Depending on the situation, a full interior appraisal of a property is not always necessary. Some refinance loans or low-risk loans may only require a “drive-by” or “exterior only” appraisal to be completed. This is also a common inspection request for foreclosure proceedings.
An exterior appraisal relies on data gathered from observations of the exterior of the property (typically viewed from the street), along with information obtained through public records (zoning information, tax records, assessor cards, and other public data). Neighborhood characteristics and comparable sale data are also utilized as in all other reports.
On the homeowner’s end, exterior appraisals can be seen as more convenient since they don’t require an appointment time. This often can help move the process along faster as the appraiser can go at their first available time.
However, there are limitations and it is not unheard of for a homeowner to request a full interior inspection following an exterior only because the information that was publicly available to the appraiser was not fully reflective of updates/improvements made to the home and therefore, could change the estimated value.
Since the appraiser is relying only on what they can see from the outside of the home and what is reflected on public records in regards to gross living area, updated features and permits pulled, assumptions often need to be made about the condition and features of the interior of the house. This may result in a value that is lower or higher than what would have been estimated if the appraiser had access to the interior of the property.