Comp Photos, Inspections and Such During a Pandemic

Are appraisers professionals?  During these convoluted times of C-19 it is likely we will need to modify to some extent the way we do business, but must we modify our professionalism along with the way we practice real estate appraisal?  I submit to you we do not.  Let me explain why.

For some reason, some lenders have concluded that during C-19, when we are likely doing drive-bys and desktops, not full-blown interior inspections, we appraisers deserve lower fees for what we do.  We all know how hard it is to make a dollar, so we shop for the highest quality and the lowest price.  Is there any reason for a lender to shop differently?  

OK, during these convoluted times, some lenders are going to offer less for an assignment than they did before.  That’s just business.  Since we are all busy right now, we are in the enjoyable position to be able to pick and choose the jobs we take, our clients, and the fees we will accept.  Revel in that freedom now since we know the market will eventually turn and that broad choice we have now will narrow significantly.

But let’s get back to the idea of being professionals.  Do we really need to put boots in the living room to come up with a credible value opinion?  Since USPAP does not require an inspection, merely a disclosure if we did not, USPAP is not sure boots in the living room makes for an appraiser any more credible than not putting boots there.  Now, should we inspect REOs?  Probably, since their condition has a lot to do with their value “as is”.  How about a really custom-built and custom-finished home?  Probably, since if the subject does not have some of those custom touches the comps have, we have to know that.

What I am advocating here is that the appraiser, the professional, be allowed to make that call.  When we do work for a GSE, that freedom is not present.  We, the professionals, know when an interior inspection is warranted, as well as when it is not.  Yet the GSEs and their investors have taken this freedom from us and, what’s worse, we let them.

What I’m saying here is we might need to put boots in the living room on occasion.  But really, most of the time that may not really be necessary.  It’s not really necessary we, the professional appraiser, take the photos.  Frankly, in all but the rarest cases, we can contract out those services without affecting the credibility of the value opinion we form.  Our time, our capital, our income are best spent in appraising, not schlepping around the countryside sneaking comp photos while we hope nobody call the cops on us.

We, as the appraisal professionals, should be free to make that call.  And the GSEs should be free to live with the choices we professionals make.

 

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 528 During a Pandemic Are Comp Photos And Inspections Necessary

http://traffic.libsyn.com/theappraisercoach/528_During_a_Pandemic_Are_Comp_Photos_And_Inspections_Necessary.mp3

11 Comments on “Comp Photos, Inspections and Such During a Pandemic”

  1. Is that the trick Dustin to pulling off 4 to 9 appraisals a day (no interior inspections)? What do you mean “What I’m saying here is we might need to put boots in the living room on occasion”. Year after year I’ve told you, but it still seems blog after blog you put profits before morals. If you don’t look for the problems Dustin, there’s a good chance you won’t find them. I seek the problems, find the problems, disclose the problems, and interpret the problems.

    Seek the truth.

  2. Hello Dustin I agree with most of what you say in the post; however, I have not only been a appraiser for almost 25 years and I have also been an investor with over 100 real estate transactions under my belt. I think all markets are different and unique and what may be applicaple in one market may not be in another. Having bought many houses over the years I would never buy a property that I did not personally inspect. The reason is the houses almost always look different in the photos than real life. It is not possible to accurately value property in my market without personal inspection because the differences in condition. Sure it is easier with new construction but there has been very little recent construction the last 10 years so I can value anything from my laptop and I do that all the time when shopping for deals on houses, but the funny thing is my opinion of that house always changes after the personal inspection. My accuracy is much better after I personally go look at the property and 9 times of 10 what looked great on the computer has a major flaw that affects value. It is suprising to me to ever hear a experienced appraiser comment that appraisals are as reliable without an inspection by the appraiser or own appraisers team (if you are doing that kind of thing) because I think time has revealed the most effective appraisers are the ones still driving the property, doing the inspection, and completing the report and making a good living doing it. Also the form type is not based on the home or the complexity of the appraisal or the appraisers qualifications. The form type is dicated by the credit worthiness of the borrower and the loan amount and nothing else is taken into consideration and that is why it is not in the hands of the appraiser because we are not the end user and that is who typically orders the appraisal needed to meet internal guidelines and they do not take any consideration of what is most reliable value opinion.

    1. When you place profit above all else James, there are those that will find the loopholes (no interior inspection required / I’m in compliance), even though we all know to find the 1, 2, or 3 in 10 problem homes, ALL 10 have to be thoroughly inspected. Again, I seek the problems, find the problems, disclose the problems, and interpret the problems, while many others hide behind what you can do (USPAP) instead of doing what you should do (physically inspect).

      Go make up a value, and seek the truth.

  3. Interior inspections, and taking the time to provide current comp photo’s, and data; I believe are necessary. Not a millionaire like others, but I am providing quality data, information, and opinions in my reports; and not just schlepping thru for the sake of a dollar.

  4. Really Dustin – Many properties you do need to personally visit – the above 3 responses are so on target. If you have been working very long at all – you can recall times when you had a property in mind – Just new what it was like from photos and then at inspection found something very different, that just was not captured in the photos and not described. Even like the street was totally trashed with abandoned cars – Or there was a peek-a boo view of the lake. All these things do affect market value

  5. I agree that there are time times we need an interior inspection and times when we do not. I agree we need to be able to make that call as professionals. However, if someone was going to take away that choice, I would rather that they tell me all need interior inspections than all do not need interior inspections. If interior inspections are taken away from appraisers, we will be pushed out of sight and become less valuable to the process.

    1. Gary, I agree “there are times we need an interior inspection and times when we don’t”, however I have those conclusions only after I’ve completed the work (interior inspection), and never before. Its like saying AVM’s are close enough 70, 80, or 90% of the time, thus why are full appraisals even needed?

      Seek the truth.

  6. While I far prefer an interior inspection of the subject myself and do so 99% of the time, with the exception being some pre-foreclosures, I recognize the irony of thinking I do a better job by inspecting the interior of the subject when I rely on outside sources and MLS to determine the condition of the comps.

    1. Yes Pamela, there are some things outside of our control, but those things we can control through an interior inspection regardless of what USPAP tells use we can do (no interior inspection required / Dustin) in my opinion should be done if physically possible (Covid 19). At least with physical conformation, the body of the problem we are trying to solve is solid (Tony has 7 apples, the train is traveling at 50 MPH, etc.). Confirming how many apples Dustin has across the street through pictures, yes be difficult.

      Seek the truth.

  7. For a 2-3 weeks during this pandemic, if a property was occupied, and the residents could not leave for medical reasons, etc. we did a very few exterior only inspections. However, we would only the accept the ones that were either currently listed, very recently sold, etc. With those, we also required to have access to current photos, mls info and a floor plan. We only deal with quality lenders, none of which asked us to complete these at a lower fee. In fact, we received emails from them, as soon as Fannie Mae addressed “flexible appraisal alternatives”, that said they realized this covid-19 situation was not their vendors/appraisers fault, that we were still being asked to work as essential business, and that they were to continue to pay full fee with no acceptions. We are no longer doing exterior only appraisals.

  8. I do agree that interior inspections are not always necessary, especially in these times, but relying on others,especially the home owner to take pictures, is not a good idea. How do we know if the interior pictures are of the subject or someone else’s house?, or if inferior conditions, repairs needed, etc. are left out of these pictures. HOWEVER, taking comp photos is a total waste of time and money and it is dangerous. It is also illegal in some communities The photos provided by the MLS are better than anything an appraiser can take, with one hand out the window,foot on the gas, trying not to get caught by the home owner or security! It’s about time that it ended!

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