The real estate market is currently experiencing one of its most hectic periods in recent memory. As record low inventories and sky-high demand continue to impact the pace of real estate transactions, one critical component of this process is in the spotlight: the appraisal.
For the appraisal process when buying a new home, the primary objective is to get things done quickly and accurately. And in the wake of the COVID-19 pandemic, the balance of speed and safety made the appraisal process even more complex. This made desktop appraisals the idea option — allowing appraisals to be conducted remotely, using public records such as listings, MLS, public data and tax records. And starting in early 2022, Fannie Mae and Freddie Mac will accept desktop appraisals on a permanent basis for applicable financing.
While both options will be viable as we move farther away from the COVID-19 shutdowns, desktop and full appraisals have their own benefits and drawbacks that must be weighed.
Desktop Appraisals vs. Full Appraisals – Definitions
Just as it sounds, a desktop appraisal is a property valuation conducted remotely, at an appraiser’s desk, using data sources like public records, mined data, property condition reports, tax records and information included on the multiple listing service (MLS).
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.), while a full appraisal puts the onus on the appraiser themselves to determine the property’s condition.
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.
- More economical
- Faster turnaround time
- Considered the “Gold Standard”
- Appraiser assesses the property in person
- Appraiser isn’t seeing property condition first-handl
- 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 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.
Desktop Appraisals vs Full Appraisals — The Bottom Line
When it comes to assessing appraisal options, it is critical to understand that desktop appraisal products have made leaps and bounds compared to where they were just a few years ago. There are a number of real estate valuation companies rolling out new and innovative products that are revolutionizing the appraisal process.
Fueled both by the COVID-19 pandemic and by rapidly expanding technological capabilities, desktop appraisals are now able to more accurately and efficiently deliver high-quality reports that are comparable to — and even better than many alternatives.