Before the Dodd-Frank Act passed in 2010, people with an assistant appraiser’s license were allowed to go to the property, take pictures, gather data, and write the report by themselves as long as someone with a full appraiser’s license read over the report and signed off. The Dodd-Frank Act prohibited this, meaning for an assistant to complete an appraisal, someone with a full appraiser license would have to go to the house with them. This discouraged appraisers from training assistants as they didn’t benefit from training them. Due to this, very few people could get a full appraiser license while many current appraisers were retiring. This led to a shortage of appraisers and, therefore, the price of an appraisal skyrocketed. Then recently, hybrid appraisals were created to encourage the training of assistant appraisers. This allowed assistant appraisers to go to the properties by themselves to take pictures and complete a house survey.

What is a Hybrid Appraisal?

Hybrid Appraisals are when a third party is hired to inspect the inside of the house, noting the features, location, size, condition, needed repairs, or deterioration of the property. The inspector will also take pictures of the inside, outside, and all other property places. The inspector will then send this information to the appraiser. The appraiser will then use MLS and housing records as well as the information given to them by the inspector to determine a fair market value of the property. The difference between this and a desktop appraisal is that a desktop appraisal doesn’t have an in-person inspection. This means a desktop appraisal only goes off of housing records and an MLS without ever stepping on the property.

Steps of A Hybrid Appraisal

• The Seller Accepts the Buyer’s Offer: After the Seller accepts the buyer’s offer, the buyer must apply for a loan/mortgage. Then a traditional or hybrid appraisal will have to be done
• The Lender Hires the Appraiser: When the lender hires the appraiser, they get to choose whether they want a traditional appraisal to be done or a hybrid appraisal.
• Hiring A Third Party: The third-party hired to inspect the home could be someone working under the appraiser who still needs to be licensed, a separately licensed appraiser, or a freelancer.
• The Inspection: The third-party inspects the property, taking photos, marking the house’s condition, needed repairs, location, etc.
• The Appraiser Researches the Property: The appraiser looks at the value of similar properties sold in the area, usually through a service like an MLS. They also check records to view the age of the home, square footage, number of bedrooms and bathrooms, property inspections, and previous appraisals on the property.
• The Third Party Makes the Report: Usually, the third party will make the report with Fannie Mae’s Uniform Residential Appraisal Report form.

What are Hybrid Appraisals Used For

Hybrid appraisals are most commonly used for analyzing how a loan is performing. Although, it is becoming more common to see hybrid appraisals being used for purchasing and refinancing.

Who Does the Inspections:

Recently, a company called Proxypics has popped up that is similar to Uber, Doordash, or Fiverr. However, the freelancer is hired to take pictures of houses instead of delivering food or chauffeuring. The app will show jobs that can be started that will order someone to take certain pictures of the property and then will survey the freelancer about the property. The appraiser can then use this to make the appraisal. Another person who can do the inspections could be trained under the appraiser. This could be someone with an assistant appraisal license working to become a full appraiser.  

Why Use A Hybrid Appraisal

First, hybrid appraisals are significantly cheaper than traditional appraisals as they only cost $300-$400, while traditional appraisals can go anywhere from $600-$2,000. Also, they take less time, with inspection being a maximum of an hour and the appraisal coming back within a week. At the same time, traditional appraisals could take up to a month.

The Drawbacks of a Hybrid Appraisal

The drawbacks are the appraisal might need to be more accurate as the appraiser isn’t physically in the home. Also, in some cases, the inspector may have different licenses or certifications than an appraiser. This means the inspector may need to be more knowledgeable regarding what he should be taking note of.

Who Accepts Hybrid Appraisals

Not all loan companies accept hybrid appraisals some big companies such as Rocket Mortgage, Fannie Mae, and Freddie Mac do.

Where are Hybrid Appraisals Most Popular

They are most commonly used in suburban and urban areas while rare in rural areas.