Last time in our “Up Your Appraisal IQ” series, we talked about several options you have in the event an appraisal comes in low and why it’s important to partner with a Key Mortgage loan officer to ensure your client gets the best option for their circumstances. This week, let’s take a look at the tools and technology that influence the appraisal process and what that means to you. 

We all know that one of the key drivers in appraisal valuation is data and the technology that can aggregate it, analyze it, risk assess it and ultimately utilize it for the purposes of mortgage lending. Let’s highlight a few of these you might (or might not) already be aware of:

Property Inspection Waivers (PIW)

This is a mortgage lender’s ability to accept the value of the property as submitted via the sales contract (or estimated value if a refinance) without having to do a physical inspection of the property and without providing any further justification such as an appraisal. These waivers are provided via messaging through automated underwriting engines for Fannie Mae or Freddie Mac (Desktop Underwriter or Loan Product Advisor), which use hundreds of thousands of completed appraisals to leverage the data contained to substantiate the value.

Risk and Value Assessment Scores

Speaking of data, gone are the days of relying solely on the appraiser to give the lender comparable properties and the resulting valuation. Both Fannie and Freddie use risk assessment models to score the appraisal between 1-5, with 1 being the lowest risk and 5 being the highest. The scores take into account value and data on the home, as well as the comparables used to substantiate the value given. Along with the score, they will provide what appear to be similar comparables that should or could have been used. So lenders are no longer flying blind or relying solely on an agent to provide comparables.

What technology can’t do is tell the specific story behind a property. While there is no hiding from the data, understanding the dynamics around the interest (or lack thereof), the history or unique condition of a property may influence the value in a way that no data point can. So, being proactive and sharing that with an appraiser at the onset of the process can be a key driver to marrying data with market demand.

We like to say that loans are like snowflakes — each one is slightly different. Having a lending partner to help navigate the appraisal process and understanding the why and how is critical to you and your client. That’s what we’re here for! Leverage your Key Mortgage loan officer to help you with this.