Are Appraisers Going Extinct?
Are Appraisers Going Extinct?
Full Video Transcript Below
[00:00:00] Well, good morning, real estate fans. I'm Alice Lema broker, John L. Scott and beautiful Southern Oregon with another edition of the weekly podcast. Today's going to be super interesting. I'm asking the question, are appraisers headed for extinction and you'll see some announcements that have happened recently. Why I'm wondering, this possibility.
[00:00:21] Before we get started, let's give you a quick second to subscribe to the channel. Thank you to everybody who's done it so far, but everybody else, please subscribe. Give us a, like, give us a thumbs up, ask some questions, send this to your friends and family, especially if they're in a transaction, whether they're selling or buying. They need to know this is going on.
[00:00:41] Okay. Back to the podcast, are appraisers headed for extinction. So what am I talking about? Well, right now, when you're getting a mortgage or you're selling your home and your buyer's getting a mortgage, there's a human involved called an appraiser. They worked for the lender, all that money that you give, for the appraisal goes to the appraiser but it's given to the lender as protection in case of a foreclosure. That's what the appraisal is for. So that's what you're doing. You're paying the lender to be safe, but anyway, I digress.
[00:01:12] Okay. So right now you have a person who comes to your house. And they measure everything and they look at everything, make sure everything works, make sure the finishes are what they say. They check out the neighborhood, runs all the comparables and does a very detailed analysis of why they think the property is worth a, B and C, and if there's any repairs that need to be done. So that's kind of what happens now.
[00:01:35] Recently Freddie Mac, one of those pseudo housing government agencies involved in all of our lives when we're buying and selling, Freddie Mac recently announced they are permanently approving what's called a desktop appraisal. Now a desktop appraisal means no human comes to your property. They do everything online and they don't really know if you trashed your house or if it's an absolutely amazing neighborhood, they're just doing everything by the numbers on the computer. So that's called a desktop appraisal. So if you start hearing lenders, listen to that, listen to that phrase, desktop appraisal, you start hearing that this is what they're talking about. They're talking about automating this whole appraisal process. Okay. So Freddie Mac makes this announcement they're permanently approving the use of desktop appraisals.
[00:02:27] Well then the FHFA which is the federal housing financial agency announced that as of march 19th, 2022, which was a little bit ago, March 19th, 2022, they are accepting remote appraisals without a human ever stepping onto a property. So the FHFA has already moved toward this direction. They're using the phrase remote appraisals and that they will accept that.
[00:02:59] But they're talking about the same thing they're talking about. Not having somebody verify some of the facts or any of that. Well, I guess you can verify a lot of facts online, but you know, the holdup right now, it was very interesting. What what they were saying, the holdup was, is a lot of listings or historic data for, for homes. They don't have the floor plan. They don't have the measurements of the property necessarily online. So as more of us, like I put floor plans on my listings, measurements. So it's like, those are actually accelerating this movement. We do it so that people can see the relationship between the rooms and the space, but yeah.
[00:03:40] So as they get more and more technical with what these houses look like I guess that's the trend there. They're not going to be sending people out to look and verify if you're really worth it or not. So, you know, this is going to be a double-edged sword. I don't know if there's anything we can do about it, but I sure think it helps to know that that's a possibility and I bet it's going to be more popular in the subdivision.
[00:04:02] So if you're in town and you're in a subdivision and all the houses are kind of similar, that's where it started. Okay. And during COVID I think that whole practice of replacing the human appraiser with technology kind of got accelerated because of the pandemic. So here we are leftovers from the shutdown.
[00:04:24] You might not have a real person come look at your house anymore. So there's the question. Are appraisers going to be extinct like the Dodo bird? I don't know, but why don't you give me your thoughts and let me know if you're in the middle of a transaction and this is happening to you. Let's talk about it.
[00:04:40] All right. That's the podcast for this week? I'm Alice Lema broker John L. Scott here in Southern Oregon. Give me a call, give me a text I'm around all weekend. My number is 541-301-7980 make it a great day. See you next week.