Desktop appraisals: An untapped opportunity for credit unions

Publisher’s Note: CUInsight is hosting a free webinar Tuesday, June 21st titled, “Leverage Remote Inspection & Appraisal Technology at Your Credit Union.” We hope you’ll join us! Register here.

Desktop Appraisals for purchase have been officially approved by the GSEs, but what benefits do they offer, and what are some of the common barriers when it comes to Desktop orders?

Desktops, which are appraisals without a physical, in-person inspection by the appraiser, aren’t new, but they became more widespread during COVID-19 when GSEs allowed for flexibilities in the traditional process.

But even during the pandemic, many lenders were slow to accept or order desktop appraisals. There were questions about veracity, confusion about workflow, and uncertainty around how long these would be accepted.

Then came the housing boom.

Appraisers, who were already backlogged on valuations, faced a tsunami of demand. They couldn’t keep up. Getting an appraisal done could take weeks.

So with all these factors – massive demand, the need for a faster process, and a shrinking pool of active appraisers – desktop appraisals for purchase seemed like a sigh of relief for a weary industry.

Because appraisers wouldn’t have to drive to properties, they could – in theory – do more valuations in less time. This would make an even bigger difference in rural areas where fewer appraisers cover large areas. A two-hour drive to a property becomes a four-hour time savings if it’s a desktop order, and in the case of many appraisals, days and even weeks saved not having to coordinate a time to drive to the properties.

The new normal was here! The future is now! Right?

Not so fast.

With the GSE approval of Desktops in March of 2022 came a complicated requirement: instead of a sketch, appraisals would need a detailed floor plan, to include interior walls and room labeling.

Appraiser forums blew up with frustration.

“How are we supposed to do that without visiting the property?”

Appraisers would either have to go to the property and measure the house, which makes a Desktop pointless, or they’d have to rely on third-party data provided by an agent or homeowner.

Along came RemoteVal, a remote inspection app that lets an appraiser remotely inspect, photograph and measure a home through the homeowner’s smartphone. It’s a 3rd-party tool but 1st-party data.

Appraisers could do most of their normal process, gather and verify all the data of an in-person visit, but they could do it from their desk. Remoteval Desktops have taken between 2-4 days on average to complete.

Plenty of other benefits exist, too.

If a pandemic or natural disaster makes appraiser access to a home difficult, RemoteVal allows the inspection to take place – as long as there is a cell signal and someone at the property.

Fewer round trips to properties means reduced carbon footprint, not to mention fuel savings, which has now become a significant national issue.

RemoteVal also addresses fair lending and bias issues. In March 2022, The New York Times reported that minority homeowners were consistently dealing with undervalued property and higher appraisal fees.

“Remote Appraisal Inspections offer much more benefit to lenders than just faster turn times,” Mark Walser, President of Incenter Appraisal Management, said. “In the industry’s ongoing discussion about racial bias and other forms of discrimination, remote inspections present an opportunity for appraisers to fulfill assignments with accuracy and speed, but also have conversations with the homeowners without risking some of the negative interaction that can possibly occur in a face-to-face meeting.”

“There are other types of bias as well that remote inspections can impact positively. For example: removing the higher fees that underserved or rural communities often have to pay for in-person inspections.”

So the official approval for Desktops exists. The technology solutions to create accurate desktop valuations exists. And the benefits are clear.

But adoption has been complicated. What’s the problem?

Let’s explore the three main reasons that come up:

First, confusion surrounding Desktop Appraisals is holding everything back. What types of transactions will meet eligibility? What about complicated, multi-story homes? Will agents and homeowners willingly be part of the inspection process? How do we get floorplans when the agents don’t have them?

And where do most complicated homes/properties exist? In rural areas, where complex floor plans and fewer cookie-cutter builds make for more difficult comps. There goes the drive-time savings.

Second, lenders are reporting that they are not getting the approvals for Desktops on a lot of their loans.

Third, appraisers allegedly simply refuse to do them. That’s an easy conclusion to jump to when looking at a site like AppraisersForum.com. Reactions range from “this is the stupidest idea I’ve ever heard” to “let’s all band together and go on strike for a month.”

But appraisers like Wayne Wright who have actually used RemoteVal have drastically different responses.

“This is light years better than a hybrid,” Wright said. “You get better data, you can do more reports, and it’s easier to schedule. RemoteVal is simple to use, and I got a good feel for the house. This is 100 percent a plus for the industry.”

The loudest voices online may not accurately represent overall appraiser sentiment, or even the majority of the appraiser sentiment.

Lost in this conversation, though, are the AMCs – who might be the real hold up.

When the GSEs gave their formal blessing for Desktops, lenders turned to the AMCs and asked, “Can you do this?”

The reply: “Absolutely.”

Except that most AMCs didn’t have the technology or workflows in place to accommodate the number of desktop orders the lenders wanted, or to assist the appraiser in getting the floorplan created to help them complete the reports. Even today, most credit unions have AMC vendors that do not have the technology or capabilities to perform these reports.

So where do we go from here? Is the industry stuck with lengthy turn times? Are Desktops DOA?

The future isn’t so bleak. Desktops aren’t going away. The need for speed and all the benefits will continue to push the industry forward.

And technology like RemoteVal will only make the process easier and faster to adopt. Appraisers are also surprisingly sanguine about embracing new technology when they understand it and when they are in control of the process.

In spite of the confusion and initial frustration, lenders will have the most say in what happens next. After all, they are the customer, and customer demands eventually turn even the biggest ships.

Credit unions are in a phenomenal position to capitalize on the promise of remote appraisal technology. Myriad opportunities exist to utilize them in portfolio, consumer and mortgage lending. Immense benefit of speed, lower costs and member experience can be reaped as well. Credit unions benefit from having vendors who can deploy the technology now while the industry is repositioning, and prepare for the future where they will be able to leverage the next generation of mobile, tech-savvy customer with services that make the appraisal and valuation process much faster.

Don’t forget to join CUInsight and Incenter for our free webinar titled, “Leverage Remote Inspection & Appraisal Technology at Your Credit Union“, on Tuesday, June 21st. Register yourself and a colleague here.