video production. I give instructions for what to look at, when to pause, how to point the camera, etc. I’m also asking about specific upgrades as well as any deferred maintenance I should know about. This is an important distinction because I can take my time to see what I want to see and probe further if I spot something interesting. I’m not personally recording the video like some appraisers have talked about but I’m taking screenshots of every single room while the video plays. Thus I end up leaving my “inspection” with a ton of interior photos.
Buzz: Does it take more time to do a walkthrough with the help of the homeowner?
Ryan: Yes, it does, but not too much more. I have to take down notes as the owner is walking through the house and I find myself being very cautious since I realize this is my one shot to see the property. There is extra communication also to politely walk someone through this process and guide them through the home. I have found some clients have needed a good 20-30 minutes of communication to simply get them on board for what the inspection will look like. Anyway, on the inspection I am trying to absorb all I can, so I tend to take a little more time than usual. I’d like to add it’s important to ask the occupant to hold the camera with both hands to try to keep it steady. I learned the hard on my second inspection like this where I drove away feeling motion sick after 25 minutes of the owner shaking his screen as we walked through the home.
Buzz: How do you account for that in your fee?
Ryan: I am actually charging the same amount as I have before for what I would normally do to measure the house and observe the interior. If the market will bear more, then I’ll charge more, but my standard fee still seems very reasonable and I haven’t had resistance to it yet. Literally nobody has complained saying they should pay less, so I think the same fee is highly reasonable as collectively it’s about the same time involved for the entire appraisal process. Sometimes onlookers heavily segment the appraisal into thinking it’s all about the inspection, but that’s really only the tip of the iceberg in the process. If anything for the time being this feels like more work because it is a brand new process to me, but over time I suspect I’ll become more efficient. My concern of course for colleagues is hearing of AMCs offering very low fees to appraisers for doing a similar amount of work.
Buzz: What language are you putting in the report to protect yourself?
Ryan: I simply tell the reader what I did and did not do. I realize some colleagues loathe inspections like this, but USPAP puts us in charge of the scope of work and we get to develop the scope of work necessary for the assignment. During a pandemic, it just makes sense to me that the scope of work would change. Thus, I am very clear that I observed the exterior of the front of the home from standing height only. I tell the reader I did not go in the backyard and that the video tour was performed on the date of inspection by whoever gave the tour. I mention I could not smell the interior and that I assume everything is in average to good condition or at least consistent with what I saw during the observation. I am still crafting my statements and figuring out what works best, so I’ll continue to adapt over time as needed. I definitely include a disclaimer as such though, “The appraiser reserves the right to alter the opinion of value in this report based on further information about the subject property.” I also mention that I assume the occupant gave a fair picture of the house and did not hide anything.
Buzz: What options do you have for verifying the walk through is at the subject property?
Ryan: I have been going to the property itself and the owner comes outside to wave. Then I call the owner and we walk through together. This is not a perfect system, but if I’m talking to the owner on the phone prior to the owner walking in the home it becomes pretty difficult to cheat by showing me a different house. If I was doing a desktop appraisal with a video walk through, I could look up Google Maps so I know what the house looks like and then have the occupant start the video outside the home first while we are on the phone.
Buzz: Are homeowners being helpful?
Ryan: Yes. I have found most owners to be extremely helpful. Some people do not want to take photos or video of course, and that’s fine. In those cases, I may do a traditional exterior assignment or decline the assignment if I don’t have enough information to render a credible value. I even had an elderly man use Google Duo with me. He already had the app on his phone since he uses it to talk with his granddaughter.
Buzz: How do you feel about the new way of doing business?
Ryan: I wouldn’t call this the new way, but a new temporary way of doing things. This is necessary for the current pandemic, but I definitely strongly prefer seeing the property myself. I really don’t like having someone else be my eyes even though in most cases I feel like I’m getting a decent sense of the house. There is something to be said though about getting the feel of a property and walking through a home with the eyes and mind of a buyer. I miss getting to experience that personally, so my valuations just feel a little more naked right now. Ultimately, while I think this is okay for the time being, I look forward to getting back to business as usual in the future so I can more adequately see things as a buyer would.
Buzz: Are there any tips you have for any appraisers out there still completing appraisals?
Ryan: I assume you’re talking about doing full interior inspections. I think it’s important for appraisers to consider the pandemic and what safety looks like today. Would you want an appraiser to go into the home of your family members right now? I certainly wouldn’t want that. Thus, at some point we have to ask what is best for society during the pandemic. But at the same time, I won’t tell other appraisers how to run their lives and businesses, so I’m not one to push what I am doing on others. I’m just saying I’m concerned about the spread of the virus. I realize it’s not easy to say NO to clients, whether for private work or AMCs. Lenders on paper have talked thoroughly about exterior and desktop products, but there are still many interior appraisals being ordered. With so much volatility in the secondary market right now, interior inspections are even more valuable to package and sell off a loan. But pushing that aside, regardless of what anyone asks appraisers to do, if appraisers perceive too much risk for health, there is nothing wrong with saying NO. In fact, that is one of our best qualities as appraisers.
Ryan, thank you for sharing your experiences during this unusual time. If you’d like to follow Ryan, click here for his blog. Have any comments or would you like to submit content of your own? Email firstname.lastname@example.org.