Monday , 11 November 2019

Drones Take Flight for Appraisals

Jeffrey Miller
Jeffrey Miller, Valbridge Property Advisors
Lamar H. Ellis III
Lamar H. Ellis III, Drone Education Services, LLC

Drones enhance an appraiser’s ability to inspect a property. Not only can an aerial drone show more of the property, it is also relatively inexpensive to use and can contribute to a safer working environment. Aerial drones provide easy access and viewing perspectives that are impossible to replicate from ground-based shots. Aerial inspections of a property using a drone have real practical applications in the valuation of real estate and need to be addressed in the scope of work.

On September 13, 2016, aerial inspections using drones were initially addressed by The Appraisal Foundation in a USPAP Q&A Issue. It stated that unmanned aerial vehicles, or drones, are a tool, not unlike binoculars, that can be used to enhance the view of a property. It also clearly stated that use of a drone, without a visitation to the property, would not constitute a personal inspection.

In the 2018-2019 USPAP Publication, FAQ 214, it states that unless an appraiser makes a “visitation of the property,” then it does not constitute a “personal inspection” of the property. In order for an appraiser to state they made a personal inspection, a visitation must occur in conjunction with the use of the aerial drone. USPAP does not require a personal inspection, but it does require disclosing the extent to which the property was inspected. The basic scope of work requirement is to clearly state whether an appraiser has personally inspected the subject property and a personal inspection, as stated in USPAP, is having a physical presence at the property.

The extent of the inspection is the appraiser’s responsibility. How much it is explained can vary from a minimal statement to providing a detailed explanation, and will be influenced by the scope of work. The same options are reasonable if a drone is utilized.

FAQ 214 also includes a reminder to be familiar with: “All relevant federal, state and local laws, requirements and restrictions.” Per the FAA, if a drone is being used for commercial purposes, the operator must obtain a Remote Pilot Certificate.

The Proposed Revisions to Advisory Opinion 2, Inspection of Subject Property, in the 2020-2021 USPAP Publication, will include two paragraphs focused on drone use that are similar and consistent with their past statements. The proposed revisions state that aerial drones are a tool, such as cameras, and that an appraiser must physically visit a subject property to state they have made a personal inspection.

We have included several examples of statements that can be used in the scope of work to include a drone. Even though it is not required, we recommend that you include additional clarification and details to benefit the client. The additional clarification states that you have the certification to use a drone for commercial use and that you followed all federal, state, and local laws and guidelines.

Examples:

Personal Inspection in conjunction with the aid of a drone

I have made a personal inspection of the subject property (and/or comparable sales). I physically visited the subject property (and/or comparable sales), in conjunction with using an unmanned aerial vehicle (a.k.a. drone), on mm/dd/yy. To the best of my knowledge, I followed all federal, state, and local laws and guidelines in the use and operation of the drone. I am a current certified Part 107 Federal Aviation Administration small Unmanned Aerial Systems remote pilot.

No Personal Inspection – Appraiser uses aerial imagery provided by an outside drone service.

I have not made a personal inspection of the subject property. I relied on aerial photographs and aerial videos provided by ‘A DRONE COMPANY.”  “A DRONE COMPANY” captured the aerial imagery of the subject property (and/or comparable sales) from an unmanned aerial vehicle (a.k.a. drone), on mm/dd/yy.  To the best of my knowledge, “A DRONE COMPANY” used a current certified Part 107 Federal Aviation Administration small Unmanned Aerial Systems remote pilot, and followed all federal, state, and local laws and guidelines.

If an appraiser uses an outside drone service, the appraiser should get written confirmation that the drone service used a current certified Part 107 Federal Aviation Administration small Unmanned Aerial Systems remote pilot and that they followed all federal, state and local guidelines in obtaining permission for the aerial inspection.

Aerial photography and videography have already made an impact on various real estate industries. Real estate brokers are showcasing their listings with aerial imagery, roofers are able to show leaks and heat loss, tax assessors are able to inspect more properties, developers are able to assess their projects in real time, and insurance companies are developing baseline assessments. The need for data is real and appraisers are well positioned to take advantage of this growing technology.

We are excited about the professional use of aerial drones, and encourage questions or comments.  Please fee free to reach out to Lamar Ellis, Drone Educations Services, LLC at 833-DRONE-ED (833.376.6333) or Jeff Miller, Valbridge Property Advisors l Atlanta at 404.354.2331.

Have any comments or would you like to submit an article of your own? Email comments@appraisalbuzz.com for more information.

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About Lamar H. Ellis III and Jeffrey Miller

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Lamar H. Ellis III: Lamar is from Atlanta, Georgia and holds the prestigious MAI and SRA designations with the Appraisal Institute. He is also an approved instructor. Lamar was an early adopter of Drone Technology for real estate. He is a current holder of an FAA Part 107 Remote Pilot of Small UAS certificate. From the first day he became aware of drones he realized the impact on valuation and a way for appraisers to use it in their practices. He is a consultant, published author, speaker and blogger for drone technology and its applications to real estate. - Jeffrey Miller: Jeff is a member of the Appraisal Institute with the MAI designation, a Certified Commercial Investment Member (CCIM), and a member of the American Society of Appraisers (ASA). In addition, he holds the Appraisal Institutes’ Litigation Certificate and has the AI-GRS designation, which is commercial reviewer designation. He previously served as the President of the Atlanta Chapter of the Appraisal Institute in 2012, and served on the Board of Directors from 2009 to 2015. Jeff has extensive experience in valuing a broad range of property types throughout the United States, and has managed valuation projects in North America, United Kingdom, Asia, and the Caribbean. Assignments have been completed for a variety of purposes including lending, estate planning, eminent domain, bankruptcy proceedings, litigation support, and acquisition/disposition. Jeff has qualified as an expert witness in numerous courts in the State of Georgia and in Federal Bankruptcy Court.

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