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When you buy a home, the mortgage lender requires a third-party professional to create an appraisal report that estimates the house’s value. Under the traditional home appraisal process, the appraiser thoroughly reviews all available information by conducting an in-person evaluation of the interior and exterior of the house. This usually takes several hours.
A drive-by appraisal works differently, though. This type of assessment does not require the appraiser to enter the home, making the process faster and more affordable.
Learn more: Home appraisal — how it works and how much it costs
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A drive-by appraisal is an alternative method of appraising a property that does not require a professional to enter the home. Drive-by appraisals became much more common during the height of the COVID-19 pandemic when real estate appraisers needed to find safe ways to conduct business without having to enter the homes they were evaluating.
To conduct a drive-by appraisal, the licensed appraiser uses real estate records and data, as well as a “drive-by” examination of the home’s exterior, to determine the property’s value. Since the appraiser does not enter the house, a drive-by appraisal must rely on public records, market data, and similar homes to estimate the home’s market value.
Dig deeper: What is the difference between a home’s appraised value and market value?
Although the term “drive-by” may suggest that this kind of appraisal is slapdash, that is simply not true. Though appraisers do not walk through the home’s interior during a drive-by appraisal, they still adhere to their professional guidelines and use all the information at their disposal.
While most traditional appraisals use the Fannie Mae Uniform Residential Appraisal Report in the home evaluation, drive-by appraisals generally use Fannie Mae’s Exterior-Only Inspection Residential Appraisal Report or a similar one, depending on whether you’re buying a single-family home, condo, or manufactured house.
If a professional real estate appraiser conducts a drive-by appraisal for your home, this is what you can expect them to consider as part of the process:
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Exterior examination: The appraiser will visit the property and take photographs and notes about the home’s exterior.
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Comps: The appraiser gathers information about recently sold homes in the same area that share characteristics similar to the home currently being appraised — also known as “comps.” Researching comps may include an in-person visit to comparable properties to get a more accurate view of their similarities and differences.
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Neighborhood assessment: Location is an important factor in the value of a property. The appraiser will evaluate the area’s features and drawbacks to determine how the neighborhood affects the home’s market value.
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Records: The appraiser’s research may include public records, tax records, and Multiple Listing Service (MLS) listings.
Read more: What happens when an appraisal comes back lower than the offer?
A drive-by appraisal provides less information than a traditional one because the appraiser does not enter the home. That means this kind of appraisal isn’t the right fit for every situation. Depending on your property and loan type, your lender may also require a traditional appraisal.
However, a drive-by appraisal can be the right choice in the following scenarios:
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When there was a recent appraisal: If the home has recently undergone a traditional appraisal and the interior has not changed, a drive-by appraisal can be an appropriate option.
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For a home equity loan or home equity line of credit (HELOC): Mortgage lenders tend to regard home equity lending as lower risk than a new home purchase and may allow borrowers to get a drive-by appraisal.
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When a home is at risk of foreclosure: If a homeowner has defaulted on their mortgage, the lender may get a drive-by appraisal as part of the potential foreclosure process.
Dig deeper: How to buy a foreclosed home
This type of appraisal has benefits and drawbacks, and you should understand them fully before deciding if a drive-by appraisal is right for you.
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Typically less expensive than a traditional appraisal
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More convenient since homeowners do not need to accommodate or schedule an appraiser’s visit
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Can be quicker than a regular appraisal
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Might not be as accurate as a traditional appraisal since the appraiser does not personally examine the interior of the property
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Can miss interior problems like mold, damage, or disrepair that would be discerned during a regular appraisal
Learn more: What is an appraisal contingency, and should you include it in your offer letter?
According to HomeAdvisor, appraisals for residential homes typically cost $300 to $400, but drive-by appraisals usually cost $100 to $150 — meaning this kind of appraisal is significantly less expensive.
Generally, your mortgage lender will let you know if you can get a drive-by appraisal or if you need a traditional one. If you believe a regular appraisal is unnecessary, you can request a drive-by appraisal and outline your reasoning.
Appraisers enter the house in most cases. But if they’re conducting a drive-by appraisal, also known as an exterior-only appraisal, they will visit the home but not go inside.
This article was edited by Laura Grace Tarpley.