Despite the fact that some lenders, including Fannie Mae and Freddie Mac, are now allowing exterior-only inspection appraisals or desktop appraisals as safety measures related to COVID-19, Read found that nearly all of the 35 agents she spoke to have used traditional appraisals in multiple transactions since the pandemic took hold in the U.S. The inspection process now typically involves explicit directions to ensure safety, including requiring all doors be open and lights turned on, as well as having the homeowner wait outside the property while the appraiser goes inside to conduct the inspection.
Another difference is that most agents aren’t present for the inspection. Instead, they’re opting to email the appraiser their packet of information, including such things as a list of property upgrades, the age of the roof, and a copy of the contract. Read expects these safety steps to continue for the foreseeable feature. “Some people believe the pandemic has sped up what would have happened in the real estate industry anyway,” she said.
Lyle Radke, director of collateral policy at Fannie Mae, is seeing a similar trend. On March 23, Fannie Mae issued temporary guidance on appraisal requirements allowing desktop and exterior-only appraisals on many mortgage transactions. That flexibility is set to expire on June 30, but it’s conceivable that it will be extended again, Radke said. However, in the majority of cases, lenders and appraisers are still choosing the traditional approach, he added.
Appraisers in harder-hit states such as New York and New Jersey are opting more often to use such alternative methods to conduct appraisals, said Radke. In less-populated states—like Wyoming, where COVID-19 is having a lower impact—modified appraisals are virtually nonexistent. “They’re getting into homes, but they’re taking new precautions in terms of social distancing and hygiene,” Radke said. “I think those are the things that will have staying power.”
While hope is growing for a vaccine or medical breakthrough to eventually manage the transmission of COVID-19, Radke said there will always be a risk of contracting other illnesses and infections. “We’ll never stop thinking about hygiene,” he said.
Federal regulators are also allowing lenders to postpone appraisals on residential and commercial properties for up to 120 days after the mortgage has closed, a modification due to COVID-19 that sunsets on Dec. 31, said Jeremy Gray, director of credit administration at Rock Canyon Bank in Provo, Utah.
James Heaslet, chief of construction and valuation at the Department of Veterans Affairs, has also found that the majority of appraisers are still doing interior inspections with increased safety measures. Real estate agents today, he said, are “critical and integral” for home buyers and sellers, in part because they’re in communication with appraisers. “We need the details [about the property] and need good photos,” said Heaslet. “Photos are used to sell the property and to showcase the property, but photos are also used to evaluate the property.”
One of Read’s favorite terms is “managing expectations.” Part of the client education process is explaining that there’s a good chance the buyer is going to use mortgage financing that has to go through the appraisal process. Appraisals will continue to happen during the pandemic, but with more care and consideration for everyone’s health and safety.
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