Are appraisers still working? This is probably the question I’ve had most over the past week, so I wanted to unpack some thoughts.
1) Yes & No: Most appraisers are working and it seems like the bulk of appraisers working for lenders are still walking through the interior. There are definitely some appraisers who are not inspecting the interior though (myself included). Some sources say appraisers are deemed an “essential” service during the pandemic, though not everyone agrees.
2) Exterior focus announced: Fannie Mae and various banks have announced a temporary emphasis on exterior-only and desktop appraisals. When hearing this it’s easy to think every future appraisal is going to be a “drive-by”, but that’s not the case. In fact, traditional appraisals are still going to be in play for various types of loans and my guess is they’ll be the product of choice as long as they’re available. There is lots of conversation too about appraisers technically focusing on the outside but also getting information about the inside of the home through photos and video. Here is a table Fannie Mae published on Monday show what is possible, but we’ll have to wait and see how it all unfolds in the local market.
Keep in mind the lender sets the tone here and it’s not up to the appraiser to decide whether to do an exterior-only appraisal or not. However, an appraiser needs to believe a credible value can happen with a more limited scope of work, so appraisers won’t blindly say YES to an exterior-only appraisal if there’s not enough information. Lastly, just because a lender or AMC asks an appraiser to do something doesn’t mean the appraiser has to say yes.
3) Time: It’s going to take some time to see how this all shakes out. We’ll know much more in coming weeks. For instance, we haven’t heard from FHA yet.
4) Practical tips for real estate agents: It might help to take extra photos or video of a home before you list just in case it comes in handy for the appraiser. You might also consider being ready to talk with the appraiser about things such as layout, interior charm, age of improvements, quality of finish work, or anything you might understand more fully by actually walking through a home. If an appraiser is doing a desktop appraisal, I’m not certain the appraiser will call you or not, so you may want to include extra details in your MLS descriptions. This of course isn’t anything new because sharing property details is useful in any market. Please consider using my Appraiser Info Sheet to help tell the story of the property.
5) Private appraisals: If you are looking for a private appraisal, I can’t recommend enough being willing to color outside the lines. Would it be ideal to have the appraiser observe the interior in person? Yes. But during this pandemic it’s important to work with what we have and keep everyone safe. I have private clients who are working with me to use FaceTime to walk through a property (or the Google Duo app for an Android). I also have clients who have sent me 50+ photos of the interior and a very detailed written or verbal description of the property. Of course some appraisals for complex properties or geared toward court might need to wait.
6) Questions for appraisers: I’m not trying to ruffle feathers, but I think we’re at a place where it’s critical for appraisers to strongly consider whether they should be going into occupied homes. I have the utmost respect for peers, and that’s why I want to bring this up. So I ask, where is the line for us? At what point would you personally begin to pull back? How bad would it have to get? When is it deemed too risky for you and others? If you aren’t visiting your friends and family right now out of precaution, is it okay to go into homes of other people’s friends and family? I realize these questions are direct and there is also a cost to saying NO, but we have a serious situation going on right now. I have definitely lost business lately in light of saying NO to private clients, but that’s okay for this season. I don’t mention this to be combative and I hope to not be fielding angry emails all day. I love my peers and I’m concerned that we’re being asked to go inside homes right now. My strong opinion is we need to stop inspecting the interior of occupied homes. But put more lightly I’d say I think we’re at a place where appraisers need to show resistance to lenders for the sake of public health. Lastly, I realize not all areas of the country are the same in terms of COVID-19 cases (just in case you were ready to destroy me).
A few closing things.
Zoom session: If you want some background noise while quarantining, here’s a Zoom session I did yesterday hosted by KW Elk Grove. We talked about market stats, trends, and then fielded questions. It seemed like most questions were about how to see the current market and choosing comps. This is 100% off the cuff. Enjoy if you wish. Watch below or here.
New market update video: Here is a new market update video from two days ago. This is 20 minutes. Watch below or here.
Fresh daily visuals: During this pandemic I’ve upped my stats game and I’m finding new ways to visualize how the market is moving. Here are four images I’m updating every single day. If you have ideas for images too, I’m open ears. Remember, it’s tempting to focus on prices, but we see change happen first in the listings and pendings.
I hope this was interesting or helpful. Thanks for being here.
Questions: If you work in real estate, what types of appraisals are you seeing happen? If you are an appraiser, what’s your take on interior inspections?
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Great blog and video. Ryan as you know my situation I am NOT going into homes. I am right now trying to assist folks with consultations at this point. Of course I am doing land and horse ranches. But that is it. If a drive-by comes by I will consider but they might lead to some more craziness that I don’t want to participate within.
Regarding your video you are a true gentleman, good comments and vision.
Thank you so much Brad. I think when markets change we adapt. I like how you are consulting. Good for you.
Item #6. This should be asked of EVERY APPRAISER in the United States. “When is it deemed too risky for you and others? If you aren’t visiting your friends and family right now out of precaution, is it okay to go into homes of other people’s friends and family?”.
Thank you Scott. I think we are taking this too lightly in our profession and we need to give it more serious thought. I respect how many colleagues are being careful. Mad props. But could we be endangering other people’s lives? Is that what being “essential” looks like?
I will still go into a home if:
A) The occupants are healthy and have not travelled to New York or abroad in the past month
B) The occupant has turned on all lights and opened all doors
C) Will have every occupant keep a safe distance
I am careful not to touch anything (other than the attic scuttle for FHA inspection; the occupant does the rest. I sanitize my hands, camera, pen, and tape measure afterward, and am careful not to touch my face.
In my opinion, I will be fine; I choose not to live in fear, as long as my region is not a hot spot. That’s my take, but everyone has the right to decide for themselves.
Thank you for the great articles!
Hi Dan. I appreciate how careful you are being. I will say I talked to an appraiser who said on social media that he was doing nothing different, and that’s striking to me. I choose not to live in fear either. Be safe and be at peace. Thank you.
Great Blog and source of accurate information.
Thank you sincerely. I appreciate it.
I think it’s important to send a clear message like the one you are. Well done. Integrity.
Thanks Amy.
Great article, Ryan!
I took a hard stance last Monday (3/16) of not doing any more interior inspections and had over 20 files cancelled. A few are on hold and may get converted to a 2055 or desktop, but I’m not holding my breath. I get numerous requests daily, and I’m sure AMCs just call around until they find someone willing to do it.
Everyone seems to be doing what they think is best. Personally I don’t want to get sick and unknowingly infect homeowners and their family members. But I’m sure there will also be appraisers who take little to no precautions, don’t get infected, then brag about how busy they were and that COVID-19 was overhyped.
Thank you Ben. Good for you. I think you’re right. In this midst of this crisis we’re seeing some pretty tone-deaf AMCs who are showing their true colors. I despise the fact they are asking appraisers to run into a burning house like this. It’s troubling to think of reverse mortgage appraisals happening too. What a risk and it highlights the lack of empathy among lenders. But regardless of what lenders and AMCs are asking, at some point appraisers are going to have to decide what is best. I do sense more colleagues speaking up saying they’re frustrated and they want change. There are quite a few saying they won’t do interiors either.
I turned down orders last week with the comment “I am 70+ and diabetic and not leaving my house for 2 weeks.” No orders this week but I am notifying my clients that I am available for “Fannie/Freddie Covid-19 desktop or exterior appraisals.” I didn’t move fast enough when the first deaths occurred here in the Seattle area, so I am still looking for hand sanitizer, masks and booties. I have kept wet-wipes in my car for years, but my last canister is almost empty.
Thanks for sharing Barry. It sounds like a wise move to be safe. I am hearing of desktop and exterior products slowly trickling in, so hopefully your inbox will be full soon.
I hope everyone is Safe. I practice safe distances, etc. But still do interior inspections if all is well. My price for an appraisal has gone up based on the risk. I bid on assignments, and most don’t come back. So I have to assume there are still appraisers charging low fees and completing interior inspections. My question is this, I feel the market dropping out,. I just spoke with a realtor, and the floor traffic has dropped by 90%. A seller stated to me that she got one offer, $200k below list. I told her to rent it out for now. She agreed. I found a statement on Liability administrators web site (Lia – E/O carrier), to add.. this.. “The Global outbreak of a “novel” coronavirus known as covd-19 was officially declared a pandemic by the world health organization (who). The reader is cautioned, and reminded that the conclusions presented in this appraisal report apply only as of the effective date indicated. The appraiser makes no representation as to the effect on the subject property of the any unforeseen events, subsequent to the effective date of the appraisal. We need to cover our butts.. I will be putting this in my reports… Be SAFE!!!
Thank you. We really have to watch the market carefully. It is a day by day thing to gauge consumer sentiment and understand how buyers are sellers are feeling right now. I think it’s really smart to include statements in appraisal reports like this. I also discuss in depth what is happening with current pendings and listings and I am very clear about uncertainty in real estate right now. We are in such an interesting market. There are many dynamics. Part of what’s happening in Sacramento with subdued contracts has to do with real estate being locked down, but even without that were already seeing pending contracts dropping. There are many layers in the market. That’s for sure.
I believe the Liability wording is from Peter Christensen, who had a webinar the other day. You can download all his suggested verbiage and watch the webinar here: https://www.valuationlegal.com/2020/03/valuation-legal-webinar-legal-and-risk-issues-for-appraisals-stemming-from-the-covid-19-crisis/
Thank you. On a related note I spoke with a Realtor who was surprised an appraiser mentioned COVID-19 in a report. I say props to that appraiser as this is a relevant consideration for the market today. Not mentioning it seems like the stranger thing…
I’m still doing interior viewings of properties up here in Portland. We do not want to danger anyone and are being very careful to not touch our face, wash, and keep our distance. Following those protocol, I find it safe to walk through a home. We come in far less contact with others on an interior than we would on a trip to the grocery store. I’m the only one in my family who has left the house in two weeks. My only other trips are for groceries.
Thank you for being safe Gary. I appreciate how strict you are being with your family too. My kids are going stir-crazy right now. Hope you have cracked the code on how to keep kids sane. Ha.
I think the current state of Real Estate (In California at least) is an obvious mess. Many agents are following the rules to stay at home. These agents’ sellers are not listing yet and their buyers are not out seeing homes. However, you have a lot of agents who are operating mostly business as usual (200+ new listings in Metrolist past 24/hr with standard showing instructions).
I am not the ethics/moral police, but I know this fractured system can’t possibly work like a normal market.
We are likely to end up with some really skewed data during this lockdown that will be artificial and disconnected to what the real market would actually be doing. Does the house that was $400k a month ago now sell for $350k during the lockdown because half of agents are following the rules and not showing their buyers? Or does that same house sell for $450k during lockdown because it was the only one listed while the 4 others on the street were following rules and waiting for the lockdown to end before listing?
The number of sellers and buyers in the market during the lockdown does not represent the true number of sellers and buyers who would otherwise be in the market – and this creates artificial data.
Question is, how does this artificial data affect sales once things return to normal?
Hi Matt. I hear you. In my market update video above I talked about having a tale of two markets right now. We have an imposed market and we have a theoretical market (where we wonder what would be happening without lockdown status).
The lockdown is making a huge difference as I talked about above and in many places online this week. I have the stats to back that up if any onlookers have doubts. As I’ve said in many places lately, the market would very likely have more pending contracts right now without the lockdown. But at the same time it’s important to note pendings have also declined in light of increased uncertainty as well as a change in mortgage rates. Uncertainty is a huge deal though that we cannot underestimate. Anyway, it’s easy these days to blame the lockdown on any downward trends, but there is more to the story.
When all this is said and done and the market is allowed to be free again, we’ll see what happens. The market won’t be bound by data from the past though, so it’s not a huge concern if we have subdued stats right now or “artificial data” as you said. The truth is the market is never bound to the past because dynamics change and buyers and sellers can think past recent trends. So if the market breaks out and shows stronger demand after the lockdown period ends, then it would be a mistake to use sales from a more subdued lockdown period without accounting for the way the market has changed. Yet let’s remember just because the market is on lockdown doesn’t mean prices are for the time being. This is something we have to watch closely to know more about as this time unfolds.
The second weekend of the lockdown is upon us. In terms of real estate, here’s the advice I’ve been giving to clients and contacts. Don’t impose headlines on the housing market. It’s too easy to say certain things are happening, but what is actually happening? We need to let data tell the story and inform our narrative. As I’ve shared elsewhere too, 44.5% of all pending contracts last weekend during the lockdown had multiple offers. I don’t think this factoid fits the narrative of many housing snippets lately. Of course pendings were also down about 42%, and that’s the bigger story.
In short, if the market is really there in the future and demand is present to buy at higher prices once this ends, then we’ll see the proof of that in more pending contracts, higher prices, a stronger sales to original list price ratio, less price reductions, less cancellations, etc…. The future value isn’t bound by what happens now unless the market continues with whatever trend develops right now.
This is a market built for data analysis and people’s skills or lack thereof are going to be put to the test…
Lastly, we do have to wonder what type of market will exist when this all ends. What will the economy be like? Where will consumer confidence be? How about mortgage rates? Lots of questions.
I hope this is making sense. I am exhausted. What a wonderful but tiring week. I had intense communication this week and many hours logged into Zoom. I am a blessed man, but a tired one. Here’s to Friday evening!!
Let’s keep the conversation going as needed.
As always, appreciate your analysis throughout the week.
Regardless of how this all plays out, we will certainly be seeing many changes in the coming months.
Hope you get a data-analysis break through the weekend!
Agreed. Thanks Matt. I had a really relaxing evening last night and today I’ll take some time. 🙂
Thanks for your great points! I am inspecting the interior of homes. That being said, many of the homes I appraise are either vacant or new construction, with no one inside. For those homes that are occupied, I wear a full respirator and new surgical gloves on every inspection. I would not inspect the interiors without this PPE on. It’s too dangerous for all parties involved. For those wearing PPE, they also need to be aware of how to safely use it. There’s more to think about than just throwing a mask on. Stay safe out there!
Be careful out there Jamie. I know you have a past as a mold professional so I imagine you have an edge when it comes to be prepared and cautious when it comes to spores and such. I do think it’s a different thing with new construction and vacant homes. Thanks as always.
Ryan; Interesting and informative post and comments. Don you have any direction or ideas where I can verify City of San Diego appraisers as considered being essential since the May 15th lock down? The reason I am asking is that I am 1/2 owner of a home in San Diego and an interior appraisal was done on March 24th without my knowledge or my being there .
Hi Gene. Thanks for the comment. I would look to San Diego County (or city) for some direction. I imagine they have something posted online. Many say appraisers fall under the category of financial services which is very clearly stated as being essential in many areas of California. I know in Northern California the Appraisal Institute has been clear that their interpretation is appraisers are an essential service.
That’s interesting to hear an appraiser was there without your knowledge. I have to think the appraiser was given permission to access the property from someone. Was that the case? I don’t know what the situation is here, but appraisers tend to gain permissioni from whatever party engages the appraiser (or whoever the client instructs to speak to about access). That is permission enough, though I understand there might be situations where not all the owners are on board. I’ve definitely seen this happen with estate appraisals and divorce at times. The appraiser rarely even knows not all owners are on the same page though. That’s really between the owners more than anything in my mind.
Anyway, I just wanted to pitch my two cents. Feel free to comment back with more information if you wish.