The new HUD/FHA 4000.1 manual, in reality a very large BOOK, is said (by FHA) to have everything in it we need to know, and comply with when doing FHA appraisal reports.
We’ve all been amped up about the FHA 4000.1 Handbook changes. It DOES NOT have everything you need to comply with.
FHA has a second BOOK – The Single Family Housing Appraisal Report and Delivery Guide. On page 117, it details how FHA wants prior sales reported for the subject and for COMPARABLES. It is a change to their current procedure – and is specific to FHA only.
The info below is on page 117 of that Guide. You should print it, and save it with your FHA reporting documentation that you keep under your pillow.
FHA Single Family Housing Appraisal Report and Data Delivery Guide.
Analysis of prior sales or transfers of subject and comparable properties
Report the date(s) of prior sale(s) or transfer(s) of the subject that occurred within three years of the effective date of the appraisal. (This is already on the 1004, etc. Forms)
Report the date(s) of prior sale(s) or transfer(s) of each comparable that occurred within three years of the effective date of the appraisal. (FHA Specific Requirement). (This is different than what the form shows.)
Report prior transfers regardless of conveyance type or consideration amount. If the prior transfer or offering is not relevant to the current transaction or offering, explain why.
For new construction, include any prior transfers of the land as vacant.
If the properties are located in a “non-disclosure state,” the appraiser is responsible for reporting the information that is reasonably obtainable.
Report the analysis of prior sale or transfer history of the subject and comparable properties.
The appraiser must evaluate the relevancy of prior transfers to the current sale or offering of the comparable.
The appraiser must describe the difference between recent transfers versus the current sale or offering, and the effect on the appraisal problem.
The appraiser must provide an analysis of the prior sale or transfer history of the subject property and comparable properties in the report. Simply reporting a transaction is not a sufficient analysis or explanation to the reader.
FHA recognizes the limitations of form reports and the UAD format. If multiple prior transactions exist for the same property within three years prior to the effective date of the appraisal, the appraiser must analyze and report those prior transactions.
Enter the data source(s) used for sales and transfer information. Two sources are recommended for researching prior sales and transfers: local MLS and local public records at a minimum.
Be familiar with the data source(s), i.e., how the data is gathered and how often it is updated, what is the publication date of the data, and what is the effective date of the data.
Also, an ‘in-house’ appraiser at an AMC attended a recent FHA 4000.1 manual class, and wrote the following 8 page bullet point list – which you may find to be a handy reference.