As regulators work toward a decision on whether to increase the threshold for residential real-estate transactions requiring an appraisal from $250,000 to $400,000, many lenders and appraisers alike are wondering whether they are prepared, whatever happens.
For lenders, a higher threshold will offer more flexibility on the type of appraisal products they use. They stand to benefit by lowering costs and potentially decreasing turnaround times for property evaluations on more types of real estate loan transactions.
For appraisers, though, it’s a more complex issue. On the face of it, there are two key threats for appraisers if the appraisal threshold is raised:
1. It could reduce the number of appraisals needed.
Simply put, raising the threshold to $400,000 means there are more transactions – especially in smaller or more rural markets – that could be done without a traditional appraisal.
The solution? Combine Speed with Value. Allowed access to a full range of appraisal solutions – e-valuations, desktop appraisals, hybrid/bifurcated appraisals and traditional appraisals – the most innovative appraisal management companies (AMCs) stand to benefit from a threshold change. Forward-looking appraisers and AMCs who are using the latest technology solutions coupled with their own highly trained appraisers can scale to meet the new, evolving needs of their lender clients. Bifurcated appraisal solutions – the evolution of what has also been called a desktop or hybrid appraisal – enable an appraiser to complete more appraisals because technology and use of local property inspectors alleviates the need for the appraiser to be on site. The result is that appraisers gain the ability to complete three to four times the number of appraisals a day vs. traveling to every property site conducting traditional appraisals.
This enables appraisers to deliver faster turnaround times, at lower costs and with better compliance – all conducted within a USPAP-certified appraisal process.
2. It could introduce discrepancies into property appraisals.
One of the fears around hybrid or bifurcated appraisal solutions is that lenders and borrowers aren’t getting the benefit of trained eyes on the ground. Basing an assessment on similar properties won’t take into account improvements like a kitchen renovation, or lot-specific circumstances.
The solution? Focus on Quality. Innovation in hybrid appraisals has resulted in new options that are more accurate and compliant than past alternative valuation methods – while still providing a low cost and quick turn time. ValueNet™ by Accurate Group is the market leader in bifurcated appraisal products and desktop appraisal technology.
Appraisers who use ValueNet like the flexibility and quality it delivers. It’s a powerful tool for appraisers to arm themselves with in the face of an appraisal threshold increase. And it’s a win-win, as lenders gain access to leading-edge technology that combines best-in-class vetted and crowd-sourced local data sources with certified local appraisers – resulting in a thorough assessment of each property, quality-controlled by a licensed appraiser. By combining innovative technology, desktop appraisal processes and locally sourced appraisers, ValueNet can deliver more accurate, regulatory-compliant appraisals and property condition reports faster and at a lower cost than traditional solutions.
The Net-Net?
Bifurcated appraisal solutions can be a win-win for both appraisers and lenders. An appraiser can complete more appraisals using a product like ValueNet, and lenders benefit from lower costs and faster turnaround times without sacrificing accuracy.
If you are already working with the Accurate Group, rest assured you have a leg up on the competition. Accurate Group provides valuation solutions to 22 of the top 25 U.S. banks, credit unions and mortgage lenders of all types. Through relationships with more than 10,000 appraisers nationwide, we manage more than 25,000 appraisals each month. Since 2010, Accurate Group has managed all types of appraisals on more than $450 billion in property value and has closed or recorded over $400 billion in loan volume for its clients.
Want to learn more about the decision to raise the appraisal threshold to $400,000? Email askAG@accurategroup.com to request your copy of our new whitepaper: The FIRREA Appraisal Threshold Debate: Are We Asking the Right Questions?
Watch the ValueNet™ video for an overview of the ValueNet appraisal technology platform. With both interior and exterior inspection options, support for loans at every level and an 18-year track record, ValueNet can help you improve the profitability of your home equity, HELOC and portfolio loan businesses.
About Accurate Group
Accurate Group is a leading provider of technology-driven real estate appraisal, title data, analytics and e-closing solutions. Accurate Group combines exceptional service, innovative technology and its proprietary AccurateAudit™ compliance foundation to provide banks, credit unions, servicers, non-bank lenders and capital markets firms with the best combination of speed, quality, regulatory compliance and price.
With Accurate Group, lenders, consumers and capital markets firms benefit from market-leading solutions that improve accuracy, lower costs and improve compliance across all types of real estate loans, mortgage-related assets and real estate portfolios.
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