Typical desktop valuations
An increasing number of real estate transactions are being approved by desktop valuation. The Federal Housing Finance Agency began accepting desktop valuations during the COVID-19 pandemic. Fannie Mae, the government-sponsored enterprise that has more than $4.3 trillion in assets, announced in 2022 that it would begin accepting desktop valuations for some loans. Freddie Mac, Fannie Mae's counterpart, also began approving loans based on desktop valuations that year.
The methods for conducting a desktop valuation are relatively simple. The appraiser generally will begin by examining property tax data. Only using tax records to determine the value of a property isn't a good idea since taxes are based on relatively subjective criteria. The assessed value of a property, for example, is often considerably less than the fair market value.
Appraisers also will use data from the Multiple Listing Service (MLS) to find properties that are similar to the property being valued. As with any other sample, size is everything; the more properties that are similar, the better the chances that the valuation will be accurate.
Fannie Mae and Freddie Mac appraisers are also required to obtain floor plans for desktop valuations to ensure that the property hasn't been significantly altered and that the available data are an accurate reflection of its value.
Again, while they're most common in real estate, the value of almost any tangible asset can be estimated with a desktop valuation. The key caveat, however, is understanding that desktop valuations, although convenient and often less time-consuming, are estimates, and a physical inspection of an asset will generally yield a more accurate valuation.
