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This is Part Four in a series on Hybrid Appraisal. Be sure to read Part One, Part Two and Part Three.

The term “hybrid appraisal” (as it’s currently used), means that the appraiser sits at a desk, while someone else (not an appraiser) looks at the property.  It appears that the non-appraiser may or may not inspect the interior, measure the improvements – but always takes a front photo, similar to what can be found in MLS listings, or Google Earth street pictures.

The basic claim is that the overall process is cheaper and faster, and just as good.

  • Non-appraisers are cheaper, and work faster; and,
  • The appraiser uses his/her analytical expertise more efficiently.

The desk appraiser relies on whatever information is provided from the non-appraiser.  Usually the non-appraiser fills in a separate form provided by the lender, lender’s agent, or AMC (Appraisal Management Company).  Presumably the form provided, and the individual have no reason to be biased to help “make the loan.”  The non-appraiser inspectors have a range of property analysis experience, ranging from being a successful Realtor® to someone with a car, a camera, and the provided form.

The desk appraiser relies on this non-appraiser information.  So, what does USPAP say about this?  Well, the appraiser must provide a document called a “signed certification” as required by Standards Rule 2-3.   A couple of things jump out.  It says:

“…no one provided significant real property appraisal assistance to the person signing this certification.  (If there are exceptions, the name of each individual providing significant real property appraisal assistance must be stated.)”

So, it appears that the non-appraiser inspector must not provide any significant appraisal assistance.  In other words, no decisions that might be “significant” to value.  No judgment about the highest and best (optimal) use.  No decisions about functional or economic obsolescence.  And no judgement calls about the quality, condition, interior appeal, visible locational impacts, renter occupancy, useful site area, and effective age.  We must presume that these are factual, and require no appraisal competence.

But the desk appraiser must sign the certification.  The Standards Rule 2-3 goes on to say:

When a signing appraiser(s) has relied on work done by appraisers and others who do not sign the certification, the signing appraiser is responsible for the decision to rely on their work. [emphases added]

It goes on:

The appraiser(s) signing the hybrid appraisal is required to have a reasonable basis for believing that those individuals performing the work are competent. The signing appraiser(s) also must have no reason to doubt that the work of those individuals is credible.

Can you believe it? There is that word again! “Credible,” “Worthy of belief” it says.

So why in the world would I have any problem of belief?  A person competent in driving, taking pictures, and noting what the lender client says to fill out in the form.  No ethics required.  No appraisal decisions.  Fast.  Cheap.  We got it.

The complete appearance of “better, faster, cheaper.”  We got it!

(… but what if?  What if the appraiser selected the inspector…  What if? …)

Stay tuned for the next exciting blog piece about bifurcating for hybridization.