What Is a Desktop Appraisal and How Does It Work?

A desktop appraisal is a method of property valuation where a licensed appraiser determines a property’s value without conducting a physical inspection. Completed remotely from their office, it relies entirely on available data and digital resources to form an opinion of value. This approach represents an alternative to traditional appraisals, which typically require an on-site visit.

Understanding the Desktop Appraisal Process

The desktop appraisal process involves a licensed appraiser gathering and analyzing property data. The appraiser collects information about the subject property and the local market, including its location, size, age, and recent sales data from comparable properties. Appraisers utilize specialized software and databases to access property information.

With the collected data, the appraiser applies valuation methodologies, such as the sales comparison approach, to determine the property’s value. This involves comparing the subject property to recently sold properties with similar characteristics. The appraiser then synthesizes findings into a formal report stating the property’s value. Fannie Mae requires appraisers to use Form 1004 (Desktop) for reporting these appraisals, which must include a floor plan.

Information Relied Upon for Desktop Appraisals

For a desktop appraisal, appraisers depend on digital and public information sources to establish a property’s value. These sources include public records, such as tax assessments and deed information, providing details about ownership, property characteristics, and historical data. Data from Multiple Listing Services (MLS) is also utilized, offering insights into recent sales, property listings, and photographs.

Appraisers can also incorporate information from third-party data providers and previously collected property data. This includes user-provided photos, videos, or floor plans, which describe the interior and exterior of improvements. While information from parties with a financial interest can be used, the appraiser must verify such data through a disinterested source to ensure its accuracy.

Typical Scenarios for Desktop Appraisals

Desktop appraisals are used in situations where a physical inspection is not required or feasible. They are employed for mortgage refinance transactions, particularly when the borrower has sufficient equity and a recent appraisal might already be on file. These appraisals are also suitable for home equity lines of credit (HELOCs) to determine property value for credit limits.

For lenders or investors managing large real estate portfolios, desktop appraisals offer a cost-effective method for monitoring and evaluating collateral value. They can also be used for internal corporate valuations or initial property valuations ahead of a potential listing or refinancing. Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac have incorporated desktop appraisals into their loan processes for eligible transactions.