A drive-by appraisal, also known as an exterior-only appraisal or a Form 2055 appraisal, is a property valuation method where the appraiser assesses only the exterior of a home, without entering the interior. This approach allows for a quicker, less costly appraisal process often used for refinancing, low loan-to-value loans, home equity lines of credit (HELOCs), or portfolio reviews by lenders.
During a drive-by appraisal, the appraiser visits the property to visually inspect and photograph the exterior features—such as roof condition, siding, windows, landscaping, and overall curb appeal. They evaluate the neighborhood’s upkeep and factors affecting market value like traffic or nearby commercial properties. Then, they use public records and recent comparable sales data to estimate the property’s value. Standardized report forms like Fannie Mae’s Form 2055 or Freddie Mac’s Form 1055 are typically used to document findings.
Lenders use drive-by appraisals mainly for cost efficiency and speed, especially for loans deemed lower risk due to factors like substantial borrower equity or smaller loan amounts. This method became more prevalent during the COVID-19 pandemic to minimize in-person contact. However, drive-by appraisals rely on the assumption that the interior condition aligns with what the exterior and comps suggest.
While drive-by appraisals provide faster turnaround and lower costs—usually between $150 and $350 compared to $400 to $600 or more for full interior appraisals—they cannot detect interior issues such as mold, outdated systems, or major repairs. They also may not fully recognize upgrades or renovations inside the home, potentially affecting the accuracy of the valuation.
Drive-by appraisals are best suited for refinancing, low loan-to-value loans, and properties in uniform, well-maintained neighborhoods. They are generally not appropriate for new home purchases or higher-risk loans where a detailed interior inspection is essential.
To ensure the best possible exterior impression during a drive-by appraisal, homeowners should maintain curb appeal by keeping lawns trimmed, repairing visible damage, cleaning exterior surfaces, and providing clear views of the property.
For a more detailed understanding of appraisal methods, see our glossary entries on Refinance Appraisal and Comparable Sales (Appraisal).
Sources:
- Investopedia, “Drive-By Appraisal,” https://www.investopedia.com/terms/d/drive-by-appraisal.asp
- Freddie Mac, “Appraisal and Property Field Reviews,” https://guide.freddiemac.com/app/guide/section/5601.1
- IRS.gov for appraisal tax implications (https://www.irs.gov/) (for general reference)