URAR 1004s Are for Sissies
1004s are for sissies
I remember the first time I ever saw a real appraisal report. No, I am not talking about a 1004, 2055, or even a 1025. I am not referring to a Fannie or Freddie form at all. I mean a real, living, breathing, monster of a report; the narrative!!! (insert collective gasp here) Early in my career, one of my insightful instructors brought one of his narrative reports to class. As I perused that 76 page beast full of words (not boxes), descriptions (not canned comments), graphs (not pre-filled MC Addendums), and pictures (oh, how there were pictures), I remember thinking, “wow, 1004s are for sissies.”
My next thought was something along the lines of “glad I will never have to write one of those.” I guess I figured, mistakenly of course, that if you are not a commercial appraiser, you would never need to know how to write such a monstrosity.
I was working on a case for litigation this past week. As part of the process of discovery, the other side sent over their appraisal report. Though I disagreed with the findings, I was impressed by the detailed, narrative report the appraiser had prepared. Rather than checking boxes and regurgitating phrases such as “The subject is in a limited market and therefore…” or “done in conjunction with local builders…” blah blah, blah, he had gone into detail providing graphs, regression analysis, and specifics as to why he made the conclusions he did. My own report ended up being over 70 pages when all was said and done, but his was truly impressive. Though I thought his assumptions were unrealistic, his supporting data was strong, and I concluded that this appraiser was no sissy.
Most of us residential guys spend a majority of our careers appraising real estate and putting our conclusions on a Fannie or Freddie, pre-made form. Highest and Best Use? Check. FEMA Zone? The computer filled it out for me. Subject description? Scuttle: check. Slab: check. Crpt/Tile/Gd: got it. Neighborhood description? Well, the north boundary is probably Main St. The South is likely the river, and so on and so forth. How often do we stop to consider what it is we are actually doing? Though the new version of USPAP has called heresy on the phrase ‘Summary Report,’ isn’t that still what it actually is? Remember an appraisal and an appraisal report are not the same thing. Frankly, they are about as closely related as Kentucky marriage bloodlines (wait… that is probably not a good analogy). An appraisal is what you do and an appraisal report is how you decide to explain what you did. Unfortunately, many appraisers get so used to checking boxes and filling out forms that they forget to consider what it is they were actually hired to do. We all do it on occasion.
Do not misunderstand; I do not think there is anything wrong with the 1004, 2055, or 1025… well, truth be told, there is plenty I would change… but we ought to be familiar with some other ways of reporting our findings. Lately, there has been a lot of disgust on display over some lenders’ decision to move away from 1004s and use other reports more specific to their purpose. Personally, I have no issue with lenders, AMCs, attorneys, or Grandma Matilda asking whatever form they want of the appraiser. We just need to make sure we remember that the form does not equal the report and USPAP still needs to be complied with.