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RESPA Reform: Consumers Benefits, Industry Opportunity

National Mortgage Professional
Nov 15, 2002

Expeditious Appraisals: How to Decrease Turnaround Time Patrick ButlerPatrick Butler, Appraisals, Multiple Listing Service, Appraisal Services Inc. With the recent refinance boom, many lenders are having to wait weeks for their appraisals to be completed. Most appraisers are swamped with business, and some have sworn off new clients altogether. Is there a solution to this excessive turnaround problem? I believe there is. It is critical for appraisers to take advantage of every technological resource available today. There is no reason why lenders shouldn't have their appraisals back within a week or so, under any conditions. In this article, I will provide some details on how it is possible for an appraiser to provide extremely rapid turnaround times, simply by making smart workflow decisions and utilizing the latest technologies. One of the largest delays in the appraisal process comes from the amount of time required to actually visit the subject property. For this reason, it is important to take and return telephone calls after normal business hours and on weekends. If the borrower works during the day, then it is especially important to be able to return calls in the evening, so another day isn't lost while the borrower is at work. The most significant delay in the appraisal process is caused by the time spent driving to and from the subject property, and then to various assessor's offices to obtain additional data. Driving time can very easily exceed the time it takes to actually develop the appraisal. However, appraisers can reduce their driving time significantly by utilizing as many online data sources as possible. Every attempt should be made to finalize the appraisal with only one trip to the property, which requires an extensive amount of research to be completed prior to the actual visit. This is accomplished, in part, by interviewing the homeowner during the initial telephone conversation. Appraisers should ask plenty of questions about the borrower's house, so that they can begin to search the computer for additional data. The Multiple Listing Service (MLS) should be searched to see if the subject property has any sales history. If the property has been sold in recent years, then it is possible for the full MLS listing data to still be available, possibly even including a photo. This is the optimal scenario, giving the appraiser a very good jump start on the appraisal. Sometimes, the subject property is part of a subdivision that was principally built as tract homes. If possible, the appraiser should try to identify the subjects model name. This is one of the easiest ways to pull comparable properties. For example, one proven method is to scan and save each page of the builders sales literature as an electronic document. It is always convenient to have the actual floor plan of the subject property prior to the inspection, which will allow you to copy the sketch to your appraisal software in advance. Then you only need to bring the printed sketch to the subject property and make any necessary changes. If the subject property is newly constructed, then the builder likely has a Web site with online literature available, with a subdivision map that can be especially useful if the neighborhood is too new for printed maps. Oftentimes, there is no real need to visit the builders sales office. An increasing number of township assessors in Illinois have their data available online, which significantly reduces turnaround time by eliminating the need to drive to their office. This is especially important if the subject and comparables are located in multiple townships. A great deal of time is wasted driving back and forth to various assessor's offices, when data can be simply and conveniently obtained on the weekends using the Internet. The appraiser's goal should be to have the comparables chosen before inspecting the subject property. Personally, I pull a great deal of extra comparable data in value ranges both above and below what I expect the subject property to be valued at. Once Ive had a chance to inspect the property, I sometimes discover that the comparable data is useless. But more often than not, I have all the comparable data we need before I inspect the subject property. I even download the comparable photos from the MLS into our report. I always plan on taking new photographs on the day of inspection, but the MLS photos are available as backups in case there is a glitch. Another source of appraisal delay is unexpected, adverse externalities that affect the subject property. For instance, lets say the subject property backs onto a shopping center or is located on a busy road. It helps tremendously that the appraiser be made aware of these factors prior to choosing comparables. Otherwise, they will have to spend time choosing new comparables and making yet another trip, and a day or two may be lost in the process. There are a number of ways to determine whether or not any adverse externalities are present. The first method is to look at the Sidwell map, which can be accessed online by subscription. The Sidwell map can be used to locate any obvious adverse externalities that surround the subject property. Aerial photos are another way to see if there are any commercial uses bordering the subject property, and to check for cellular towers or water towers in the subject's back yard. A subscription for online aerial data isn't cheap, but it can save money in the long run, through increased productivity. Finally, flood panel information can be determined from various online databases. The advantage to online flood data is that the subject property can be located by geographic coordinates, which is extremely useful when trying to pinpoint the subject property in a new subdivisionthe flood maps probably will not show any of the newer streets. The appraiser can take a reading with a Global Positioning Satellite (GPS) while at the subject property and input these coordinates into the online flood database to guarantee a precise determination. Appraisers still using printed maps are wasting more time than they need to, and are taking real chances with making a wrong determination. Census tract numbers are also available online, so there's no excuse for an appraisal to be delayed due to undetermined flood zones or census tract numbers for new subdivisions. Finally, any modern appraiser should be able to deliver the appraisal report electronicallymore than 95 percent of my appraisals are delivered in this manner, which requires the appraiser to use an entirely digitalized workflow, including digital cameras, mapping, sketching and scanners. This allows the appraisal to be delivered just minutes after completion. Any special addendum requests can also be delivered in the same expedient way. Reducing appraisal turnaround times is possible by using the right tools and developing a workflow that places a high priority on starting the appraisal prior to inspecting the subject property. There are legitimate reasons why some appraisals may take longer than others, but make sure that the delay isn't caused by your appraisers not having access to the data that they really need to get the job done the right way. Patrick Butler is a real estate appraiser who works for Appraisal Services Inc. He may be reached by phone at (630) 897-3339 or e-mail [email protected].
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