What is a desktop appraisal and how does it work?

A desktop appraisal is a property evaluation conducted without the appraiser visiting the site. Specific circumstances allow desktop appraisals instead of traditional home appraisals, which require the appraiser to inspect the property in person.

Rocket Mortgage doesn't use desktop appraisals, but it's important to understand all aspects of the home buying process.

Learn more about desktop appraisals, how they differ from other types of appraisals, when they're used, how long they take, and the pros and cons.

Desktop appraisals defined

What is a desktop appraisal? It’s a property valuation that the appraiser can complete without leaving their desk. It relies on tax records, property records, prior appraisals, and the multiple listing service (MLS) for photos, floor plans, comparable sales, and market data to estimate a home's fair market value. The appraiser is not required to visit the property in person and inspect the interior and exterior of the home.

What’s the difference between a desktop appraisal and a hybrid appraisal?

A desktop appraisal is conducted remotely without any physical inspection of the property.

A desktop property valuation differs from a traditional appraisal, in which the appraiser visits and inspects the property in person.

A hybrid appraisal is a mix of the two. The appraiser will send a third-party data collector to inspect the property. The collector will report their findings to the appraiser, who will incorporate them into their appraisal using a hybrid appraisal form.

Another type is the drive-by appraisal, where the appraiser visits the home to evaluate its curb appeal but doesn't inspect the interior.

Desktop underwriters and appraisals

Once you apply for a mortgage, your application goes through underwriting. This is when the lender reviews your loan application and financial documents to determine whether you're a good candidate for a mortgage.

Desktop underwriting handles most of this process using software. An algorithm evaluates applications, speeding up the process and eliminating the risk of manual errors. The software evaluates different factors, including a borrower’s credit, income, loan-to-value (LTV) ratio, and cash reserves. This information gives the lender a clear picture of the loan application.

Desktop Underwriter by Fannie Mae is a popular electronic valuation tool. It helps lenders quickly complete credit assessments and qualify borrowers. It allows lenders to quickly generate preapproval offers and ensures their loans conform to Fannie Mae requirements. Freddie Mac offers a similar tool called Loan Product Advisor.

When are desktop appraisals used?

A desktop appraisal is only used for purchase transactions, including new construction.

To be eligible for a desktop appraisal, Fannie Mae and Freddie Mac require loans to meet the following criteria:

• It must be a 1-unit property
• It must be the borrower's primary residence.
• It must be a purchase transaction, including new construction.
• Its LTV cannot exceed 90%.

“Desktop appraisals are commonly used when the lender, loan type, property data, and risk profile make a full interior inspection unnecessary,” says Dennis Shirshikov, a professor of economics and finance at City University of New York-Queens College. “They are most useful for lower-risk transactions where the property has enough reliable public and market data to support the valuation.”

How long does the process take on average?

Desktop appraisals are typically much faster than traditional appraisals. That’s because they don't require an on-site inspection. A traditional appraisal can take 1 to 3 weeks, but a desktop valuation can be finished in a few hours to a few days.

“In most cases, a desktop appraisal can typically be completed within 24 to 48 hours, depending on the complexity of the assignment and the availability of reliable market data and property data,” says Luke Tomaszewski, board member of eValuation Zone, an appraisal company based in Chicago.

But your exact timeline will depend on various factors, including the quality and accessibility of available data. Again, appraisers often rely heavily on MLS listings or tax records. If this information is incomplete or inaccurate, the appraiser may need additional time and resources to verify it.

Unique properties may require more time to find comparable sales. The timeline also depends on the individual appraiser's workload, as well as the quality of the systems and tools available to them.

Considerations when getting a desktop appraisal

Whether you can get a desktop appraisal will depend on a few factors, including the lender you work with and the type of home loan you choose. While you cannot choose whether you have a desktop appraisal, there are some factors you'll want to keep in mind when getting one.

• Amount of time: A desktop appraisal doesn’t always mean a faster process. It still requires coordinating multiple schedules.
• Total cost: The cost varies by location, and the buyer usually pays for a desktop appraisal.
• Required documents: The appraiser will need access to tax records, MLS listings, prior appraisals, and any other relevant data about the property.

Desktop appraisal pros and cons

It’s important to understand the advantages and disadvantages of a desktop appraisal. Let’s take a closer look at both.

Pros

Benefits of desktop appraisals include:

• Cost. This appraisal type may be less expensive than a traditional appraisal.
• Speed. A desktop appraisal is usually faster than a traditional appraisal because there is no property visit to schedule.
• Less bias. Desktop appraisals can eliminate certain biases that can be introduced when an appraiser visits the home.

Cons

However, desktop appraisals aren’t ideal for everyone. The downsides include:

• Eligibility. Complex properties may be excluded. Also, some loan purposes, property types, occupancy types, and LTV ratios may not be eligible.
• Lender restrictions. Not all lenders use desktop appraisals, including Rocket Mortgage.
• Remote evaluation. The appraiser may miss important improvements to a property or recent damage that may affect the value if they don't inspect it in person.

The bottom line: Desktop appraisals may be an option for you

A desktop appraisal is often less expensive, and more impartial, convenient, and flexible. It allows underwriting to continue even if the appraiser can't visit the property in person. However, desktop appraisals won't be an option for everyone, as some properties and borrowers won’t qualify, and your chosen lender may not allow one.

Ready to begin your home buying journey? Explore your borrowing options today with Rocket Mortgage.