Advancements in technology have led many to question the continued role of the Loan Originator in the home financing process. Could it be that the appraiser is the one at risk?
With databases constantly being fed information about property values, market conditions, area employment trends, and other information pertinent to determining property values, will we continue to need a physical inspection of a home to determine its value? Appraiser’s say yes; Fannie and Freddie say no.
Both agencies have loan programs that do not require a standard full appraisal report. In some cases, no appraisal is required at all.
Each has built a major database of property value information they can draw upon when making valuation decisions.
Think about it, how many times does the appraised value vary drastically from the sale price set by the Realtor? Market and property conditions determine value.
Appraisers say without a physical inspection, the property condition cannot be determined. However, property damage would be noted by the Realtor.
Plus, what buyer would purchase a home at full value if it was deficient or in need of repairs?
Will full appraisals be required for all mortgage transactions of the future? Maybe, for some, but surely not for all transactions.
It’s just a matter of time when a property’s value for lending purposes will be satisfactorily determined by technology, without the need for the physical walk through. We already have the AVM’s of today.
We have the technology for home and neighborhood views online through applications offered by such entities as Google and Trulia.
If need be, a lender can get a close up view of the property being financed and its surrounding area and all comparable sales. No need to visit the home.
So, when making a loan decision, lenders will be able to use technology to validate consumer credit, income, and asset information as well as property values.
This is good for lenders and consumers, saving them time and money, reducing the loan costs to both. Not so good for appraisers.
The question is – who and what is next?