Market Conditions

Down the Rabbit Hole with the Form 1004MC


OK, I admit it. I am old school. I still think you need to understand how to do something manually before you throw caution to the wind and buy into new technology to replace a good, old-fashioned, hands-on process that has worked fine for years. I honestly believe the use of technology without a complete understanding of how to do the basic process manually just lets us make more frequent and more complicated mistakes faster. In other words, if you can’t drive a Chevy Nova very well, don’t buy a Maserati Ghibli and expect it to fix your driving problems.  All that will happen is that you will be going faster when you hit the wall.

What does this have to do with the Form 1004MC? In the old days when television was black and white and when reporters reported the news instead of making it up, the officers of banks and savings and loans had to decide what their home loan lending policies would be. First, they had to decide if they would offer home loans at all. Next, they had to decide what cities they would make loans in (typically they would only loan in markets where they had deposits so they had firsthand knowledge of those markets). (more…)

FHA Draft New Appraisal Requirements - Image courtesy of Stuart Miles / FreeDigitalPhotos.net

FHA Issues Draft of New Appraisal Requirements


The Federal Housing Administration on July 31 issued drafts of four new appraiser policy documents that it plans to add to its Single-Family Housing Policy Handbook. The FHA is seeking feedback before the documents are finalized.

The draft documents relate to FHA appraiser eligibility requirements and the application process, as well appraiser responsibilities and compliance actions, eligibility guidelines for appraisers performing appraisals and reporting results, data delivery requirements related to the FHA Uniform Appraisal Dataset and instructions to help appraisers accurately complete FHA appraiser forms.

FHA developed the documents in an effort to provide appraisers a more consistent approach to its policies. Stakeholders can submit comments on the draft policies (more…)

Differences Between Neighborhood and Market Areas & Analysis

Differences Between Neighborhood and Market Areas & Analysis


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…)

Appraisal Issues and Challenges

Statement of Frank Gregoire (NAR) Before Appraisal Oversight Hearing

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


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…)

Making Sense of Marketing Time and Exposure Time

Making Sense of Marketing Time and Exposure Time


Marketing Time

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.

Exposure Time

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…)

Danger of 1004MC

Danger of 1004MC


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 Tutorial


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, reducing time spent on an appraisal report. With little user input necessary, DataMaster populates the Subject, Comparable Sales, Rentals, and Listings Grids of an appraisal report in minutes. By electronically verifying MLS data against Public Records, DataMaster helps ensure that the information used in the appraisal is as accurate as possible. It is available on a subscription basis billed on a monthly basis. $75/month for one license, $65/month for 2 to 5 licenses, $60/month for 6-9 licenses, or $4/appraisal with a monthly minimum of $20/month and a monthly cap of $80/month. For more information go to DataMaster.

Below is a video demo of DataMaster using the MRMLS and exporting the data to WinTotal.



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