Businesspeople doing paperwork for a hybrid appraisal.

Everything You Need To Know About Hybrid Appraisals

Molly Grace4-minute read

March 25, 2021

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If you’re buying a house, selling a house or both, an appraisal is likely in your future. Buyers will want to know that the home is being sold at fair market value. Appraisals are also part of the refinance and loan assessment processes. Although only an option in some cases, hybrid appraisals – also known as bifurcated appraisals – provide a way to expedite the process, lower its cost and decrease the face-to-face contact required.

Hybrid appraisals have historically been used for mortgage servicing rather than home purchases, but with COVID-19 encouraging high-tech, low-contact solutions, the applicability of hybrid appraisals may be widening. If you’re thinking about getting an appraisal, read on to learn more about the hybrid option and see if it’s right for you.

What Are Hybrid Appraisals?

A hybrid appraisal is a type of desktop appraisal [note: add link to desktop appraisal article when complete]. It is a valuation of a property completed by a licensed appraiser who has never visited the property. When you choose a hybrid appraisal, appraisers use information provided by a third party, rather than gathering it themselves. This third party will have visited the property; they could be a property inspector or a real estate agent.

How Is A Hybrid Appraisal Different From A Desktop Appraisal?

Historically, appraisals are an important part of a real estate transaction done in person by an experienced appraiser. But as technology has improved, many processes have been simplified.

Both hybrid appraisals and desktop appraisals have utilized technology to make the process faster and more efficient. Hybrid and desktop appraisals have shorter forms than a traditional appraisal, and they’re performed at a desk by an appraiser who hasn’t inspected the property. The main difference between a hybrid appraisal and a desktop appraisal is that hybrid appraisals use data provided by a third party to conduct a property valuation.

This third party – who’s often a licensed appraiser, home inspector or other real estate professional – will do the work of physically inspecting the home and reporting their findings to the appraiser, who will then create a report based on the inspector’s findings as well as their own desktop valuation. This valuation will typically look at data points from the specific property, such as the year it was built, as well as analysis of the real estate market in the area.

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What’s A Bifurcated Appraisal?

Hybrid appraisals are sometimes referred to as bifurcated appraisals. This is just another way of saying that the appraisal process is split up into two parts, with both parts completed by a different person.

The appraiser is responsible for gathering data from public records, their local multiple listing service (MLS) and other sources to learn about the subject property and property value trends in the area. This is one part of the process. To complete the other part, the appraisal will enlist a third party to complete the property inspection and report back their findings. The appraiser will then implement those findings into their appraisal report.

What Data Is Collected During A Hybrid Appraisal?

Both general data and specific data are collected during a hybrid appraisal. General data includes all real estate information on a macro level, ranging from market value to social and economic forces affecting the listing. Conversely, specific data focuses on a single property and can include details about the property and local market characteristics.

Where exactly does this data come from? An appraiser may use data from a property inspection, plans and specifications, public records, engineering reports and even photos of the property, according to the Appraisal Foundation, which sets the standards for real estate valuations via the Uniform Standards of Professional Appraisal Practice (USPAP).

These two types of data are collected by the appraiser or third-party sources.

What Are Hybrid Appraisals Used For?

Hybrid appraisals are mostly used for mortgage and servicing purposes, not for purchasing or refinancing. The most common uses of hybrid appraisals include updating a loan value, assessing how a loan is performing or in the case of preforeclosure or foreclosure. However, COVID-19 has pushed buyers and sellers to look to more flexible solutions, including hybrid appraisals, to broaden their options.

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Why Are Hybrid Appraisals Popular?

Hybrid appraisals are becoming increasingly popular because they’re faster, safer and more affordable than other types of appraisals.

Hybrid appraisals can also benefit appraisers by limiting their scope of work and making better use of their skill sets. Instead of having them drive out to take measurements and photos, appraisers can stay at their desks and focus on the higher-level work of analyzing the property and performing the valuation.

Are There Fees For A Hybrid Appraisal?

A traditional appraisal can often cost $200 – $400 depending on the amount of work required. Contrast this with hybrid appraisals, which can cost a fraction of that. You may even be able to get this appraisal alternative for less than $100.

However, if you’re a homeowner or home buyer, keep in mind that hybrid appraisals still may not be possible. If you’re purchasing or refinancing with a qualified mortgage, you may not be able to use this type of appraisal. You should speak to your mortgage lender about your options.

Should I Get A Hybrid Appraisal?

While a hybrid appraisal might seem like the best option for you, it’s important to be aware of their risks. Some hybrid appraisals can offer extensive information to home buyers, but others may be misleading or inaccurate because they rely on third-party data.

Most markets have plenty of data, which allows for a strong hybrid appraisal, but other markets may lack data. Ultimately, the quality and amount of data will make or break a hybrid appraisal. All home buyers want a credible appraisal, so it’s important to research hybrid appraisals within your target market and choose what type of appraisal works best for you and your needs. 

With all technology comes experimentation with trial and error. Regardless of what type of appraisal you prefer, hybrid appraisals – along with other alternative valuation products – will likely continue to gain popularity in today’s tech-focused world, and keep evolving and improving so they can meet the needs of today’s home buyers and appraisers. 

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Molly Grace

Molly Grace is a staff writer focusing on mortgages, personal finance and homeownership. She has a B.A. in journalism from Indiana University. You can follow her on Twitter @themollygrace.