Overcoming Appraisal Issures, Desktop Appraisals in March, and Need Floor Plans?

Scott: Luke your background includes appraising, running a national AMC, and developing new tech for the appraisal industry.   

As lenders, especially in today’s market, quality mortgage valuations are so important.  

What are the most common issues you see lenders having now?  

Luke: Good question and there’s a couple. First, we all know about the supply-demand imbalance that puts pressure on valuations, the high volumes, and sustained rapid price increases. We have been keeping up with the requests but only with a great effort from our team.  Good comparable that are very recent can be an issue.   

Scott: With that, if a lender has issues with value, how should they evaluate those and how can they try and solve them.  

Luke: First your appraiser should be looking at the comparable sale dates closely, looking at the time adjustments, and we also look at cost approach data and what it says.   

Scott: The prices move so fast that most borrowers work with their agents to best structure the offer to get the deal. At that point they look at the what if’s and sometimes choose to take the appraisal off the table with more money down or higher LTV financing and then after the deal closes look at a HELOC or refi options.   

Where there is pressure on the appraised value and a lender looks wants to challenge the value, how should they do that (or how should they not do it)  

Luke: Great question. The thing that you really want to avoid is giving a long list of comparables to the appraiser and expecting them to research say 20 properties. Simply doing a shotgun approach like that does it tell the story and can just accelerate a negative response back. On the other hand, it’s better to provide a few that best tell the story can be effective.   

Scott: At the MBA national conference, Sandra Thomson mentioned that FHFA is going to revert to some of the Covid flexibility and allow desktop appraisals in certain situations. She didn’t talk about any of the details, but the crowd reacted wildly with the news. It was probably one of the strongest reactions from the audience of all of the speakers. Since then, the changes have been formally announced including the launch date of the weekend of March 19th.  

We know that the property must be a one-unit property, 90% LTV or lower, and a primary residence. From an appraisal standpoint, is there anything else that you’re hearing about the change? 

Luke: Yes, the floorplans aren’t always widely or easily available. We developed an app called Proxy Pics that is really pushing the envelope of how valuations could be done and we’ve gotten some good feedback from the agencies. Recently, we’ve had a lot of interest from lenders who want to be able to create a floorplan when one doesn’t exist They would use our app with scanning capabilities powered by CubiCasa to generate a floor plan. 

Scott: Thanks for the information, Luke and wish you the best for a great 2022 with Evaluation Zone and Proxy Pics  

Luke is the CEO of both ProxyPics and Evaluation Zone, headquartered in Chicago Illinois and regularly speaks at trade conferences about the future of valuations, developed a hybrid appraisal report, created ProxyPics (his second U.S. Patent), has traveled as far as Australia to meet with other experts about tactics and theory, has been an expert at AARO about the future of education for appraisers and virtual reality inspections.  

Luke has been a Diehl Faculty Expert and Speaker for 4 years. 

Luke is the CEO of both ProxyPics and Evaluation Zone both headquartered in Chicago Illinois