In an age when cash buyers are on the rise and above-listed offers are the norm, if you borrow money to achieve your accepted high bid, the appraised value is critical to your financing being approved.
Companies exist in this market environment that help close the appraisal gap on bids deemed higher than value, but price gaps are just one issue in the world of appraisals.
A rising issue on the appraisal front is the intersection of time and quantity. There are simply not enough appraisers. According to Freddie Mac, there has been an increase of 50% in the number of appraisers needed to meet demand, coinciding with a 65% increase in the amount of time it takes to complete an appraisal.
Enter the new “desktop” appraisal option, which can be used instead of a traditional appraisal on eligible purchase loans. Fannie Mae now makes appraisals without a physical inspection available in specific instances for single-family, owner-occupant purchase with at least 10 percent down payments.
In the RESO spirit of competitors collaborating toward stronger standards, Jeff Allen, President at CubiCasa, and Mitch Dorius, VP at DataMaster, appeared on stage together at the 2022 RESO Spring Conference to discuss the current state of appraisals in an enlightening presentation called “Standards-Driven Desktop Appraisals.” | WATCH VIDEO (24:46 minutes) | VIEW PRESENTATION
The duo spoke on how they are streamlining the consumer appraisal experience and adding unique data elements to real estate information systems in the wake of the new desktop appraisal requirements. Fannie Mae has published two documents on the topic:
Desktop Appraisal Fact Sheet | ANSI Fact Sheet
Additionally, the Data Dictionary Workgroup has reviewed the subject and created a new field, GrossLivingAreaAnsi, to support the Fannie Mae changes and the ANSI measurement guidelines required on inspections.
In looking at the fact sheet and how a number of parties (appraiser, agent, owner, etc.) could capture the area measurements using different technologies (such as digital floor plan apps), it was determined that a new field was the best option for industry clarity. The Data Dictionary Workgroup voted for the addition during the RESO Spring Conference.
Another discussion item was the Fannie Mae Form 1004 Desktop and how prior 1004 forms refer to “Gross Living Area” (in square feet) and Gross Living Area Above Grade. The possibility of nuances between RESO’s LivingArea field and Form 1004’s GrossLivingArea or nuances between RESO’s AboveGradeFinishedArea and Form 1004’s GrossLivingAreaAboveGrade (i.e., “Finished” vs “Living” in the field names) provided further reason for the new field.
If you are a RESO member, you can review the discussion related to the new field on the Data Dictionary Discussions Forum, including some thoughts that may call for further discussions. You can also learn more about the formation of an Appraisal Subgroup that will review the MLS-to-appraisal flow and the appraisal-to-lender flow where the new desktop system is largely based.
