This installment is part of an ongoing series about the challenges buyers face during COVID-19 and how the homebuying process is adapting to meet their needs.
If you’re borrowing money to buy a home or to refinance your mortgage, your lender will likely require an appraisal.
The word “praise” is in there so this must be a good thing, right? It can be. An appraisal is an unbiased, professional opinion of the home’s market value – or in other words, how much a buyer would pay for the home in the current market.
The market value is important information to a lender because it lets them know whether they could sell their home for enough money to recoup their loss if the loan goes into default and foreclosure. It’s an assurance that they won’t be left high and dry if an emergency happens, like a sudden loss of income. (And remember, if you start to struggle with making your payments, be sure to talk to your lender. There are numerous options to help you avoid foreclosure – which we explain in our post on loss mitigation.)
How does it work?
Lenders typically have a list of approved appraisers they use. The lender will contact the appraiser and order the type of appraisal they need.
Most real estate transactions require a full residential appraisal. Appraisers use industry-specific valuation software, and drive by the home and nearby comparable homes (known as “comps”) and take measurements and photos of the home’s interior.
Yep, that means that typically, appraisers need to go inside.
What’s happening during COVID-19?
To keep appraisers and homeowners safe during the COVID-19 crisis, pros that regulate appraisal practices are reviewing appraisal requirements and making temporary adjustments to limit the need for appraisers to go inside homes they’re evaluating.
Fannie Mae and Freddie Mac, for example, are accepting appraisals with either a drive-by (exterior-only) inspection or a desktop inspection for some transactions when an interior and exterior appraisal is not available.
What’s a “desktop appraisal,” you ask? This is when an appraiser uses the valuation software to access data on similar homes in the area to closely estimate the home’s market value.
However, experts note that these temporary adjustments aren’t industry-wide … yet.
“I’d say 90% of the lenders we work with still ask for a full inspection, including the interior,” says Kelly Kellogg, a senior residential appraiser at Appraisal Experts in Winter Park, Florida.
If they plan to come inside
The appraiser will set up a time to visit and will ask some general questions about your home. In light of the pandemic, they might also inquire about your health and any recent international travel. But rather than sharing fond memories of your evenings in Paris, just let them know if you or someone in your household may have been exposed to COVID-19.
To protect you and themselves, an appraiser will ask that you maintain a physical distance of at least 6 feet while they’re inside. Most likely, they’ll wear a face mask, plastic gloves, and booties. You’ll probably want to wear a face-covering as well and wipe down any surfaces they touch, like doorknobs and countertops, after the inspection.
Here’s the tea
Whether or not an appraiser will need to come into your home during the COVID-19 crisis depends on many factors and will vary by lender.
To get the specifics for your loan, contact your lender. If you’re uncomfortable about having the appraiser enter your home, let your lender know and ask about options to keep your loan moving forward and help you feel secure about your family’s safety.
- Curious about closing on a home from a social distance? Check out our post on closings during COVID-19.
- Losing your mind a little bit in all of this? We feel you! Clear out the chaos with our meditation tips.