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    Lending | 3 min read

    Modernizing the Property Valuation Process: Part 2

    As we discussed in Part 1 of Modernizing the Property Valuation Process, the housing market has experienced dramatic changes that have presented many challenges for appraisers.

    Although the market has shifted, the challenges remain. While initiatives put in place by Practical Applications of Real Estate Appraisal (PAREA) and The Appraiser Diversity Initiative to provide alternative pathways for aspiring appraisers to join the industry and decrease the shortage of appraisers represent a good start, there still are other ways we can all help to modernize and expedite the process for borrowers.

    Alternative Valuation Options

    Lenders want to give their borrowers the best possible experience and not only reduce cycle times but ensure the integrity of the process. Having multiple product options helps to create capacity and meet borrower expectations. For best-in-class customer service, the industry is moving toward a risk-based approach rather than a “one size fits all” strategy. Depending on specific loan criteria, property type or complexity would determine which valuation product is needed.

    Appraisal Waivers

    The Government-Sponsored Enterprise (GSE) is showing its commitment to appraisal innovation, starting with the continued use of appraisal waivers. The waiver programs are further enhanced by adding an inspection report requiring a comprehensive capture of property data, images, and floor plans. In certain situations, these enhanced waivers and inspection products may require an upgrade to a hybrid appraisal.

    Hybrid Appraisals

    When conducting a hybrid appraisal, an appraiser will review a copy of the onsite inspection and data collection report and determine their valuation without having to go out and inspect the property themselves. With this appraisal option, the appraiser is able to view and assess the interior and exterior of a property remotely via a third party or by using tools such as Skype, FaceTime, or others.

    There are efficiencies here that will expedite the overall process.

    Desktop Appraisals

    The 104 Desktop Alternative is the latest innovation by the GSE for appraisal modernization and helps alleviate appraiser capacity issues. Appraisers will rely on multiple data services, like property data records, MLS past sales, or prior appraisals to support an opinion of value. The idea is to provide appraisers flexibility and an opportunity for increased efficiency. This product is used for purchase transactions, which means the required data is much more readily available.

    These are the most significant recent improvements in the modernization initiative within the spectrum of products from AVMs to full traditional appraisals.

    Recent GSE Redesigned Form

    Another step to modernizing the process for borrowers comes from the GSE. The GSE has redesigned the uniform appraisal dataset forms. This initiative includes subject matter experts from across the country working on a complete makeover, moving from a standardized form to a standard yet dynamic format that will adjust to the property's characteristics being appraised. These forms as we know will eventually go away.

    The system will be designed to force required data elements to be entered by the appraiser depending on the type of property and characteristics, market trends, public data, and everything that would impact value. So, when the process is complete, the analysis should be well supported and every important salient fact is in the report. This will also help eliminate scope creep, so it won't include elements that really have nothing to do with the property's value of marketability. The redesigned forms will be a much cleaner and clear solution.


    SWBC Lending Solutions has high hopes and our fingers on the pulse of the evolution of the property valuation process. We are committed to providing a full solution by leveraging the best technology partners and the most qualified appraisers in third-party data collectors.

    Click here to learn about SWBC Lending Solutions' Valuation options.

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    Chuck Mureddu

    Chuck Mureddu has more than 30 years of combined mortgage lending experience, including appraisal management, institutional risk, loss mitigation, and whole loan exit and securitization strategies. As the Chief Valuation Officer for SWBC Lending Solutions, Chuck is responsible for all valuation policy and process, quality assurance, and regulatory compliance.

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