When examining appraisal reports, it is commonly noted that the Neighborhood section of the 1004 appraisal report contains data for sales of properties that are comparable and competing to the subject, rather than for sales of all homes of the same category (i.e., single family detached).
Professional appraisal reference works, such as Appraising Residential Properties, 4th Edition (published by Appraisal Institute) address the differences between a “neighborhood” and a “market area.” Further, various Fannie Mae selling guides and announcements, and the HUD 4150.2 handbook contain guidance for appraisers regarding the analysis of neighborhood and market data, and what is expected to be reported in the Neighborhood, Inventory Analysis and 1004MC sections of the appraisal report.
This document contains excerpts from these publications with relevant portions highlighted for easy reference. Additionally, comments and observations have been included to assist in understanding their applicability to the topic. (more…)
Frank Gregoire’s written testimony to the United States House of Representatives Committee on Financial Services Subcommittee on Insurance, Housing and Community Opportunity before the Appraisal Oversight Hearing
APPRAISAL ISSUES AND CHALLENGES
There are a myriad of circumstances and issues working to hinder the recovery of the nation’s housing market. Among them, and often overlooked, are those related to the credible valuation of real property. A credible valuation provided by a licensed or certified professional 1) ensures the real property value is sufficient to collateralize the mortgage, 2) protects the mortgagor, 3) allows secondary markets to have confidence in the mortgage products and mortgage backed securities, and 4) builds public trust in the real estate profession. However, in today’s world there are many road blocks in the way of valuing property and, as a result, allowing for a healthy recovery of the broader real estate industry. Because there are many roadblocks there is no one, “silver bullet” solution. (more…)
Strangely enough, USPAP 2012-2013 does not include a definition of Marketing Time. Marketing Time is only addressed in the Advisory Opinions (AO 7) and the Advise from the ASB is that reasonable marketing time is an opinion of the amount of time that might take to sell a property interest at the concluded market value during the period immediately after the effective date of an appraisal.
USPAP requires an opinion of exposure time, not marketing time, when the purpose of the appraisal is to estimate market value. USPAP 2012-2013 defines Exposure Time as the estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Exposure Time is a retrospective opinion based on (more…)
This article was published in the September 2011 issue of the IllinoisAppraiser Newsletter
1004MC : Danger! by Lee Lansford
If you conduct appraisals for residential lending, you are familiar with the 1004MC.
Many appraisers rely upon the data which populates the form for conclusions (e.g., trends for Property Values and Prices, relationship between Supply & Demand, etc.) which are later communicated on page 1 of a Fannie Mae appraisal report form. Of course, the data and analysis in the 1004MC are, in part, used by the appraiser in analysis in the Sales Comparison Approach.
What could go wrong with this scenario?
The correct answer is plenty, resulting in the appraiser communicating misleading opinions and conclusions.
What danger might there be in depending upon the data in the 1004MC as support for certain conclusions (i.e., Overall Trend) and opinions both in the 1004MC and in the neighborhood section on page 1 of a Fannie Mae appraisal report form?
There are instructions located at the top of the 1004MC form. If the appraiser places all reliance upon the first part of the first sentence (The appraiser must use the information required on this form as the basis for his/her conclusions…) and ignores the latter part of the sentence (more…)
DataMaster is a software that works hand in hand with the following appraisal software: WinTotal, ACI, and ClickForms. It auto-populates MLS data and/or Public Records data directly into appraisal reports. These records are compared giving the appraiser the ability to decide which source to use. DataMaster also calculates the Fannie Mae 1004 Market Conditions Report, and transfers that information directly into the appraisal form (1004MC). By electronically transferring data, re-typing of data is eliminated, (more…)