Desktop Appraisals: Interview with Fannie Mae


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Desktop Appraisals: Interview with Fannie Mae

by Isaac Peck, Editor 

With Fannie Mae and Freddie Mac officially accepting desktop appraisals, it is clear that change has come to the appraisal industry. Working RE sat down with Lyle Radke, Senior Director of Collateral Policy at Fannie Mae, to better understand how Fannie Mae will be rolling out this product and what Fannie sees for the future of appraisal.

Question: What are some of the advantages Fannie Mae believes that desktop appraisals have over traditional appraisals?

Lyle Radke: The desktop product removes the fieldwork requirement. So, the primary advantages are that it has the potential to alleviate capacity concerns and lead to faster appraisal turn-times. While we don’t track appraisal turn-times and fees, we do hear feedback on what’s happening out there. We’ve heard in some parts of the country, it can take a long time to get an appraisal completed.

Question: How can desktops help alleviate appraiser capacity? What percent of traditional 1004 assignments will qualify for desktop appraisals?

Lyle Radke: We believe desktop appraisals may alleviate capacity constraints since they eliminate the field-work requirement, meaning that appraisers no longer have to spend hours driving from house to house or inspecting the subject property in the field. There is a case to be made that the highest and best use of appraisers is as market analysts, not performers of fieldwork. If appraisers are able to do this efficiently, it will save time.

To your second question, our eligibility requirements are very straight-forward. The desktop appraisal is an eligible option for purchase transactions where there is a single unit, single-family home, and the loan is for a primary residence at an LTV of 90% or lower. This is the criteria we are using to determine eligibility. We don’t have hidden rules that draw on urban versus rural, or tract home versus custom built, et cetera.

If a property meets these simple criteria, it is eligible for a desktop appraisal. Within the purchase bucket, this would mean that roughly half of conforming purchase transactions may be eligible for desktop appraisals.

We certainly hope that lenders and appraisal management companies (AMCs) will help the process. This doesn’t need to be entirely on the appraiser’s shoulders to determine whether or not it’s going to work. I could see a big lift for rural assignments. If you’re having to drive all over, this could be a real efficiency boost. When I was appraising, I did a lot of rural work. I did 100 miles every day, on average. If I could have cut that in half, I could have saved a lot of money and a lot of time.

Lenders and AMCs could do pre-work to see if necessary information and exhibits are available on a property. We know there is currently a lot of discussion amongst appraisers as well. We’re going to watch, see how this works, tweak and adjust it over time based on what we see.

Question: Why are you requiring floor plans? How does Fannie Mae anticipate appraisers will get access to the floor plans of the homes?

Lyle Radke: We want to make sure that appraisers have all the information they need to formulate a credible opinion of value. If they don’t understand the functional utility of the property, that may prevent them from accurately performing the assignment. Those around the appraiser, the lender, the listing agent, they are the ones who are going to have to step up and provide the floor plan. It’s intended to be something to help the appraiser to have enough information to do their job.

Functional utility refers to the flow of the floor plan. Is the function of the floor plan useful? Let’s say, for example, you’ve got a house where you come in the garage and as you enter the garage you’re stepping into the bathroom. That would have an effect on the value. Functional utility absolutely impacts value. People pay more for houses that flow well.

How do you get from the garage to the kitchen? What kind of privacy do you have in those situations? These questions are important to establishing a home’s value. Appraisers already adjust for functional obsolescence. It is a longstanding requirement for all Fannie Mae appraisals. In fact, we already require appraisers to provide a floor plan in cases where they identify functional obsolescence.

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Question: One of Fannie Mae’s requirements is that data “provided by parties with a financial interest in the sale or financing of the subject property must be verified by a disinterested source.” How will this work with MLS data and video walk-throughs? If the appraiser is looking at the camera on a livestream with the listing agent, does that count as verification?

Lyle Radke: When we talk about the source of the floor plan, there are a number of different companies with app-based phone technologies that will allow the user to generate a floor plan through photos taken and measurements taken in the home. In cases where the app is generating the floor plan and the data is coming from the app itself, the Certification 10 obligation to validate or verify interested party information wouldn’t apply.

We are also intending for the appraiser to rely on MLS data. Some of that may come from the assessor and it may come from a real estate agent. Verification should not be confused with recreation. We are not asking the appraiser to recreate the data from an independent source. The appraiser has broad discretion in how they verify the information. The appraiser should be asking: does this information make sense?

Examples of how appraisers can verify the information include: (1) third-party websites that provide aerial or street level photos; (2) floor plans or imagery generated by third-party applications; and (3) with the remote viewing tools available today where the appraiser can view the property with their own eyes. The appraiser is responsible for producing credible assignment results and we are leaving it up to the appraiser how to verify the various data points. The appraiser has broad discretion and can decide which points of information they are concerned about and which data points need further investigation and verification. Fannie Mae is not going to prescribe to them precisely how to verify everything. The intent is not to make this any harder than it has to be.

On a typical assignment where there is enough information in the MLS and public record, an appraiser might pull data from the MLS, pull data from public records, and gather that information at their desktop. If the information fits, they can complete the assignment. If there are points the appraiser is uncertain about, then they could take additional steps. They may contact the homeowner, real estate agent, or another party to the transaction. They can take additional steps to verify information and answer key questions on an as needed basis.

It will be up to the appraiser to decide whether or not the public record is sufficient. If the appraiser believes the public record is reliable, there is no need to go any further. Fannie Mae is not mandating or requiring a remote inspection. Appraisers do this all the time with comparable sales. The appraisal industry has a long history of reconciling disparate data sources, being detectives and figuring out where the gaps in the data are. We do this with comparables all day, every day.

Here is one more example: Imagine that the appraiser receives a floor plan from the MLS as an exhibit. Hopefully that floor plan gives an indication of where it came from, but the appraiser could research where it came from, what company did it, what quality controls they have, and so on. If the property is X sq. footage, the room count matches, and I’m scrolling through photos and I see three pictures of different bathrooms—I can get a comfort level around this information.

Question: Will interior pictures be required by Fannie Mae? Encouraged?

Lyle Radke: The desktop appraisal requirement is exactly the same for all our appraisals. The Fannie Mae Selling Guide Section B4-1.2-01 is a great resource for appraisers.

Here are the requirements:

Exterior Photographs: Clear, descriptive color photographs showing the front, back, and a street scene of the subject property and the front of each comparable. The subject and all comparables must be appropriately identified.

Interior Photographs: At a minimum, the report must include photographs of the following:

  • the kitchen
  • all bathroom
  •  main living area
  •  examples of physical deterioration, if present, and examples of recent updates, such as restoration, remodeling, and renovation if present.

These requirements are the same across all appraisal products, including the new desktop appraisals.

Question: Fannie Mae has decided not to offer desktop appraisals for second homes, investment properties, cash out refinances, and 2–4-unit properties. Why has Fannie Mae made this determination? In what cases is a traditional 1004 preferable to a desktop appraisal?

Lyle Radke: The first thing that drove our decision around the eligibility box is, if you go back to the pandemic, we had a temporary, non-technical solution. We asked appraisers to copy and paste an alternate set of certifications and Scope of Work. So, we have a desktop appraisal form, rolled out in 2020 and we only have a URAR version, meaning we never created another version for other property types. For simplicity’s sake, we’re best prepared to do the single-family residence.

Beyond that, there are some other issues. Regarding the question of purchase versus refinancing, if it is not a purchase transaction, you may not have current MLS data. For example, you may not have your primary data source available. Another aspect is with a purchase transaction, you generally have some market discipline around that contract price. That’s not to say the contract price is always supported, the market is comprised of the actions of the participants in that market, and that is reflected in the aggregate of the transactions. So, by definition, the typical purchase transaction will be at or near market value. You will have outliers and exceptions, of course. But all of that goes away in a refinance. There is no market exposure and the appraiser is working from a blank slate.

Now some of the other questions: Why not second homes or investment property? Part of Fannie Mae’s mission is to promote homeownership, so we’d rather start with desktop appraisals in a space where it best promotes the mission. The purchase of primary residences is also the cleanest transaction in terms of motivations. It’s less likely to be speculation or tied to a business venture, and has a more straightforward, simple risk calculus. So, a single family home that is a primary residence avoids higher risk influences such as non-owner occupied and business interests.

About the Author
Isaac Peck is the Editor of Working RE magazine and the President of OREP, a leading provider of E&O insurance for real estate professionals. OREP serves over 10,000 appraisers with comprehensive E&O coverage, competitive rates, and 14 hours of CE at no charge for OREP Members (CE not approved in IL, MN, GA). Visit to learn more. Reach Isaac at or (888) 347-5273. Calif Lic. #4116465.

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Comments (11)

  1. Agents in my area state the square footage on their listings with the source. Often, the source is stated as “appraiser”, yet the agents include areas we do not include in the GLA, such finished basement areas, guest houses, etc. If FNMA requires appraisers to follow ANSI, then is FNMA also requiring these 3rd parties providing sketch, such as agents, to follow ANSI too. Is FNMA requiring these 3rd parties to take a course in how to measure and understand what is and what is not included in the GLA? Why is FNMA accepting data from 3rd party sources, but not my trainee, who I trust?

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  2. All of the alternate data sources mentioned in the article are notoriously unreliable. I estimate that at least 50% of the time the data I find in these sources is incorrect. I would just not be comfortable putting my license and reputation on an appraisal of this kind.

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  3. Very little of my time is spent on inspecting the property and driving comps. The vast majority of my time is spent on data verification. It can take weeks for some municipalities to spend 30 seconds of computer time to verify data. With a desktop product, I’ll have to verify the subject data I could have collected on my own. Doesn’t sound like it’ll save much time. My guess is this will be tweaked until the next crash of some lender, then they’ll say it was a bad idea.

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  4. In my market area appraisal assignments are down 70%+. How will fannie/Freddie insure that the current population of appraiser have work. Were going to see another wash out of 50% of the appraisers. Why, no work. I have completed 4 assignments in the last 30 days. It’s going to get worse. So in a few years, we have another boom, there will not be any appraisers. I guess your gearing up for this with the desktops. People complete assignments that live 500 miles away. Here we go again. Who is going to get the blame this time, when foreclosures tick up. Wait Foreclosures are risiging. No work, no appraisers. Let the realtors and loan officers come up with a value. what;s that called a BPO.

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  5. by Everett Clark

    Not a fan at all. I’m supposed to rely on data provided by a third party, and in some cases I’m going to set aside an appointment time of 30-45 minutes to explain the system to the Realtor or homeowner and guide them through the process. So I’m saving a little drive time…except I still have to drive comps. Then there’s the idea that my municipalities have a floor plan, or can provide me with enough information to complete a credible report. In the end, I’m carrying an immense amount of liability for this report, the same amount as if I were inspecting the property myself, without ever having seen the entire subject property. My idea…if enough of us refuse to take these assignments, they will be discontinued. Otherwise, the future of our industry will be some lender intern assembling a report complete with comps and commentary, and the appraiser being asked to review and sign for a minimal fee. Sometimes having a 9-5 job where you can forget the job after you leave looks better than being your own boss as an appraiser, making your own hours, but having the weight of the world on your shoulders when the deck is stacked against you.

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      • The sketch and square footage stated in the Atlanta market tax records are always incorrect as the tax assessors round up on every single dimension, even if it should be rounded down. They include two-story open areas too. I have a statement that tax records should not be relied upon.

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  6. So If I read this correctly we still have to shoot front, street and back and front of all comparable properties. So how again is this saving us drive time etc. The only thing this takes away is interior inspection and they get to lower the price of the Appraisal. The question should have been asked about that. How is time saved driving ??? if need all that information.

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  7. Reality: The desktop appraisal are garbage, just another FannieMae dumpster fire claiming they are helping appraisers. Appraisers in my area have completely rejected the desktop and are rejecting these orders. What experienced appraiser is willing to turn over measuring/ floorplan responsibilities to a third party! I can easily complete a full inspection, draw the sketch, and deliver the report faster than any desktop relying on some (incompetent) third party to give me floorplan data.

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  8. This is ludicrous. How can I tell a realtor that they have to provide a floor plan because Fannie Mae says so. Realtors are not governed by Fannie Mae. I can’t even get some realtors to call me back let alone provide accurate information in a timely manner. This is funny. What has NAR said about this?

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  9. by David Buckley

    Soooo, In an environment where all parties are saying you MUST verify comparables with a current street shot (complete waste of time) as we rely 100% on MLS, Lyle is fixated on functional utility (flow), and making it easy with less collateral verification. His emphasis on “subjective nature” of appraiser process supports his feeling that their numbers system (not unlike AVMs) can better pick comparables. There lies the real issue which you will NOT hear discussed, are the comparables used really comparable and are they the best?

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