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Valuation Blog 6.27.2022
Desktop Appraisal vs. Full Appraisal: Everything You Need to Know

The real estate market recently experienced one of its most hectic periods in memory. And if record low inventories and sky-high demand weren’t enough to make the industry feel volatile, add in the ever-evolving standards around appraisals and it’s hard to know where to even begin.

The evolution of 1004 desktops vs full appraisals have occurred in phases, and further change is still expected when it comes to appraisals required for Government Sponsored Enterprises (GSEs). In the simplest of terms, the rules and regulations around 1004 desktops have occurred in the following phases:

  • Phase 1: Before the COVID pandemic, loan origination required a full appraisal.
  • Phase 2: During the height of the COVID pandemic, desktop appraisals were accepted for some originations to provide flexibility in the wake of a public health crisis.
  • Phase 3: Based on the positive results using desktop appraisals during the pandemic, the GSEs developed the 1004 desktop to be accepted for certain originations in the interest of continued flexibility.

Phase three is where the real estate market is now. Because of the pressing shortage of appraisers and increased demand requiring more efficient processes, GSEs are hoping that offering 1004 desktops in addition to full appraisals will help streamline and optimize the appraisal process. It is important to note, however, that further change is coming.

Regardless of the future regulatory changes, 1004 desktops and full appraisals each have their own benefits and drawbacks that must be weighed.

1004 Desktop Appraisals vs. Full Appraisals – Definitions

Just as it sounds, a 1004 desktop (also known as a 70D form) is a property valuation conducted remotely, at an appraiser’s desk, using data sources like public records, mined data, tax records and information included on the multiple listing service (MLS).

As of 2022, GSEs are allowing lenders to use 1004 desktops on purchases that meet certain loan and risk criteria. What’s more, the 1004 desktop form is the same as the one accepted during the COVID pandemic, but it requires two additional pieces of information:

  • A virtual floor plan of the subject property that shows interior layout with walls and design.
  • A sketch of the exterior measurements and perimeter.

Tools like Pro Teck’s VALIDITY Floor Plan create the required digital floor plan and sketch using software and a smart phone.

A full appraisal, on the other hand, is a property valuation that is conducted in person by an appraiser at the physical address of the property. The appraiser assesses both the interior and exterior of the home to determine the condition of the property.

Speaking in general terms, desktop appraisals and full appraisals are fairly similar in that the parameters upon which an appraiser makes their determination are exactly the same using the same appraisal methodologies. A home that is appraised via desktop appraisal must meet the same standards as a home that is appraised in person. The only difference is that a desktop appraisal is reliant upon MLS, public data and other third-party sources (property tax records, public records, etc.).

1004 Desktop Appraisals vs. Full Appraisals — Pros & Cons

Desktop and full appraisals each have their own benefits and drawbacks and determining the right product for an evaluation is largely dependent on the circumstances.

1004 Desktop Appraisals Full Appraisals
Pros
  • More economical
  • Faster turnaround time
  • Considered the “Gold Standard”
  • Appraiser assesses the property in person
Cons
  • Appraiser isn’t seeing property condition firsthand
  • Negative influences (such as power lines, highways, etc.) may be more difficult to uncover
  • More expensive
  • Takes longer to process
  • Can be difficult to schedule

When to Use a 1004 Desktop Appraisal vs. Full Appraisal

Choosing the right appraisal product for originating a loan is wholly dependent on the credit risk policy of the lender. After the 2008 housing crisis, more regulations were put into place surrounding real estate processes, including the appraisal. As such, the lender is responsible for determining what product is best for your circumstances.

And always remember, an appraisal is not an alternative to a home inspection. If you have any questions about the condition of a home and its systems, please reach out to a home inspection professional.

1004 Desktop Appraisals vs Full Appraisals — The Bottom Line

While it is impossible to know if and when the next iteration of 1004 Desktop and/or full appraisal changes will come, it is possible to safeguard your processes and customers with the right solutions.

VALIDITY Floor Plan is a unique solution that supports the 1004 Desktop by developing the interior and exterior floor plans. A broker/agent from Pro Teck’s extensive national network visit properties and provide a digital rendering of the subject property that meets all GSE requirements, which ensures appraisals keep moving through the pipeline. And because they are trusted Pro Teck broker agents, our customers don’t have to rely on unknown third-party findings — all VALIDITY findings that inform the 1004 Desktop are kept in-house with the Pro Teck family of systems. VALIDITY Pro, which includes a floor plan and property inspection, is available when appraisal modernization initiatives are finalized.

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