I agree with the article and comments regarding the bifurcated appraisal compared to the traditional 1004. However, there is little question that it will “work”, just no where near as accurately for now. What I don’t see in the article or comments is any discussion as to the purpose of the new products.
The reason the bifurcated report is being created is not to save any money in fees or shorten turn times; after all, the fees paid now are not high in terms of labor hours, and since the borrower pays, lenders are not impacted.
The reason is to create a work force of inspectors that can rate properties according to location, condition, view, etc. , then those ratings will be added into an algorithm that completes the appraisal using big data.
For years Fannie and the lenders (and appraisers who review) have noted and complained about the wide range of appraisal quality and the inherent subjectivity of residential property appraising. With today’s fervent adoration of everything digital, big data manipulation would be seen as the answer to appraising residential real estate, if it wasn’t for that pesky buyer preference for those intangible things that affect quality of life.
The solution is to reduce the intangibles to a rating scale, and while that still requires a physical inspection, the inspector does not have to spend the time to produce an opinion of value; that will be done digitally. The bifurcated appraisal is a logical first step to creating the property inspectors that later on will be able to qualify the components of residential value that big data can’t see.
Source: Working RE Magazine