The spread of the Coronavirus is impacting the real estate and mortgage industries in unprecedented and unusual ways. One crucial step in every mortgage transaction, the home appraisal, has become increasingly challenging in recent days.

Before the current pandemic, a residential real estate appraiser would visit the property, shake the hand of the homeowner or real estate agent providing access to the home, tour it inside and out, and photograph each room and all significant elements to be used in the appraisal report. It’s amazing how quickly things have changed, and all that close interaction just isn’t feasible or smart in the current public health crisis.

In many areas, shelter in place and stay at home regulations prevent appraisers from entering homes. Where these restrictions haven’t been enacted, or where appraisals are specifically exempted, homeowners and appraisers alike report feeling increasingly uncomfortable with interacting in the home.

Of course, we can’t eliminate the appraisal requirement…that would leave lenders and homeowners vulnerable to mortgage fraud and predatory lending. So what can we expect from the home appraisal process while Coronavirus continues to spread?

Here are a few of the various ways appraisals may take place in the short term:

Traditional with extra precautions

If an in-home appraisal is required, both the appraiser and homeowner can be careful to avoid exposure. This can include canceling the appointment if the appraiser or anyone in the household has experienced any symptoms of illness in the past several days, or if they believe they may have been exposed to someone who has tested positive for COVID-19.
All parties can protect themselves with gloves and masks, remain at least 6 feet apart during the appraisal, and forego handshakes. The appraiser can avoid touching anything within the home, and all surfaces can be disinfected before and after the appointment.

Alternative home appraisals

On Monday, March 23rd, the Federal Housing Finance Agency announced that it had instructed Freddie Mac and Fannie Mae to “provide alternative flexibilities to satisfy appraisal requirements and employment verification requirements through May 17, 2020.” We anticipate that this alternative option will be provided for other programs as well.

These alternative methods could include some variation of the following:

• Drive-by appraisals where the appraiser does not need to leave his or her vehicle
• Desktop appraisals where value can be determined using existing data
• The homeowner or real estate agent could provide photos or videos

We would expect to see alternative appraisal methods accepted past May 17th should the spread of the Coronavirus not be contained at that time.

At Luxury Mortgage Corp, we are confident that the real estate and mortgage industries will continue to innovate to keep home sales and mortgage lending moving forward, despite the challenges we face. If you have any questions about home appraisals or how any aspect of the financing process is being impacted right now, please get in touch.

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