Are appraisals an essential service?

With the number of states, counties and cities issuing stay-at-home orders increasing every day, the real estate industry is left to quickly interpret whether its functions are considered essential services.

With many moving parts and jobs in the real estate process, appraisers, notaries and homebuilders, along with many other roles, are having to individually interpret their local restrictions to see how they can continue operating. 

The appraisal industry is one of those fields in a tight spot since not only is the majority of an appraiser’s work conducted in person, but they’re experiencing a surge in demand. Their job forces them to enter client homes when social distancing rules are stricter than ever, creating mounting concern as the virus continues to spread throughout the nation.

According to the Appraisal Institute, a global professional association of real estate appraisers, appraisers need to be considered an essential service nationwide. At least 17 states, 26 counties and 10 cities have issued stay-at-home type orders, with more joining the list every day, but of these orders, the Appraisal Institute found that only a handful of states and localities have explicitly cited real estate appraisers under essential worker classifications. Meanwhile, others are not being as specific, causing inconsistency and confusion for appraisers. 

The Appraisal Institute compiled a list of statewide stay-at-home, shelter-in-place or non-essential business closure orders, noting when possible if the order explicitly states appraisers as an essential service.

As more localities implement similar orders, the Appraisal Institute is working with governments to include appraisers as part of essential services, so they’re exempt from stay-at-home orders. 

On Thursday, the Appraisal Institute, along with the National Association of Realtors, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the Massachusetts Board of Real Estate Appraisers told the National Governors Association, the National Association of Counties, the U.S. Conference of Mayors and the National League of Cities that they are concerned about ramifications and unintended consequences if appraisal services are not deemed to be essential services. 

They collectively asked the groups to exempt appraisers, stating, “Appraisers are performing critical and timely services for real estate-related transactions, many of which will continue to take place during this crisis, and that will help to keep the economy functioning.” 

“Everyone’s goal is the same – to protect the health and well-being of our citizens,” the joint letter stated. “But we must also protect and preserve the fabric of our communities and the critical infrastructure that supports and protects us all.”

Ken Chitester, communications director with the Appraisal Institute, said the Illinois Executive Order 2020-10 best deals with the provision of appraisal services as an essential service for financial institutions and as a regulated professional service.

The appraisers who are still operating and going into houses are advised to take adequate precautions to protect themselves, including social distancing, use of personal protective equipment and limited human interaction. 

While the associations are working hard to exempt appraisers, the Appraisal Institute added that if an appraiser doesn’t feel comfortable entering a property, they can refuse the assignment and seek work that doesn’t require an interior inspection. 

“In fact, major users of appraisal services have temporarily changed their policies in the past week to facilitate and encourage exterior-only or drive-by appraisals that avoid person-to-person contact,” Chitester said. 

Apart from the letter, the government has announced initiatives to lessen the need for appraisals during the COVID-19 pandemic. Earlier this week, the Federal Housing Finance Agency stated that it is directing Fannie Mae and Freddie Mac to ease their standards for both property appraisals and verification of employment. The entities said that they would use “appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.” 

As the news continues to develop, there are appraisers like Brady Enlow, who is based in Texas, who are opting to conduct business while taking the necessary precautions as outlined by the federal and local governments in his market area.

“I believe this is related to our integral part of the financial services industry,” Enlow said. “However, it should be noted that I am aware of some peers that are not working during the pandemic, or at least only completing appraisal orders that do not require an interior inspection.”

Given the rapid spread of the coronavirus, Enlow added, “The fact that appraisers are essential workers in some places does not mean that all appraisers will continue to do interior site visits.  I think many people across the country are fearful and don’t want to put themselves at heightened risk.” 

This is a developing story and will be updated with information and quotes as they come in.

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