The appraisal process is one of the most important elements of the real estate industry – and unfortunately for the appraisers themselves, it’s also one of the most time consuming.
In a pre-COVID world, it was common for appraisers to come out to a home and visually inspect both the inside and the outside. They would go room by room, taking detailed photographs and making a note of any important elements that might impact the home’s value.
They will also use information from comparable properties, otherwise known as comps, to help make this judgement. In many situations, comp photos will be used – a subject that has been mired in controversy in recent years from professionals. This is true for a number of different reasons, all of which are worth a closer look.
Comp photos are exactly what they sound like – photos of a similar home in a neighborhood to the one that is about to be sold that will then be used for the purposes of an appraisal.
For appraisals to be as accurate as possible, appraisers need as much information to draw from as they can. Therefore, comps can be quite useful. If a home that is about to be sold has a pool and a similar home in the area also has a pool and recently sold for a certain amount of money, it stands to reason that this amenity would impact both properties equally.
The same is true for homes with similar floor plans, with the same number of bedrooms and bathrooms, with certain outside fixtures or landscaping elements and more.
Comp photos in particular are not a requirement of USPAP. However, most of the lenders that a homeowner is likely to encounter will require them. This is because for the purposes of getting a mortgage, an appraisal is of paramount importance.
No lender will ever approve a mortgage for more than a house is actually worth. Doing so would almost immediately put the borrower underwater, which isn’t in anybody’s best interest. Therefore, lenders want appraisals to be as accurate as they can get and they’ve historically seen comp photos as one way to do it.
Note that appraisers will draw from a variety of other information sources when making their determination, not just comp photos. They’ll use MLS listings and records pulled from the county to find out more accurate information about the properties in question. All of this will be presented in their final report submitted at the end of the process.
From a certain perspective, comp photos are important – or at least, they were. But in the modern era, technology has evolved to the point where they’re not nearly as necessary as they used to be.
Yes, an appraiser could spend time driving through a neighborhood and taking photos of comparable properties. But why do they necessarily need to do that when they can sit at their desk, pull up Google or Apple Maps and essentially learn the same information?
For years, services like Google have been sending camera trucks around on virtually every street in a given area, taking high quality photographs that are updated on a regular basis. These are often just as good as the comp photos that an appraiser might take, largely rendering the practice redundant.
In a lot of situations, these online tools can actually provide more information than standard comp photo ever could. Using Google Maps you can get a satellite view of a property, for example. You can see the backyard in a way that you likely wouldn’t be able to if you were doing a drive-by appraisal, or if the home was located down a long, private driveway or road.
This visual information, paired with information obtained from the county and MLS listings, can paint a vivid picture of a home in a way that makes an appraisal more accurate.
Not only that, but all of this will help save valuable time on behalf of those appraisals so that they can get more work done in a day.
In the end, comp photos do serve a purpose from a certain perspective – it’s just that there are a lot of other more efficient ways to serve that purpose, too. Some organizations do require recent comp photos, which is understandable. It’s just that thanks to the benefits that modern technology brings with it, there are a lot of other and more efficient ways to accomplish largely the exact same thing.
To get even more information about comp photos and their current purposes within the modern day real estate industry, or to get answers to any other questions that you may have, please don’t hesitate to contact AmeriMac today.