What Is a Desktop Appraisal?

Desktop valuation is a type of valuation that doesn't require a physical inspection of an asset. Based on documentation, photos, and expert testimonials, desktop appraisal or valuation can be used for any asset. In the case of mortgages and homes, desktop appraisal gained popularity during the COVID-19 pandemic. Now, desktop appraisals may be used for various purposes, such as loan servicing, portfolio evaluations, or home equity calculations. Read on to understand when you could get a desktop valuation and what that means for your home loan. 

Key Takeaways

• A desktop appraisal can be a fast, accurate alternative to a traditional appraisal for certain properties. 
• Lenders may opt for a desktop appraisal for refinancing, home equity assessments, or some single-family home purchases. 
• Real estate investors use desktop appraisal for quick portfolio evaluations.

Understanding Desktop Appraisals

As the name implies, a desktop appraisal is a property valuation completed from the appraiser’s desk. For a mortgage desktop appraisal, the appraiser typically uses tax records and information listed on the Multiple Listing Service (MLS). In a desktop appraisal, the appraiser doesn't visit the property but relies on available data and documentation.

A desktop appraisal is not the same as a hybrid appraisal. In a hybrid appraisal, the appraiser doesn't visit the site; instead, a third party performs an on-site inspection before the appraiser completes the valuation remotely. In this case, the appraiser uses the information provided by a third party from the inspection, along with tax records and MLS data, to complete the appraisal. 

Desktop Appraisals vs. Traditional Appraisals

The differences between desktop and traditional appraisals go beyond whether the appraiser physically visits the property, although that is the key difference. Additionally, desktop appraisals are usually faster, taking less time for both the appraiser and you when you're in a hurry. They are also typically less expensive, making desktop appraisals an attractive option to save time and money.

However, there are times when desktop appraisals aren't appropriate. If the property is unique, in poor condition, or has complex features, it may require a traditional appraisal. Likewise, lenders require a traditional appraisal for certain types of loans. 

How Are Desktop Appraisals Typically Used?

Desktop appraisals can be used for various situations, including refinancing, risk assessments, or equity assessments. Investors may also use them for portfolio valuation. 

A desktop valuation can be a cost-effective option when you need a fast appraisal or when there are logistical challenges to a traditional appraisal, such as difficulty reaching the property.  Here is an overview of the times when you might get a desktop appraisal: 

Loan Servicing

When approaching 20% equity in your home, your mortgage or loan servicer might use a desktop valuation to determine whether you've crossed the 20% equity threshold. Even if you're paid 20% of the mortgage principal, a loan servicer may do a desktop appraisal to confirm the home's current value and equity. 

Single-Family Home Purchases 

If you're purchasing a single-family home in standard condition, the lender may perform a desktop valuation rather than a traditional appraisal. However, this is less common except in certain areas. For example, if you're purchasing a home in a new development with comparable properties, the lender may feel a desktop appraisal is enough.

Refinancing

When refinancing a property, the lender may request a desktop appraisal to confirm the property value. However you may still need a traditional appraisal before closing on the refinancing. 

Home Equity Calculations

Whether you need to calculate your home's equity to remove PMI or for possible refinancing options, a desktop appraisal can offer a quick and relatively accurate option. You can learn more about whether you'll need an appraisal for a home-equity loan. 

Portfolio Evaluations

If you need to assess your total net worth or portfolio value, you could opt for a desktop appraisal to get a quick idea of property values. It's common for real estate investors to use desktop appraisals as an approximation of property values and total portfolio worth. 

Pros and Cons of Desktop Appraisals

There are significant pros and cons to desktop valuations. Here is what you need to know. 

Pros

• Fast: Desktop valuations are typically much faster than traditional appraisals, allowing you to move ahead with the next steps for a mortgage loan or refinance more quickly. In some cases, desktop valuation can be automated to produce near-instant results.
• Cost-effective: Desktop valuations are typically less expensive than traditional appraisals.
• Relatively accurate: While desktop valuations aren't 100% correct, they often provide a good approximation. 
• Acceptable in certain situations: Some lenders may not require a traditional appraisal, allowing you to move ahead more quickly. 

Cons

• Maintenance can affect valuation: Poorly maintained properties are challenging to assess accurately with a desktop valuation. Likewise, recently renovated properties may be undervalued in a desktop appraisal without a physical inspection. 
• Missing information: If the property doesn’t have much information available online or MLS data isn't available, a desktop appraisal might not be very accurate. It could be inaccurate due to missing or inaccurate underlying data.
• Possible inaccuracies: Even with precise information, desktop valuation may be inaccurate, affecting the borrower and the lender.

Tips for a Successful Desktop Appraisal

Here are some tips for successful desktop appraisal. 

• Check options: You can speak to the appraiser about the property to see if a desktop valuation could be a good option. 
• Check the appraiser's reputation: It's essential to find an appraiser known for accurate desktop valuation experience. 
• Consider the property: If it has recently been renovated or has deferred maintenance, a traditional appraisal will give you more accurate information. 
• Consider your reasons: If you need an appraisal for portfolio valuation, a desktop appraisal could give you a close enough estimate. On the other hand, if you need a precise appraisal, a traditional appraisal is a better option. 

Should You Use a Desktop Appraisal?

Whether desktop valuation can offer the appraisal information you need depends on the property type and why you're seeking a desktop appraisal. Sometimes, a lender may perform a desktop valuation for loan approval. If you want to research other options, you can find alternatives to get your home's appraisal value, 

Frequently Asked Questions