Many appraisers are worried that a so-called desktop appraisal will not be USPAP compliant if a third party to inspects and/or photographs the subject property.

USPAP does not make an issue of who inspects the property, nor who photographs it. USPAP does not require the appraiser to inspect the subject property. Nor does USPAP require the appraiser to photograph the subject property or the comparables. USPAP requires the appraiser to disclose the extent of the inspection of the subject property, which includes no inspection at all. Further, USPAP makes no mention of the need to include photographs of the subject as part of the formation of a credible value opinion. Both these requirements are a function of lender requirements, not USPAP.

Fannie Mae requires the appraiser to inspect the subject property, as well as to inspect the comparable property from at least the road in front of the it (assuming that’s possible). However, Fannie Mae has no requirements the appraiser take these photographs. In other words, a contractor the appraiser hires to take photographs could do this and the report would still be fully Fannie Mae, as well as USPAP, compliant.

An individual lender may require the appraiser to take the subject and comparable photographs him- or herself. If the appraiser agrees to this condition, then the appraiser has no choice but to do so. However, the key point here is that the appraiser personally taking the photographs of the subject and/or the comparables is a lender requirement, not a requirement of USPAP, and not necessarily a requirement of Fannie Mae.

Therefore, under certain conditions, an appraiser doing a desktop appraisal is perfectly USPAP compliant.  Providing photos is not significant appraisal assistance. The appraiser is under no ethical obligation to disclose the photographer’s name, nor the extent of his/her assistance.

9 replies
  1. Dave Towne
    Dave Towne says:

    What is missed in all the discussions I’ve read about ‘alternative’, ‘bifurcated’, ‘hybrid’ or whatever you want to call these APPRAISAL REPORTS is who actually fills in the subject information in the submitted report. No one that I’ve seen yet wants to discuss that very important aspect.

    In fact, there is an upcoming paid registration webinar being put on by a respected appraiser with panelists the very people who design and promote these new products – so guess what their perspective will be.

    These reports are desired by lenders because they want an APPRAISER to sign them. They want our license number (and potentially an E&O policy) just because the federal regulators have more faith and trust in reports signed by APPRAISERS when a home is collateral for a loan.

    But the problem in report completion comes down to actual APPRAISAL PRACTICE, which is being glossed over by the promoters. APPRAISAL PRACTICE and the filling out of an APPRAISAL REPORT go together and cannot be separated just because the product promoter says the ‘form’ is USPAP compliant. APPRAISAL PRACTICE concerns ‘who’ actually prepares the report itself. If an unlicensed person (the field inspector) fills in the Subject section of the report without any involvement by or consultation with the signing APPRAISER, and the appraiser then signs the report, the APPRAISER is out of compliance with their USPAP responsibility.

    My research over the past 6 months shows there are various types of these new ‘alternative’ APPRAISAL REPORTS. Some allow the appraiser to be more compliant with USPAP than others.

    You, as the appraiser who chooses to do these, need to be absolutely certain about ‘WHO’ is doing ‘what’ in these reports. I strongly suggest appraisers decline any assignment where it is found that an unlicensed person completes any part of the actual report itself. That includes putting in photos, or supplying any data that shows up in the subject portion of the report form. That is APPRAISAL PRACTICE, and is the responsibility of the signing appraiser.

    Don’t just accept the promoted lie that ‘forms’ are USPAP compliant. No forms are…….but APPRAISERS must be.

  2. Bob Hatfield
    Bob Hatfield says:

    The problems I have with desktop appraisal reports are (a) the Certification and (b) the Scope of Work. If the appraiser is not the one doing the site visit but is instead relying on a third party, USPAP clearly requires the appraiser to have a “reasonable basis for believing that those individuals (named or not) performing the work are competent” and “have no reason to doubt that the work of those individuals is credible”. If the appraiser is unaware of who is doing the inspection then the appraiser has zero basis upon which to conclude that the person who did the site visit (at whatever level of “inspection”) is either competent or credible – which is a USPAP violation. The burden is always on the appraiser with respect to credible results.

  3. Steven Carle
    Steven Carle says:

    I agree with Bob ” the burden is always on the appraiser with respect to credible results.” These alternative valuations no matter what they are called are just that, “valuations.” One point I think the appraisers performing these are missing is the responsibility and liability associated with these “appraisals.” Anytime an appraiser expresses an opinion of value verbal or otherwise he is accepting responsibility and liability for that opinion. These alternative valuation methods are nothing but a low cost “scapegoat” for the lenders. For a measly $75 per report they are getting unsuspecting and unknowledgeable entry level appraisers to sign off on these loans. Who in their right mind would accept that kind of liability for $75 if they were aware of the consequences? Certainly not someone with any experience and/or expertise.
    I would hate to be the one doing court testimony and get asked by the prosecuting attorney if I had inspected the property and have to answer NO? The appraiser’s primary responsibility is to act as a referee between the Buyer and Seller. AVM’s are doing the buying and selling public an injustice and not protecting their best interest as intended. There should be at least one disinterested party to a transaction. With automated valuation models there are no disinterested parties as most are performed by the lender in-house. This business model can only promote bias on the part of the lender. The unsuspecting consumer will ultimately suffer the consequences.

    In my opinion these AVM’s should be boycotted by the appraisal profession. If lenders want an appraisal they should order it from an experienced knowledgeable appraiser and be willing to pay a reasonable fee for it. Not lull novice appraisers into thinking they are performing a service that is going to protect anyone in the event of default.

    • Dave Towne
      Dave Towne says:

      There may be a misunderstanding about what these ‘desktop’ appraisals are used for. They are NOT used for first mortgage lending. They are designed for HELOC or other forms of second position lending, and perhaps for asset monitoring. Thus there is no seller and buyer involvement.

      A ‘desktop’ appraisal is an actual appraisal report, signed by an appraiser. It is not an AVM. The difference is the subject inspection info is provided by a third party who does not have to be a licensed appraiser.

      Do these ‘desktop’ products allow the appraiser to comply with USPAP. The real answer is “it depends.” Please re-read my original post above to examine why.

      Until you fully understand your responsibility I recommend you stay away from these new ‘desktop’ products. And never believe anyone who tells you that the ‘form’ complies with USPAP.

  4. PacNW Appraiser
    PacNW Appraiser says:

    Mr. Anderson and Mr. Towne are both providing sound advice in that — by itself — no Desktop Appraisal Form can guarantee USPAP Compliance. Forms don’t ensure Appraisers’ compliance, not at all.

    Appraisers’ business practices, valuation methodology, and report development competency ensure their USPAP Compliance.

    Desktops and other alternative valuation services — based on a well-defined Scope of Work, clear disclosures and cautions regarding assumptions, and appropriate Certifications and Limiting Conditions — are useful valuation services for many non-first lien mortgage applications for knowledgeable Intended Users.

    If Appraisers want to continue to remain THE source of residential appraisals and valuation services in the future, they might be well advised to carefully and thoughtfully add these types of products and services to their book of business. What do you think?

  5. Wade Gibson
    Wade Gibson says:

    I have recently performed my 1st & last “desk top” were the site inspection was performed by a local Realtor. This was for “asset evaluation”, i.e., already foreclosed property. In performing my due diligence as per USPAP, found pre-foreclosure listing & tax data that significantly differed from Realtors BPO. Home was circa 1945, which had been gutted & two 2015 unfinished additions. None of the space was habitable & was 3 times the gross area of surrounding residences. Lender “INSISTED” that I utilize the GLA cited in the Realtors BPO as they already had 2 BPOs, by same Realtor on the property & I “HAD” t match the GLA already cited in these BPOs. My response was that, just because someone else “did it wrong” does not mean I have to make the same mistake. After further discussion & extensive explanation as to what the original GLA was & the unfinished & uninhabital nature of all the improvements , I cancelled the assignment, rather that continue to be told I had to follow the Realtors BPO description. Guys, my fee for this assignment was $650 (which I will probably not get paid for), not $75 that you are talking about. The Lenders’ have decided that these BPOs/3rd party inspections are God, as they only cost $25-$35 & are “good” until the examiners come in to tell them that they need an appraisal to determine a true asset value. I will never accept another assignment from the AMC that “blindly” passed the request for revision or from the Lender. I am not a novice in performing appraisals (45 years), but have never incurred the frustration in performing any type of appraisal before.
    My personal/professional recommendation is that no Appraiser, where novice or veteran accepting this type of assignment, as the liability is too great, even if you perform your due diligence under USPAP.

  6. jaydee
    jaydee says:

    Any appraiser that does this sort of work is cutting your own throat and those of other appraisers. If you don’t take on this type of work, the lender, will be forced to order a full appraisal. Since it’s your license and your responsibility….. Do you really want to rely upon 3rd party input with YOUR signature and YOUR “rubber stamp” for a HELOC or any other valuation? The borrower has stellar credit!!!! Which means that they take wonderful care of their property right? Cough, cough. You cannot use the Multiple Listing Photos for crying out loud, but can use someone else’s photo? Excuse me, but aren’t the MLS photos someone else’s? But if there is a problem somewhere down the line; you can be sure that the lenders legal department would not hesitate to come after you. Just say NO TO DESKTOPS.


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