Times Have Changed
Appraisers no longer need to drop film off to be developed and then glue photos into their reports because of advances in digital imaging technology. We no longer need to run a tape measure through bushes and mud because technology has provided laser measuring devices. We also don’t need to print our reports and drop them off at the local bank, check our fax machines for orders, or thumb through tattered booklets to search for closed sales. Technology has changed the way most businesses run and has produced a more efficient and reliable economy. Even legal documents can now be signed electronically from thousands of miles away and official transaction records can be filed in a similar manner.
Nearly every facet of business can be conducted in part or in whole without the need for physical presence. Advances in technology are so impressive and reliable that you can now tour some of the world’s most amazing locations from your living room couch. Real estate agents have mastered technology throughout this pandemic to provide potential buyers with virtual tours in place of physical showings. Yet one aspect of the real estate business has remained untouched and antiquated: appraisers are required to take original photographs of comparables used in their reports.
Not a Requirement But It’s Required
This is not a USPAP requirement or a Fannie Mae guideline, of course, and not every client will require original comp photos. But HUD and the vast majority of major lenders still include this stipulation in their assignment conditions and therefore appraisers who accept these assignments are compelled to comply. Unless they want to risk violating the engagement letter and therefore risk violating USPAP. Even if an appraiser is intimately familiar with a neighborhood and the specific property, they are required to drive by that home and take their own picture of it. Why? Well, the reasons make sense in a theoretical sense and at times may actually be prudent. Experienced appraisers fully understand that there are times when a physical inspection of a property is essential because of the myriad of potential influences on value or marketability may not be readily apparent. However, the decisions about when these additional measures are needed has been removed from the appraiser’s professional judgment and instead been dictated by arbitrary rules set by others.
Get With The Times
Appraisers are required to have geographical competency and therefore an intimate knowledge of the market area in which the subject property is located. Experienced appraisers understand nuances within markets and the effects of specific locations as well as buyer trends and preferences. And perhaps the most significant factor of comparable consideration and selection is the information available through the MLS and online maps. Right now, appraisers (and anyone else) can type in an address and get a 3-dimensional view of nearly any property as well as a view from the street. Google Maps, for instance, provides the ability to virtually drive by any house and view its surroundings. If there is a water tower in view, then you will see it. If there are high tension power lines running through the back yard, it is unmistakable, even if the MLS listing photos happen to have been taken at just the right angle to omit these potentially negative attributes.
Not every property can be viewed with such precise imagery. It’s an imperfect option, however in the vast majority of cases, technology can be utilized directly from the appraiser’s desk to obtain all necessary information to provide credible results within the appraisal report. In our fast-paced world where lenders are touting their ability to close loans quickly as vehemently as they promote their historically low rates, why has the appraisal profession lagged behind? Taking original comp photos is time-consuming and costly over time, and most importantly, it’s often a completely unnecessary exercise. We haven’t even touched on the safety concerns of appraisers pointing a small shiny device at the houses of strangers. While it could be argued that the unnecessary safety risk to appraisers should be reason enough to discontinue the practice of requiring original comp photos, let’s keep the focus on shifting to modern and efficient means to provide consumers and our clients with reliable data in a way that aligns with our fast-paced economy.
Perhaps it’s time to ask lenders to trust the licensed professionals they have hired or consider upgrading their appraiser panel. Or, perhaps it’s time for appraisers to take back their profession and consider upgrading their client panel.
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