"Predominant 1-Unit Housing Value"

[ZZGAMAZZ]

Presuming that this 1004 Page 1 metric is based upon 12-month properties that populate the 1004MC.

If so, it would be helpful if the results were modified by a market factor. Getting tired of explaining the difference between this value and the Opinion of Value as being affected by the underlying methodology that includes 12 month sales in an increasing market.

 

[George Hatch]

Your most direct comparables are a subset of the larger group of sales being analyzed in the MC. They will almost always fit somewhere within the range as opposed to comprising the entirety of that range.

 

[Carnivore]

I presume your talking about the Low/High/Median

Here is an example that I have put together. It is not a Standard Boiler Plate. You could take this an modify it for your Subject I have included the FNMA Selling Guide Reference that Include in my reports
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SUBJECT VALUE ABOVE OR BELOW PREDOMINATE NEIGHBORHOOD PRICE

PREDOMINANT PRICE VERSUS OPINION OF MARKET VALUE - The predominant price on page one is the MEDIAN of the value range for ALL residential properties within the subject neighborhood. ... These sales have not been verified or adjusted for any amenities, sales concessions, or any other significant value related differences. The Lowest Price or Highest Price may or may not have been excluded.

The Neighborhood/Market Segment contains homes of various ages, GLA, and designs. The subjects opinion of value may be below or above the predominate price. Relying solely on the predominant price can be misleading. The predominant price represents only a median price of properties. The majority of the properties may be either below or above the predominant price. The only concern regarding the subject value in relation to the low, high, and predominant price would be if the value is below the low price or above the high price. This may suggest an under or over improvement.

The value of the subject is well within the established median range of prices and is not an over/under improvement.

Reference: FNMA Selling Guide : This is a Exact Quote "

Price Range and Predominant Price​

The appraiser must indicate the price range and predominant price of properties in the subject neighborhood. The price range must reflect high and low prevailing prices for one-unit properties, two- to four-unit properties, condo units, or co-op units depending on the property type being appraised and the appraisal form being used. Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser must state the predominant price as a single figure using whole numbers.

B4-1.3-03, Neighborhood Section of the Appraisal Report (06/03/2020)

selling-guide.fanniemae.com

 

[ZZGAMAZZ]

I presume your talking about the Low/High/Median

Here is an example that I have put together. It is not a Standard Boiler Plate. You could take this an modify it for your Subject I have included the FNMA Selling Guide Reference that Include in my reports
-----------------------------------------------------------

SUBJECT VALUE ABOVE OR BELOW PREDOMINATE NEIGHBORHOOD PRICE

PREDOMINANT PRICE VERSUS OPINION OF MARKET VALUE - The predominant price on page one is the MEDIAN of the value range for ALL residential properties within the subject neighborhood. ... These sales have not been verified or adjusted for any amenities, sales concessions, or any other significant value related differences. The Lowest Price or Highest Price may or may not have been excluded.

The Neighborhood/Market Segment contains homes of various ages, GLA, and designs. The subjects opinion of value may be below or above the predominate price. Relying solely on the predominant price can be misleading. The predominant price represents only a median price of properties. The majority of the properties may be either below or above the predominant price. The only concern regarding the subject value in relation to the low, high, and predominant price would be if the value is below the low price or above the high price. This may suggest an under or over improvement.

The value of the subject is well within the established median range of prices and is not an over/under improvement.

Reference: FNMA Selling Guide : This is a Exact Quote "

Price Range and Predominant Price​

The appraiser must indicate the price range and predominant price of properties in the subject neighborhood. The price range must reflect high and low prevailing prices for one-unit properties, two- to four-unit properties, condo units, or co-op units depending on the property type being appraised and the appraisal form being used. Isolated high and low extremes should be excluded from the range, which means that the predominant price will be that which is the most common or most frequently found in the neighborhood. The appraiser must state the predominant price as a single figure using whole numbers.

B4-1.3-03, Neighborhood Section of the Appraisal Report (06/03/2020)

selling-guide.fanniemae.com

----------------------
Oh Oh. A major disconnect exists . . . and whenever I encounter that scenario inevitably I'm wrong. (No denial here.)

Point being is that my understanding is that--although I don't agree with the premise--the "neighborhood" should be comprised only of competing properties rather than the entire 'hood.

[Consequently, my page 1 "neighborhood" data is based upon data reported in the 1004MC, as well as the top of page 2.]

If so, your comments about the disparity of neighborhood improvements--condition notwithstand--does not pertain.

Please advise.

 

[Carnivore]

----------------------
Oh Oh. A major disconnect exists . . . and whenever I encounter that scenario inevitably I'm wrong. (No denial here.)

Point being is that my understanding is that--although I don't agree with the premise--the "neighborhood" should be comprised only of competing properties rather than the entire 'hood.

[Consequently, my page 1 "neighborhood" data is based upon data reported in the 1004MC, as well as the top of page 2.]

If so, your comments about the disparity of neighborhood improvements--condition notwithstand--does not pertain.

Please advise.

If you did not have or use the 1004mc What would you do/report on page one?

Here is another example. This one is just a rough draft I maintain and modify as needed for a Subject.

"
"The subject neighborhood is not homogeneous and contains a very wide variety of properties in multiple price points. The predominant price shown on page 1 indicates the mode (most frequently occurring variate in a data set) for the neighborhood and has nothing to do the the subject's relationship with the neighborhood or the relationship between the subject's value and the indicated predominant price. The subject's value is within the low-high price range for the neighborhood and does not automatically set the predominant. Although the Market Value is higher than the Predominant Price, there are several homes in the area in the price range of the subject. There are also many homes with similar GLA, therefore, the subject is not considered to be an over improvement for the area nor a marketability issue."

 

[Dublin ohio]

Point being is that my understanding is that--although I don't agree with the premise--the "neighborhood" should be comprised only of competing properties rather than the entire 'hood.

Have never seen any guidline that agrees with the above. Neighborhood prices are based on entire neighborhood. 1004mc on comparable properties. Neighborhood trends should match 1004 mc

 

[ZZGAMAZZ]

If you did not have or use the 1004mc What would you do/report on page one?

Here is another example. This one is just a rough draft I maintain and modify as needed for a Subject.

"
"The subject neighborhood is not homogeneous and contains a very wide variety of properties in multiple price points. The predominant price shown on page 1 indicates the mode (most frequently occurring variate in a data set) for the neighborhood and has nothing to do the the subject's relationship with the neighborhood or the relationship between the subject's value and the indicated predominant price. The subject's value is within the low-high price range for the neighborhood and does not automatically set the predominant. Although the Market Value is higher than the Predominant Price, there are several homes in the area in the price range of the subject. There are also many homes with similar GLA, therefore, the subject is not considered to be an over improvement for the area nor a marketability issue."

But the same guidelines indicate the following:

When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends must be reflective of those properties deemed to be competitive to the property being appraised. If the neighborhood contains properties that are truly competitive (that is, market participants make no distinction between the properties), then all the properties within the neighborhood would be reflected in the One-Unit Housing Trends section. However, when a segmented or bifurcated market is present, the One-Unit Housing Trends portion must reflect those properties from the same segment of the market as the property being appraised. This ensures that the analysis being performed is based on competitive properties. For example, if the neighborhood contains a mix of property types not considered competitive by market participants, then a segmented or bifurcated market is present. The appraiser should also provide commentary on the other segment(s) of the neighborhood when segmentation is present.

That's a BIG IF because all of the properties in a neighborhood rarely if ever reflect the subject's characteristics, lessen it's a boring homogeneous builder PUD.

 

[ZZGAMAZZ]

But the same guidelines indicate the following:

When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends must be reflective of those properties deemed to be competitive to the property being appraised. If the neighborhood contains properties that are truly competitive (that is, market participants make no distinction between the properties), then all the properties within the neighborhood would be reflected in the One-Unit Housing Trends section. However, when a segmented or bifurcated market is present, the One-Unit Housing Trends portion must reflect those properties from the same segment of the market as the property being appraised. This ensures that the analysis being performed is based on competitive properties. For example, if the neighborhood contains a mix of property types not considered competitive by market participants, then a segmented or bifurcated market is present. The appraiser should also provide commentary on the other segment(s) of the neighborhood when segmentation is present.

That's a BIG IF because all of the properties in a neighborhood rarely if ever reflect the subject's characteristics, lessen it's a boring homogeneous builder PUD.

The predominant word in the definition is "Competitive."

 

[ZZGAMAZZ]

Have never seen any guidline that agrees with the above. Neighborhood prices are based on entire neighborhood. 1004mc on comparable properties. Neighborhood trends should match 1004 mc

Please see the previous two posts. I totally agreed with your perspective for years until I drilled down on the FNMAE lending guide, and also was guided by the prevailing opinion on the AF (although it still doesn't make total sense to me because to do so bastardizes the concept of "neighborhood" IMO.

 

[Carnivore]

Concerning Neighborhoods

"

Present Land Use​

Fannie Mae’s appraisal report forms provide an area for the appraiser to report the relative percentages of the developed land in the neighborhood when discussing the present land use, rather than simply referring to the zoning classifications. The appraiser must separately report the percentage of developed one-unit sites and two- to four-unit sites. Undeveloped land must be reported in the “Other” field. In addition, if there is a significant amount of undeveloped land in the neighborhood, the appraiser must include comments to confirm that he or she adequately described the neighborhood. If the present land use in the neighborhood is not one of those listed on the appraisal report form, such as parkland, the appraiser also must indicate the type of land use and its related percentage. The total of the types of land uses must equal 100%.

Typically, dwellings best maintain their value when they are situated in neighborhoods that consist of other similar dwellings. However, some factors that are typical of a mixed-use neighborhood, such as easy access to employment centers and a high level of community activity, can actually enhance the market value of the property through increased buyer demand. Neighborhoods may frequently reflect a blend of residential and nonresidential land uses.

When different land uses and property types are present in a neighborhood, that fact should be considered a neighborhood characteristic that the appraiser needs to take into consideration when performing the neighborhood analysis and defining the neighborhood boundaries. To confirm that any positive or negative effects of the mixed land uses are reflected in the sales comparison analysis, the appraiser should select comparable sales from within the same neighborhood whenever possible. If this is not possible, the appraiser may need to make neighborhood or location adjustments to the Sales Comparison Approach adjustment grid for any sales that are not subject to the same neighborhood characteristic.