Desktop Appraisals: What You Need To Know In The Time Of COVID-19

Rocket Mortgage^® doesn't offer desktop appraisals at this time.

As the world continues to adapt to the challenges presented by COVID-19, it’s not surprising that desktop appraisals have become more popular. In an effort to keep people safe while buying a house, desktop appraisals have provided an opportunity to limit face-to-face contact during the home appraisal process.

So, what is a desktop appraisal? Let’s find out!

A desktop appraisal is a property valuation that is completed at the appraiser’s desk, using tax records and information listed on the Multiple Listing Service (MLS), instead of through an in-person survey of the property.

Importantly, a desktop appraisal should not be confused with a hybrid appraisal. With a hybrid appraisal, the valuation is completed remotely by an appraiser based on the information provided by a third party on-site through a physical inspection.

Like most industries, COVID-19 is pushing the real estate industry to innovate. Although desktop appraisals have been used in the past, it was not widely used beyond fairly limited cases.

Desktop appraisals were typically used for the following situations:

• Home equity lending: For a home equity loan, many lenders were willing to accept a desktop appraisal to satisfy the required appraisal of the property.
• Loan servicing: Loan servicers were comfortable using desktop appraisals to verify the approximate value of the property.
• Portfolio evaluation: Investors with real estate portfolios have used desktop appraisals to provide a solid approximation of the value of their properties.

As you can see, desktop appraisals were used throughout the real estate industry. However, it was previously uncommon for desktop appraisals to be used in the home buying process.

COVID-19 presented a challenge for the real estate industry. It forced new adaptations in the industry that were previously underutilized with the intention of protecting the health of everyone involved in the home buying process.

With the newfound flexibility required by COVID-19, more lenders are willing to accept desktop appraisals for home purchases. Although not all lenders are willing to accept this type of appraisal, it is becoming more accepted.

In some states, in-person inspections have been halted altogether. With that, desktop appraisals remain a viable solution to keep the real estate industry functioning by allowing home buyers to move forward.

If you are hoping to buy or sell a home without an in-person inspection, there will likely be specialized forms for you to fill out. Although the exact forms will vary based on your state and lender, expect some additional paperwork to take advantage of the desktop appraisal option.

If you’re looking to refinance your current mortgage, then a desktop appraisal could be an option. However, not all lenders are willing to accept a desktop appraisal for the refinancing process. For example, Fannie Mae does not permit desktop appraisals for refinancing at this time.

Find out how much you can save with the Rocket Mortgage^® refinance calculator.

Although it can be convenient, a desktop appraisal is not the right fit for all situations. Here are some cases when you should definitely avoid a desktop appraisal:

• Poorly maintained properties: A desktop appraisal may not be able to ascertain the full extent of the damage.
• Recently renovated properties: New renovations could increase the value of a property. But a desktop appraisal may not be able to provide an appropriate valuation without the information from a physical inspection.
• Ambiguous value: If the value of a property could be contested by the lender or the homeowner, it’s a good idea to have an in-person appraiser come out to the property for a full appraisal.
• Missing information: An appraisal is only as accurate as the information available. If a property doesn’t have a lot of information available online, then a desktop appraisal might not be very accurate.

A desktop appraisal can be a useful way to avoid face-to-face contact in the home buying process. But sometimes, an in-person appraisal is the better option.

When considering a desktop appraisal vs full appraisal, it’s important to keep the difference in the pertinent forms in mind.

A desktop appraisal form is completed without any physical inspection of the property. With that, the form requires a lot of information from the tax records and an MLS. Unlike a desktop appraisal form, a full appraisal form will also require information regarding the physical condition of the property based on an in-person inspection.

If a full appraisal is not an option, a desktop appraisal is a good next bet. Plus, desktop appraisals are typically less expensive than a full appraisal. You could pay $300 – $500 for a full appraisal, but only a fraction of this cost for a desktop appraisal.

However, there are some downsides to consider. When you move forward with a desktop appraisal, it could be less accurate than a full appraisal. With an inaccurate valuation, you may price the property inappropriately, which could cost you thousands.

Additionally, if anyone can contest the property’s valuation for any reason, it’s not the best move. For example, during a divorce, a full appraisal is likely the better option to prevent any reasons to contest a property’s value.

If you aren’t sure whether a desktop appraisal is the right option for your situation, consider seeking a professional opinion. An experienced mortgage lender, real estate agent, or real estate attorney can provide appropriate guidance for your unique situation.