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Beginning March 19, 2022, Fannie Mae and Freddie Mac will accept remote desktop appraisals nationwide on eligible transactions without the appraiser ever stepping foot on the subject property, the Federal Housing Finance Agency (FHFA) announced.
First Tuesday Journal
Effect on Appraisers
So what does this mean? Well got to assume you’re still going to have appraisers involved, yet without any property visits it sure seems like the workload will lighten up so the cost of appraisals will drop significantly and your turn times will drastically improve. Further, the current fleet of appraisers will significantly decline.
The question is, are we relying too heavily on technology? Meaning, what is going to get missed by not having appraisers go out to properties. I mean just yesterday we saw that foreclosures were up 7-fold. Still a small and relatively insignificant number, but the trajectory is going in the wrong direction.
We’ve seen it before
Here’s what I know from the 2008 melt-down. When you kick someone out of their house, they generally don’t go quietly. They’ll do some kung-fu on the doors and walls on the way out. Not to mention pouring cement down the drains. Ripping out copper, which also means ripping out sheet rock. I’ve seen all of these things on appraisals.
Yet even on traditional deals. What about missed deferred maintenance. Or what about community and geographical competence. You see the Zillow algorithm, which had the backing of billions from wall street failed. Opendoor just lost over 600M. Makes you wonder if the algorithms that the GSE’s are going to put so much trust in. The fact that it appears speed and cost seem to be a priority over quality might just turn out to be a problem because as a general rule, when you prioritize slashing, cost quality generally suffers.
When you prioritize that things must be faster, quality generally suffers. When you automate and take the human factor and knowledge of an area out of the equation, quality generally suffers. Finally, here’s my point, if we had perfect A.I, then maybe. But at this point I’ll take actual intelligence over artificial intelligence. What do you think?
