Selling your house? You may never see the appraiser

The pandemic accelerated changes to the home appraisal process that is an important part of buying and selling residential real estate.

Known as appraisal modernization, appraisers began using tools that made the process more aligned with objective comparisons based on readily available information, and in some sense, took some of the subjectivity out of the process.



The pivot was done out of necessity, with few owners comfortable with appraisers traipsing through their homes with cameras and tape measures during the COVID pandemic. But appraisal modernization was long overdue before the pandemic.

“The last time we really saw a major evolution in appraisal methodology, it was pre-internet. So, many of the things that appraisers use are designed to be typed up on a form that would fit in a typewriter,” said Lyle Radke, senior director of collateral policy at District-based Fannie Mae.

There is less need for in-home physical inspection now.

“The appraiser, instead of going in the home, might just drive by. In other situations they might not go to the home at all, but use other sources of information. We call that a desktop appraisal,” Radke said.

“There are also new technologies emerging to measure homes using an app on the phone,” he said.

Underwriters are still fussy about appraisal details, but Fannie Mae reports modernization of appraisal methodology has proven accurate in meeting those standards.

Fannie Mae economists recently conducted a mortgage lender sentiment survey to understand lenders’ views on appraisal modernization, and the overwhelming majority — 94% — said modernization efforts are valuable to the industry.

“The No. 1 reason cited by more than half of them is shortening the loan origination cycle time. In other words, getting the appraisal back faster,” Radke said.

Lenders also said appraisal modernization has enhanced appraiser capacity and can lower consumer costs.

Appraisal modernization is not without challenges. Lenders cited the speed of industry-wide adoption as the biggest challenge, followed by integration with loan origination systems and automated underwriting systems.

Fannie Mae’s full report on lender sentiment about appraisal modernization is online.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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