Drive By Or "windshield" Appraisals

[Ed]

I'm a trainee with about a year and a half of training under my belt or 1300 logged hours, how ever you want to look at it.

Anyway, We are asked on a daily basis to do Drive By's or Field Reviews or 2055 Exterior Appraisals. We decline every order for this request because we can't understand HOW YOU CAN APPRAISE SOMETHING YOU HAVEN'T SEEN. We either decline the order or tell the Lender OK but we need to inspect the interior and our fee will be (X). Generally we don't get a return call for that order. What is the general concensious regarding Drive By Appraisals? Are more and more Appraisers doing this and if so, why? Are we leaving money on the table? I know money isn't what its about. I also heard about AVM's. What's the concensious there?

We feel there is too much liablility on us as Appraisers or Appraiser Trainees not do the best, ethical and complete job we can. Why cut corners! I wouldn't want a Drive By on my house unless I had something to hide.

I know now from experience, that County Tax Cards are usually incorrect and MLS information, I won't even get into. So the Appraiser is the only thing we have left.

 

[Pamela Crowley (Florida)]

I agree with you.

I will do a drive-by only, but it will cost just as much as a full URAR. It's loaded with disclaimers and paragraphs that the lenders don't like.

 

[Ed]

Pam you haven't answered my question. WHY!

 

[Pamela Crowley (Florida)]

Why?.... Well, if they pay my fee, I will do it. I don't like them and nobody wants to pay my fee, so I rarely ever do one.

 

[Dan Leggett]

One of my better competitors, who is almost as big of a disinterested SOB as I am, had a classic line: "I'll start appraising from the street whenever the buyers start buying from the street." Alas he, as have I, started including these things in our services offered.

Along the lines of Pam's post, I leave barn doors throughout the report that might allow me a way out if ANYTHING assumed in the report is discovered to be different than what was assumed.

As far as "why?"
1: It's what the lender/investor/customer is demanding. They have the gold, they make the rules. Ever heard deminimis thresholds, AVM's, Desktop appraisals? (You don't think that appraisers have any input into how the appraisal process is incorporated into the lending process do you?)
2: USPAP has addressed & blessed under the "Scope" discussion.
3: It pays the same.

 

[Mike Garrett RAA]

Not my favorite thing to do but will do it if the fee is right. Just dis-claim the hell out of it.

 

[Lorie Miller]

Pamela, What kind of disclaimers do you add to the 2055 reports?

 

[vargasteve]

2055's are better than an AVM in my opinion. How can you use various comparables, and adjust them against the subject without seeing the interior of those homes?. In a 2055 the lender is reducing your degree of acountability (by default of ordering the lower 'less resolution' value picture), so the burden falls on their shoulders (assuming you have used due diligance in data collection / as always).

I don't particuarly care for the 2055 approach, however they are a good source of income, I struggled with 2055's for some time. For me the nice thing about 2055's (exteriors) is that you don't have to interact with the borrower in so far as appointment time so you can fill holes with them, and or pair them up with other nearby assignments. Its nice to have a 2055 hanging around when some borrower calls @ 7:30AM <_< in the morning to cancel thier 8:00AM appointment (or decides to no show, or cancel through the crack in the door :twisted: ). Normally drive by's have low loan ratios or good scores or both, well seasoned home owners. Clearly a more conservative approach within reason is appropriate on these assignment (vs assuming the best with no confirmation). "Generally speaking" there is a small degree of lender pressure & push pitches on driveby's.

You can still phone interview the customer, and refuse or request an upgrade when appropriate.

1st read the big bold heading & 2nd line on the form, then read limiting condition # 5. ( you might use addition verbage to this effect ) such as; The appraiser relied on data sources that are considered accurate, and routinely used in the course of establishing market value. This data (salient features, lot size, etc..) has not been verified by inspecting the subject property and is outside the scope of this assignment (per lender request). Therefore the appraiser offers no implied or expressed warranty for 3rd party sources, despite the fact that this information has been relied on to render a opinion / estimate of value.

If in 'your' area the data is very unreliable most of the time, or unusual / complex / non-conforming areas are not great 2055 canidates.

I suggest that you ask for appropriate verbage from the 'formites' that would help make you feel comfortable in the process. And charge an appropriate fee for your time.

 

[Jo Ann Meyer Stratton]

I make sure I have my Extraordinary Assumption in my addendum to a 2055. And every place else I make sure I repeat several times on the form and my addendum that I viewed the exterior only and it was assumed that the interior would be in similar condition to the exterior (or average--whichever is lower).

EXTRAORDINARY ASSUMPTION:
Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis

Opinion of value in this report based on information obtained from county records, MLS, etc and not verified. It is assumed that the interior condition of the improvements are comparable to exterior conditions observed from the street. If this assumption is found to be false, it could alter the appraiser's opinions or conclusions.

 

[Restrain]

We do 2055's when we have a good idea as to what the property is like, as in typical subdivisional properties. We put a disclaimer in that this was an exterior from the public thoroughfare and an internal, on-site inspection may well reveal data that may affect the value estimate.

I do not do 2055's on mfg homes, homes on large acreages (1 acre is ok as there's plenty of data due to the market), or oddball properties. I've planned 2055 exteriors, driven up to the house, and found that it doesn't correlate to the tax records. Then that's a trip fee and a call to the lender to upgrade to a walk-in.

The oddest request we had was a 2055 exterior on a 40,000 square foot home (that's not a typo). Suffice it to say, that became an upgrade as soon as it hit our office.

Roger