The Importance of Getting Hybrid Appraisals Right

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

Key takeaways:

  • In theory, hybrid appraisals promise to speed the appraisal process, provide opportunities for agents to earn fees for collecting data, and reduce delays.
  • However, appraisers’ experience with hybrid assignments raise troubling concerns.
  • Agents need to be aware of who’s doing data collection on their listings, avoid conflicts of interest, and be present during appraisal inspections.

What in the world is a hybrid appraisal? It’s a newish approach to appraisal in which a third party performs the property inspection and provides the information to the licensed or certified appraiser, who uses this information, as well as other data, to complete the appraisal. Hybrid appraisals could present new revenue opportunities for qualified real estate salespeople, reduce delays, and offer greater flexibility to appraisers. But work needs to be done to ensure this approach doesn’t jeopardize the quality of our work and the soundness of our financial system.

I first heard the term “hybrid appraisal” at a meeting of the National Association of REALTORS® Real Property Valuation Committee. This is where appraisers hang out. I’ve learned in my real estate career that it’s important to be in room full of people smarter than me, and that’s where I learned about a workshop hosted by the Federal Housing Financing Agency  on how to modernize the appraisal process. Conclusions from the workshop:

  1. There are appraiser shortages in rural and high-volume areas.
  2. It’s difficult to become an appraiser because of all the Appraisal Foundation requirements.
  3. Emerging technologies are improving the appraisal process and reducing delays.

I was not drinking the Kool-Aid on the first item. I work in a rural area of upstate New York, where there are plenty of appraisers. However, it’s true that many competent appraisers in the area won’t accept work from appraisal management companies. That’s another story. On the second point, I agreed that entrance into the appraisal business is challenging. Changes are in the works; again, that’s a subject for another day. And regarding the final point, yes, I was excited for modernization of the appraisal process. (Bring it on! How about sharing the data that has been used for Fannie Mae’s Collateral Underwriter on my appraisal reports? That would be great!)

Then I heard it: hybrid appraisal, or bifurcation. The thought process behind this new approach is that my time is more valuable at my desk, researching and completing my analyses of market data, than in the field inspecting properties. I started calling hybrids “jammie appraisals,” since I could work in my pajamas and still feed my family. This might be my path to becoming a snowbird with half my time spent in upstate New York and the other half in sunny Arizona!

Disappointment Quickly Sets In

However, as I began a process of discovery, which included accepting hybrid assignments while they were being tested, I had more and more concerns. The first hybrid assignment I accepted was in 2019. It was for the purchase of a two-family property; I received a report with photos and data points. However, I did not have the name of the data collector, so I had no way to gauge the person’s credibility. If I am taking responsibility in this appraisal process, I need to know the source is reliable and credible and not biased.


Access and share “Your Home is an Investment—Know Its Value,” a resource from NAR’s Real Property Valuation Committee that describes the different types of valuation products, including hybrid appraisals.

Read the Federal Housing Finance Agency’s Appraisal-Related Policies, Practices and Processes.


I communicated with the appraisal management company’s client, asking for the name of the data collector. That simple request turned into a mountain of problems, explanations and arguments—with me needing to educate my client on the Uniform Standards of Professional Appraisal Practice. The result: I discovered the listing agent for the subject property was the data collector. Wait, what?! The listing agent is an advocate for the seller. How can I rely on data collected by a party who isn’t acting independently? If I were to do so, I would not be producing a USPAP-compliant appraisal report. I thought my client would understand. I stood my ground and mandated a third-party data collector. I even offered to have someone in my office complete the data collection. The AMC declined.

This appraisal took six weeks to complete. It would have taken one week if a traditional appraisal had been ordered and I had been able to inspect the property myself. The harm to the consumers on either end of that transaction was alarming.

Worse, I’ve since gleaned that my story is not unique, and this practice is still the norm. Stories I’ve heard from my fellow appraisers involve data collectors who:

  • Were hired online, despite past criminal records.
  • Report they are the appraiser and are given one-day MLS codes to occupied dwellings.
  • Request repairs for maintenance items, despite the fact that they are not appraisers or home inspectors.

There is a valid public concern for these type of valuation products. Some states, including my state of New York, have taken action. Our AMC license law  requires AMCs to hire only licensed or certified appraisers, licensed real estate brokers, and licensed home inspectors. (Even meeting that requirement wouldn’t have satisfied my concern about biased data collection.)

Ensuring Safety and Soundness

I’m working to educate licensees in my market, because I recognize modernization in the appraisal process will continue, and I’m concerned for the safety of the public and our economic risk as a country.

In 2019, at the recommendation of the Real Property Valuation Committee, NAR’s Board of Directors approved a policy stating:

  • Selection of a third-party property data collector should be based on criteria and due diligence that will assure proper training, liability coverage, and access to necessary data. The individual must be able to provide unbiased information, and there should be enforcement to ensure proper performance.
  • There must be transparent disclosure to consumers regarding the bifurcated/hybrid valuation process.
  • Accurate data obtained through uniform collection methods must be provided to the appraiser to perform a credible appraisal. The appraiser should be able to communicate with the property data collector as necessary. The appraiser(s) must have geographic competency to complete the assignment.
  • USPAP requires the appraiser to determine the scope of work necessary for each appraisal. The appraiser must be allowed to provide supplemental information in the report to address aspects of the assignment necessary to comply with USPAP. All data provided to the appraiser, including the report, must be available for retention in the appraiser’s work file.

Takeaways for my fellow members who are selling homes:

  1. Please ask what type of appraisal or valuation is being completed on your transaction.
  2. Don’t accept a data collection assignment on your own listing.
  3. Rather than providing one-time MLS codes, please meet the appraiser or data collector at the property.

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