What is a Desktop Appraisal Report?
“Desktop” appraisals are normal appraisals completed by an appraiser without a physical property inspection made by the appraiser.
They are considered “desktop” since the subject property is typically researched remotely.
Compared to a typical or non-desktop appraisal where the appraiser would physically walk through some or most of the building, or a “drive-by” appraisal where the appraiser would only look at the property from the exterior without physically walking it.
Desktop Commercial Appraisals?
We regularly perform commercial desktop appraisals.
Desktop commercial appraisals have been commonplace by banks, insurance companies, governmental agencies, investment firms and more, for many years.
Appraisers have been doing commercial desktop appraisals for a variety of purposes for many years.
But they have not been “the standard” for the industry for a variety of reasons: Federal regulations for most commercial loans that require a physical inspection by the appraiser, general comfort level/risk adversities of appraisers to take on a commercial appraisal without seeing it, and more.
Desktop commercial and residential appraisals have become more used and more popular since COVID and as technology makes it easier to understand a property without seeing it. During COVID, a large percentage of residential appraisals for loans were completed this way due to health and safety concerns. After seeing the benefits, some loan types have permanently approved the use of desktop appraisals.
Some appraisal firms offer desktop commercial appraisals, some do not.
- More efficient for multiple properties
- Makes certain projects economically feasible
The primary benefits are that these appraisals are cheaper and quicker than a full inspection appraisal.
The cost difference varies significantly on the property, sometimes it is substantial, sometimes not much.
Same with timing. Take, for example, a property located 8 hours from the appraiser’s office vs a property located 5 minutes from their office. The prior would take up a day + to drive and see vs looking the property up online.
If there is a portfolio appraisal will multiple properties around the state or country, it could be economically unfeasible to fly or drive and see every property if sufficient information is available online or can be provided by the client. For example, if 10 properties need to be appraised that are located in 5 states, the time to see every property and pay the appraiser’s time and travel costs will be very high and unlikely feasible.
Nor would it be necessary for the appraiser to see each property in most cases, assuming there is information available online or from the client.
When to Use
There is no perfect answer to this and a lot of it boils down to the property, assignment type and the appraiser’s opinion as to whether they are confident that they can still provide a reasonable and supported valuation without seeing the property.
We have been looking at commercial properties for many, many, many years. The reality is that a lot of commercial properties are similar to one another, and a few pictures can easily be enough to understand the property.
Sometimes we do not even need a picture since there are online resources documenting the property.
We have performed desktop appraisals for commercial properties for governmental agencies with no pictures provided and we were still able to make credible assumptions and conclusions.
This is not to say that an appraiser never needs to see a property, rather, sometimes an appraisal can still be done without seeing it.
If you are considering this option when making a price request with us, please be sure to include this in the comments!
When not to Use
A desktop appraisal would not be used if:
- The loan terms require the appraiser to physically view the property
- The agreement with the client requires to the appraiser to see the property
- The appraiser is not comfortable doing the project without physically seeing the property