Everyone in the real estate industry, including appraisers, mortgage lenders, and mortgage brokers, are taking Public Health Authority advice and guidelines seriously with respect to the Coronavirus. The Coronavirus pandemic has changed how most professionals work, home appraisers included. So, what can you expect in a home appraisal with the virus?
1. Greater reliance on technology: Many mortgage lenders count on AIC (Appraisal Institute of Canada)-designated appraisers for professional and unbiased valuations. Home appraisers greatly rely on 2 crucial senses – sight and smell. Traditionally, a home appraiser would simply walk into a home to assess its value, but appraisers are now relying on technology like videos and photos to do their job whilst maintaining social distance. Zoom or FaceTime virtual tours are replacing walking through tours.
2. Turning to multiple listing services (MLS): More and more appraisers are turning to MLS to look for comparable sales when determining the worth of the home they are appraising. Appraisers are looking into what similar homes in comparable neighborhoods cost and then making adjustments for the type of floor, countertop, roofing, cabinets, and other fixtures. Municipal Property Assessment Corporation assessment data is also invaluable to home assessors today. Traditional appraisals (interior and external inspection appraisals) are being replaced by either exterior-only or desktop appraisals.
3. Greater consideration for the marketability of the home: Appraisers are factoring in the marketability of the home when doing appraisals. They are considering such things as the trends in the neighborhood and proximity to such things as railroads.
4. More extraordinary assumptions: While extraordinary assumptions were frowned upon by lenders in the past, these are now a necessity when doing appraisals. Appraisers are looking through windows instead of walking in and making assumptions that lenders just have to live with.
5. Reduced mortgage values where lenders are working with modified appraisals: Lenders are accepting extraordinary assumptions today. However, private lenders and B-lenders who might have given up to 85% of the mortgage’s value have scaled back to below 75% of the value because of the extra risk of modified appraisals.
6. Greater reliance on the homeowner for information on the property: The AIC has instructed its members to follow Public Health Authority directives for self-isolation and social distancing. While appraisers are supposed to give an independent opinion on the value of the property based on their own assessment, Coronavirus has made them more reliant on homeowners to provide information that they use for the assessment. This includes video tours, interior photos of the property, and building specifications.
The federal and the provincial government have designated certain industries and services as being essential to the functioning of the Canadian society and the economy. One of these is financial services. AIC designated appraisers are an important cog in the mortgage lending industry and are taking all the necessary precautions throughout the pandemic to ensure homes are being appraised while not passing on the virus. At Approved Mortgage Brokers, we are also doing our part in ensuring our clients get the best possible mortgages while reducing person-to-person interactions as much as possible.
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