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1004 MC. . .must relate to comps on sales page?

Discussion in 'Fannie Mae, Freddie Mac, USPAP' started by ockyappraiser, Oct 24, 2009.

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  1. ockyappraiser

    ockyappraiser Senior Member

    12
    Sep 26, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Kentucky
    I have done many of the 1004 MC forms since May. I also took training from Appraisal Institute, and two other organizations. All advised that the data sample should include ALL sales and listings within the subject area. . .not just those that are the comparables noted above the sales/comp section.

    I have an AMC that is insisting that the number of sales and listings noted on the 1004 MC form must match the number on the top of the comps page in the report. If this was true, the sample base would be far to small in the 1004 MC to draw valid market trends.

    I was taught that a large sample base was necessary to gain valid market trends, and that the 1004 MC form related to the boxes in the neighborhood section, not the sales and listings lines on the comps page.

    Have I missed something?
     
  2. Duckey

    Duckey Junior Member

    0
    Aug 2, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Oregon
    The training we took indicated we should use any homes that a buyer of the subject would also consider. i.e. Specific Market Segement.
     
  3. Riick

    Riick Elite Member

    33
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware
    I (of course) have no idea what you were taught.

    My reading of the instructions at the top of the 1004MC page
    is that Fannie & Freddie want "comparable properties".

    If the whole neighborhood is full of comparable properties,
    I'd include all the sales that I might use as comparables
    (those within 1 mile??),
    if it somehow happens that that's not the case, (hard to believe, eh?)
    I would include only the properties that I would use as comparables.

    AFAIC, if there are a grand total of 13 possible comparables sold
    in the last year, those are what go into the 1004MC.

    What?!, 13 are too few for a statistically significant sample and
    thus no reliable trend is discernible?
    Tough, they made up the rules, and they get what they ask for.

    On other pages are MY analyses, and those are what I depend upon and quote in the report.

    So...have you missed something???
    ..
     
  4. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    17
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    I often state..."sample is too small for meaningful trend analysis". I then go on to add narrative comments about the market. It appears to me the form and it's instructions have caused a major problem for the appraiser and readers of the report.
     
  5. Diego Lopez

    Diego Lopez Member

    0
    Sep 11, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    As already stated, they want you to use comparable properties, read the instructions section.
    With that said, you are also correct in that unless you have over 30 +/- comparable sales within the last year, the sample base is to small to draw any valid market trends conclusion.
    This is why the form is flawed.
     
  6. DMZwerg

    DMZwerg Senior Member

    0
    Mar 25, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Wisconsin
    During a break at a recent CE class this came up, namely what sample size is statistically significant and yes 30+/- is roughly "the magic number". If somebody else wants to go into details fine but basically around 30 is where the chance of error starts dropping in a fairly homogeneous sample. Just thought I would mention it again.

    On the other hand if you see a smaller number hitting VERY close then that can be significant as well and is basically what an appraisal does (aka, looks at the 3 most similar to show significance). Remember that the original sample size is actually MUCH larger and it is pared down to the most similar and/or most significant few OR if the sample is too small an appraiser generally mentions why the more diverse were used and how the credible opinion is derived from a less than significant sample.

    :beer:
     
  7. CANative

    CANative Elite Member

    208
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    30 is enough?

    If the market was exactly consistent that would mean 15 in the first six months and 7 or 8 in each of the previous 3 month market segments. That's two or three sales a month.

    I wasn't taught anything but it doesn't take much mental horsepower to realize this is not enough information to have any statistical meaning.
     
  8. Mike Garrett RAA

    Mike Garrett RAA Elite Member

    17
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Colorado
    That's what I believe too...thus my statement on the form.
     
  9. MDAPPR

    MDAPPR Member

    0
    Mar 10, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Considered the source and credibility from fat Fannie who is in current government rehab for consuming too many tinkies and hohos (no disrespect to the junk snack food industry or the big 4 US banks) at the cost American people's dollar. Of course they made the 1004MC ambiguous. I can't wait for the day when we'll never ever see a GSE appraisal form again, or a carcinogenic AVM or a BPO for that matter.
     
  10. CANative

    CANative Elite Member

    208
    Jun 18, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    They traded their houses they bought on the GI Bill
    for flag draped Ski-Doos to stuff Sam Walton's till.


    My apologies to John Prine.
     
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