What is a desktop appraisal and how does it work?

The world continues to rely on technology and operate remotely, and home appraisals are no exception. During a traditional home appraisal, a licensed inspector will evaluate the property on-site. The appraiser considers the home's condition, floor plan, and any necessary repairs. When the inspector is finished, they'll compile a detailed report.

Now, with the advancement of technology, an appraiser can do the appraisal without visiting the home. This is done through a desktop appraisal.

Some lenders may accept desktop appraisals in place of the traditional appraisal process. Rocket Mortgage^® doesn't offer desktop appraisals at this time. However, we want to provide more information to home buyers and homeowners looking to explore this option.

Desktop appraisals defined

A desktop appraisal is a property valuation completed at the appraiser's desk. Instead of an interior/exterior property inspection, it relies on third-party data. Data may include tax records or information listed on the multiple listing service.

Importantly, a desktop appraisal should not be confused with a hybrid appraisal.

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. The appraiser relies on third-party information to determine a property's value:

• MLS listings
• Property records
• Previous appraisals

During this process, an appraiser will use certain desktop appraisal forms depending on the lender and type of loan. 

In a hybrid appraisal, a third-party data collector visits the property and completes a data collection. During the data collection, they will:

• Complete an interior and exterior inspection of the property
• Collect photos
• Determine the home's measurements
• Collect specific data points regarding the condition of the home

From there, a certified appraiser will complete a hybrid appraisal on a hybrid appraisal form without visiting the property. Instead, they rely on data collection and other public data sources, if needed, to arrive at their opinion of value.

Desktop underwriters and appraisals

Once you apply for a mortgage, your application goes through underwriting. Underwriters review your loan application to determine how much risk you pose to the lender and whether you're a good candidate for a mortgage. In desktop underwriting, an algorithm evaluates these risks, speeding up the entire process and eliminating manual errors.  

Desktop Underwriter by Fannie Mae is one of the most popular software options. It makes it easier for lenders to quickly complete credit assessments and qualify more borrowers. These tools evaluate different factors, including a borrower's credit history, income, loan-to-value ratio, and cash reserves.

This information gives the lender a clear picture of the loan application. It allows them to quickly generate preapproval offers and ensures that Fannie Mae will accept their loans. Freddie Mac offers a similar tool called Loan Product Advisor.

When a desktop appraisal is used, the appraiser will typically fill out Desktop Form 1004, a variation of the standard form. In rare cases, the underwriter may use a 70D form with fewer reporting requirements.

When are desktop appraisals used?

According to Fannie Mae and Freddie Mac, a desktop appraisal is only for purchase transactions. This may include new construction purposes, though restrictions may apply.

How long does the process take on average?

Desktop appraisals are much faster than traditional appraisals since they don't require an on-site inspection. An appraisal can take 1 – 3 weeks, but a desktop appraisal can be completed in just a few days. 

However, the exact timeline depends on various factors, including the available data quality. Appraisers often rely heavily on MLS listings or tax records. If this information is incomplete or error-ridden, the appraiser may need additional time to verify it. 

Unique properties may require more research to find comparable sales, which can hold up the process. The timeline also depends on the individual appraiser – their workload and 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 loan product you use. While you cannot choose whether you have a desktop appraisal, there are some factors you’ll want to keep in mind when getting a desktop appraisal.

• Amount of time: A desktop appraisal doesn’t always mean a faster process. It still requires coordinating multiple schedules as you need a data collection completed by a data collector before a hybrid appraisal can be completed.
• Total cost: The cost will vary based on your 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

There are many potential advantages and disadvantages of getting a desktop appraisal instead of a traditional home appraisal. Let’s look at some pros and cons to consider.

Pros of desktop appraisals

Here are the biggest benefits of desktop appraisals:

• Cost-effective: Desktop appraisals tend to cost less than traditional appraisals.
• Less bias: Since the appraiser won’t physically visit your property, this reduces the risk of bias entering into their evaluation.

Cons of desktop appraisals

Desktop appraisals aren’t the right choice for everyone—here are some drawbacks to consider:

• Eligibility: Not all property types, loan purposes, occupancy types and loan-to-value ratios (LTVs) are eligible for desktop appraisals, and complex properties may be excluded.
• Lender restrictions: Your lender may be unwilling to accept a desktop appraisal, regardless of the type of home you’re buying.

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

A desktop appraisal may be the right type for your loan, but it won't be an option for everyone. A traditional appraisal may be required if you're financing a home purchase with a mortgage loan.

If you're ready to begin your home buying journey, you can fill out a mortgage application online today.