Are Floor Plans in Your Future?
A floor plan is supposed to be included in Desktop & Hybrid reports. How will that be done?
Appraisers, I’ve recently been studying a ‘word change’ in various GSE documents. This change happened initially in March 2020 in the COVID era revised ‘flexibility’ Assumption and Limiting Conditions and Scope of Work attached to residential reports, and was further incorporated into TWO new appraisal forms issued in July 2020, which you might not even realize they exist!
The word change was subtle, but has major implications for appraisers. The change is ‘sketch’ to “Floor Plan.” But when I inquired about this change, I have been told the process to produce and include a “Floor Plan” was not enforced during the COVID era.
For context, watch the video with Danny Wiley of Freddie Mac below, and listen carefully to what he says:
In the Selling/Servicer Guides of FNMA and Freddie Mac, both GSE’s identify a ‘sketch’ to be a diagram of the subject as measured by the appraiser which shows exterior walls, and includes the dimensions. That’s it. They don’t even say that room labels are needed, but most appraisers include those.
Including a ‘sketch’ in reports as an exhibit is an additional Assignment Condition, beyond what USPAP requires in Standard 2, per the Assumption and Limiting Conditions on the residential forms. Both GSE’s require a more detailed diagram including interior wall locations when interior design abnormalities are discovered, and reported – which they call a “Floor Plan”.
In practical application, “Floor Plan” is synonymous with a highly detailed diagram produced by an architect or building designer. My assumption is that diagram is the same exterior ‘sketch’, with the addition of interior partition wall locations and room labels, but without exterior or interior wall thickness shown.
“Floor Plan” is the ‘required’ diagram on the new 1004 (Desktop) and 1004 (Hybrid) report forms.
I’ve talked with representatives from both GSE’s recently. Their line of thinking, at the present time, is a “Floor Plan” should be provided as an exhibit in the appraisal report even though the report signing appraiser was not physically present at the subject property when data was gathered. Their line of thinking is also slanted to having third parties provide the subject property data, believing appraisers are more valuable as ‘analysists’ instead of as observers and detailers of the property characteristics.
Thus the evolution to the new 1004 (Desktop) and 1004 (Hybrid) report forms, with different Scope of Work and Assumption and Limiting Condition statements in each version. (These forms are in your software forms package now.)
The THEORY of these forms, by the way, is that appraisals will take much less time to get back to the lender than the current Full Appraisal, meaning one with an interior/exterior observation/inspection done by the signing appraiser. A second, underlying, belief is that kind of limited report may cost less than a Full Appraisal.
So let’s circle back to the implication of a “Floor Plan” required exhibit that is supposed to be included in the Desktop and Hybrid report. How will that be done?
If you are not aware, both Apple and Android based smartphones can have apps installed which can capture property photos and wall dimensions/locations. There are about 4 current versions of these ‘apps’, developed by separate companies. They all claim to be super accurate, even to the point of implying the “Floor Plan” produced by these apps are better than what appraisers can do themselves.
To put this into perspective, for a Hybrid report, the app is used by someone totally unknown to the appraiser. The resulting inspection/measuring details are uploaded to a particular place (in the cloud, or another country), which are then made available to the appraiser, along with the “Floor Plan.”
For a Desktop report, the expectation is the appraiser would ask the borrower or perhaps a real estate agent to download the app to their phone, then walk around the property, inside and out, while the appraiser directs that person, via the app audio, to do certain things to measure and photo the property. The resulting inspection and “Floor Plan” details are then sent to the appraiser.
Is a “Floor Plan” in your future? I’ll let you decide!
Dave Towne on e-AppraisersDirectory.com
- New UAD Overhaul: What Appraisers Can Expect in 2025 & Beyond - September 19, 2024
- Cindy Chance Terminated - September 16, 2024
- Key Part of USPAP Not Available from TAF - July 19, 2024
Still won’t do them. Try coming to my areas where some counties will not provide a sketch or others do not have building plans on houses before 2001 or 2009 (did not save or lost this information while upgrading system). My rural county does not even have an engineering dept. Keep putting your license on the line. This is so funny!
I hate to drop the f-bomb, but F*@% NO.
Ugh….honestly I am so tired of this ‘path of least resistance’ crap and this is in no way a short cut! I think the percentage of competent homeowners, agents, tenants etc that can be walked through this process might be 30%! The amount of huge, intricate homes I have measured is insane and there Is no way teaching or training the other 70% is a short cut! This is a ridiculous idea.
My advise align yourself with private banks and attorneys. They will never go for this hybrid crapola.
Scott Taylor, the company I work for has been pushing this crap on us for a year. I pushed back hard! No hybrids for me. Not risking my license for this garbage!
Kathy Morton Bunting Hoey, no doubt Mort. Our liability has not been reduced at all for a property we will never see.
That settles it. The third party inspectors and camera lidar app runners will need licensing and insurance of their own, records checks to be in other peoples homes, fingerprinting, the works. With an associated new government agency to oversee them. Look, job creation!
I agree 100%. I can’t believe that quality is thrown under the bus just to turn a report around a little quicker. I will not risk my reputation by letting some uneducated person ( or software) do an inspection for me. I don’t see hybrids becoming the norm during the rest of my career. I can’t even believe they are still around.
John, Fannie & Freddie have been clear that this is coming our way in the next couple of years unless someone convinces them otherwise.
I’d prefer to stick a pin in my eye than do this – “the expectation is the appraiser would ask the borrower or perhaps a real estate agent to download the app to their phone, then walk around the property, inside and out, while the appraiser directs that person, via the app audio, to do certain things to measure and photo the property. “
David Durham, it literally sounds like more work than an actual site visit
I agree! I keep trying to figure out what is the big time savings. If I have to review someone else’s work, it takes quite a bit of time. So the only real time savings is travel time.
Travel time for us, but lower fees for the lender.
Absolutely! Gathering the site data is the easy part. I’d rather have my own inspection, thank you very much. Pictures can lie. I can barely explain to agents and homeowners what is GLA. Trying to guide them to measure and gather the data I need will be more time consuming than hopping in the car and driving to the house myself and measuring it. Unless of course the plan is to use out-of-market appraisers to do the work (i.e. not competent).
They have lost their mind
Exactly. And it amazes me that there are plenty of appraisers out there who will do this. (SMH)
Better than an actual appraiser Floor plan. I call BS every day that ends in Y. Makes me wonder if stupidity is a prerequisite for a company like this.
I was told that the fees would not change for the appraiser by using this app. It would seem they plan to beta test at same fee then drop fees once they get broader acceptance. I have been informally polling people I know, everyone has refinanced lately, if they would see any benefit for themselves in walking around with the app, measuring, taking photos, they say sure, I would do it if it saved me money. I can’t imagine the AMCs or lenders will be lowering their fees so it has to come out of appraiser’s fees to get any incentive for the homeowners to want to do this. The liability seems crazy and I can’t imagine that a majority of homeowners would have the necessary level of comfort with the tech, or the interest in doing our job with no benefit to them.
So, now we are going to let the fox tells us how to protect the chickens or something similar..lol. Homeowners are going to measure, take pictures, etc of “their” homes? Why not lets cut out the middle man all together and let homeowners tell the lenders what the estimated value of their home is. Problem of those pesky appraisers fees solved!
Had an instance during covid where the homeowner submitted photos to the lender and they were forwarded to the appraiser. Property was a townhouse. The photos looked strangely familiar… so I looked back in MLS. Photos the homeowner sent were NOT his property, but the townhouse next door…his neighbor. When I called him to inquire as to why he sent photos of his neighbors home, his reply was… “Well it’s the same floor plan, but his is in better shape than mine. I wanted to be sure I got the highest value I could.” ***You can’t make this stuff up.
>>>>>So tell me again why it’s a good idea for ANYONE other than the actual licensed appraiser to gather this kind of data for the subject property?? (Geeeeze Louise.)
Anna Orlow Faris, Ofcourse, the ONLY and I mean ONLY reason for these software solutions is for them to recapture revenues, not to enhance accuracy or to reduce risk.
John Smith exactly.
What about privacy of the homeowner? Many homeowners request photos of the property be removed from MLS due to safety concerns. Even though these “floor plans” will not be published, they will leak out to the general public. Giving a potential thief access to a floor plan of the property is just asking for trouble. What has become of common sense?
The ONLY problem with subject property pics being “published” has nothing to do with those we place in appraisal reports, and EVERYTHING to do with how Realtors jumped on board with having MLS data transfer directly to the “realtor.com” website…. and NOW, NAR no longer even OWNS the “realtor.com” website.
Nobody is going to walk around my private living spaces with a future phone recording everything to a 3d model database, shooting laser beams everywhere. As a consumer I would request such technology not be used for my personal privacy reasons. This is just a micro sized version of that 3d model scanning device which amc’s proposed in the appraisal news a few years back. Lidar is laser based 3d modeling.
Seeing a property in person is essential, the smell, the lighting, the familiar understanding gained only through time and experience, judging comparable effective ages, the feel of spacious vs dense living spaces, personally observing the neighborhood and neighbors care of their land and homes. And home owners often find benefit in having the ability to speak to a qualified appraiser when we visit. These are consideration points which should not be substituted for the sake of efficiency. Also the use of this technology ties appraisers liability to cellular manufacturing trends and their product performance reliability. Sounds like another short sighted effort which will result in fewer appraisers rather than more in the not too distant future.
Here is a novel idea; Get the amc middle managers out of the picture so appraisers could hire train and flourish again, instead of having to give all that energy to amc’s and other third parties. The appraisal industry does not have an efficiency problem, it has an unnecessary middle management problem which has driven the majority of all licensed appraisers out of GSE work entirely.
https://www.laserfocusworld.com/blogs/article/14205758/samsung-abandons-lidar-sensors-in-phones
https://en.wikipedia.org/wiki/Lidar
If appraisers no longer go to the neighborhoods how can they still be experts in those neighborhoods?
The visit to the home is too important a component to an appraisers understanding of that home’s good and bad points to outsource to anyone else.
Why don’t they want the appraiser in the home?
I do not see how directing the homeowner to take photos will save any time. I can see this taking more time not less. What homeowner is going to show you the issues with the home?
James, Very good points. Reminded me of a basement I went into and the foundation wall was just starting to lean inward from a tree’s roots outside the back door that was planted to close to the house 20 years ago. I’m sure the homeowner is going to take photos of any that.
Again it’s all about the money.
By the time they even get these programs rolled out the rate will have increased. Imagine a world where unlicensed third party inspectors have better equipment and more resources than the licensed appraisers they are providing services for. Have lidar capable phone, will travel. Appraisers whom enter the industry after these changes are implemented will never be fully competent for the position, they will know less of real property and land than a rock in the dirt.
https://www.bankrate.com/mortgages/analysis/
“They say” never say never but I can say I WILL NEVER DO A HYBRID.
A FLOOR PLAN can mean many things depending on who is writing the definition. A floor can can mean one thing to an architect and another thing to a contractor or an appraiser or a painter or a person staging the home or a REALTOR or a …………………
I saw a presentation of this. Essentially the appraiser has to remotely hand hold the borrower or seller, or other party from the street shots, exterior photos and measurements of the dwelling’s footprint, interior photos and interior wall measurements – length and height. The selling and saving grace is that the appraiser saves traveling time. I imagine MLS pics of the comps will be fine. The presentation did not go into that. Seems like a pain in the you know where. And then you’re supposed to be knowledgeable of the neighborhood without actually being there. Right? I rather do it myself.
Again, why don’t they want the appraiser in the home?
To quote a line: “they can’t handle the truth” – the less they really know about the issues of a home from a disinterested non-commission emotionally neutral party before they package and sell the loan, the less accountability they have and more liability they can lay at the feet of said party when the loan repurchase order comes through. We only get in the way of them making more money faster.
How many times do you come across a borrower who isn’t fully accurate with their homes, the additions that aren’t mentioned, the room count changed (added bedrooms, baths) but the same GLA. NO WAY will this work, I guess I’m thankful that I’m 72 & hopefully not going to continue as an appraiser forever. Why should the appraiser loose money while the banks, lenders are getting their “fair” share will the cost to the borrower go down?
I’ve got a program that helps insert subject profile & comps, but I think it takes me just a much time to input the info myself, by the time I go back to check & read the MLS, public records that was automatically entered (I do research & select what comps I enter).
When I 1st started appraising we DID have to draw the inter walls, yes I was a newbie but it took forever. Please lets not go backwards!
IMPORTANT; THINK ON THIS; Since 3rd party inspectors are perfectly acceptable, and the REAL Appraiser isn’t required… and the AVM’s are sooooo accurate, and REAL Appraisers aren’t needed… then explain WHY the lending process still INSISTS on a REAL Appraiser signing the Appraisal Report??? LIABILITY, FOLKS. When it all comes down to it, they need APPRAISERS to blame it all on when the crap hits the fan.
>>>Why would Appraisers go along with this craziness!!??
The typical owner occupied, financed sale typically takes 30-45 days. Order the appraisal in the begining of the process, not 5 days before the closing. Problem solved.
So the homeowner is going to do exterior when its too cold, hot, rainy, muddy??? Too early, too late… “I wont be home till 7pm. Since you dont have to come to my home, we can do it about 8pm.” Lord help us when we get a technologically illiterate person on the other end.
Read the reviews under these apps in Play Store. Not very good.
Many of these aps require a gps location or address input, then someone videos the whole house and then it gets sent back to them to “process” and create the floor plan which takes 7-24 hours. Does anyone realize just how much inside info can be gleaned from these videos. They will be able to sell info on everything from race and gender, how many people live there from possible photos, what items are in the room, color choices, ect. They will be able to get info from medicine on a dresser or shelf, favorite sports teams, is the carpet worn, newly renovated, needing renovation? They will have a huge amount of data that will be able to be resold. The homeowners will be inundated with flyers, phone calls and emails. This is a bad idea on many levels. The system has allowed the Appraiser profession to continue to age with no incentive to bringing in Trainees. Funny how we need a trainee to have the supervisor go along with them but we will let a 3rd party go through a house to gain similar info. Now that the age of appraisers is 50 according to https://www.zippia.com/real-estate-appraiser-jobs/demographics/, which makes it a great time to push appraisers into staying and working from home.