Desktop Appraisals Are Coming!
An appraiser recently charged us $2,000 for a basic appraisal in suburbia with a slightly larger lot and a moderately short time frame – because we could not find anyone else, and he knew it.
BUT – with refis drying up and appraisals getting waived or easier, that appraiser is not thinking very “long term,” as lenders will remember who may have overcharged during the busy times. 😊
I thought of this today when I read this article in HousingWire: Desktop Appraisals To Start in March.
Fannie Mae and Freddie Mac will allow for “Desktop Appraisals” for some purchases starting in March.
Desktop Appraisals rely on county records and past sales for property data, and they do NOT require physical inspections.
Per HousingWire: “To be eligible for a desktop appraisal, according to Fannie Mae, the loan must be a purchase transaction, secured by a one-unit principal residence and have a loan-to-value ratio of no more than 90%. The option is not available for second homes, investment properties, cash-out refinances, construction loans, multi-unit properties, renovation loans, condos, co-ops or manufactured homes.”
Desktop Appraisal eligibility is different from an Appraisal Waiver (where NO appraisal is needed) eligibility because Desktop Appraisals do NOT require a previous appraisal in Fannie’s or Freddie’s database.
Desktop Appraisals were allowed previously during the peak of the COVID crisis with some success, as about 15% of all Fannie/Freddie purchase appraisals were Desktops in April of 2020.
This is generally good news because it will make transactions cheaper and easier, and it will help address the appraiser shortage as well.
But – in hot markets with multiple offers over asking, physical inspections will often still be necessary I suspect to help appraisers justify or support value.
“Flips” Still A Thing
A “flip” is a home that has was recently purchased and then subsequently listed for sale – typically at a higher price point – within a specific time period (3 to 12 months, depending on investors or guidelines).
With so many investors “flipping” homes, flips and flip issues are prevalent once again (like they were after the 2008 meltdown).
And – some investors (that buy loans) have flip prohibitions, as do certain loan programs.
Our best jumbo investor, for example, will not finance the purchase of any property sold in the last twelve months if the new sale price has increased by 20% or more. Other jumbo investors allow for resale within 12 months (assuming documentation is available to support the new sale price).
And, FHA will not finance the purchase of any property that has changed hands in the last 90 days. FHA will also not finance properties that are being resold within 180 days – IF the value has doubled.
Hence, agents should alert lenders if their clients are buying a flip of any kind.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
