Purposely Mis-reporting Form Requirements ?

[Cob]

Below are the instructions for the 1004 MC, I know it's no longer "required", but I have always had a problem with the wording because it contradicts itself, on the one hand, it states appraiser must provide support for "overall market conditions as reported in the Neighborhood section of the appraisal report form" then the last sentence states,
"Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the
subject property." Like a LOT of things that have to do with appraising, it's about as clear as mud.


******Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding
housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent
it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an
explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data
in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an
average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the
subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.******

 

[Sandra Koutsopoulos]

Below are the instructions for the 1004 MC, I know it's no longer "required", but I have always had a problem with the wording because it contradicts itself, on the one hand, it states appraiser must provide support for "overall market conditions as reported in the Neighborhood section of the appraisal report form" then the last sentence states,
"Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the
subject property." Like a LOT of things that have to do with appraising, it's about as clear as mud.


******Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding
housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent
it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an
explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data
in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an
average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the
subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.******

Exactly. Greater neighborhood spread on pg 1. Similar, comparable, competing properties top of pg2. Yup. And 1/2 the time, if I report it that way, I get beat up from the 'reviewer'. So depending on the audience, and my tolerance for irritation that day, I'll report it one way or another. I do, however, write commentary in the addendum page which has the cost calculations, that not all 'comparables' on top of pg 2 are very comparable to the subject, but those comparables are the listings and sales from which the comps in the report were chosen.

 

[ZZGAMAZZ]

So 5 dozen posts later without a definition decision...and with the two or three most succient posts in the thread purposely murking the controversy by describing markets in which the market for competing is predominant to the extent that competing sales "are" tue neighborhood market; a very meaningful post about murky 1004MC instruction; and a post of peripheral significance regarding the difference depending on the downwind client-although the AF often describes that distinction, I for one never once knew to whom my report was headed eventually--although I'm wondering if the Intended User should include that information, if the ultimate user presumably holds the priority position. But WTF I was just curious about the four horizontol sectons atop the page 1 Neighborhood section of a 1004 form.

 

[Tom D]

Gee.
Page 1 you are describing the house and neighborhood. So what is that range.
Page 2 you are describing the subject and comps. So, what is that range that you are considering as maybe comparable.
7 pages on this post, so sad.

 

[DWiley]

NEVERTHELESS, my post pertains exclusively to the four horizontal areas at the top of the 1004 Neighborhood section. Neighborhood Characteristics and Present Land Use %age are straightforward, but the AF advised convincingly a couple of years ago thaat the "One Unit Housing Trends" pertain to the entire Neighborhood... but the "One Unit Housing" numbers --age & value--pertain to Competing properties only--and it does't make sense to me that the two One-Unit Housing descriptors can possibly pertain to two different metrics.

This is the reverse of the proper way to complete the NEIGHBORHOOD section on form 1004/70.

Most of the data in this section should be based on the entire neighborhood. The exception is the One-Unit Housing Trends, which should be based on the segment of homes competing with the subject.



This is because in any given neighborhood different market segments may exhibit different trends. The trends reported in that case should be the trends that affect the subject property, not the overall trend for the neighborhood.

I live in a large development with a variety of homes sizes. At one point in time it was very clear from market data that the prices for larger homes in the area were declining, while at the same time prices for the smaller homes were increasing. For an appraisal report in this neighborhood at that time, most of the data reported would be the same, regardless of the home type, but the One-Unit Housing Trends would be different, depending on the market segment that the subject property was in.

Confusion on this issue is one reason why the new UAD addresses the market area rather than the neighborhood.

 

[Tom D]

This is the reverse of the proper way to complete the NEIGHBORHOOD section on form 1004/70.

Most of the data in this section should be based on the entire neighborhood. The exception is the One-Unit Housing Trends, which should be based on the segment of homes competing with the subject.

Are you saying that the one-Unit Housing Trends is not the neighborhood boundaries, but the subject's submarket of the neighborhood.

 

[DWiley]

Are you saying that the one-Unit Housing Trends is not the neighborhood boundaries, but the subject's submarket of the neighborhood.

That is what GSE guidance says.

 

[Zoe]

That is what GSE guidance says.

Makes sense with just brief summary. In your overall subdivision, you likely had the smaller homes pulling down the property values of the overall larger home section and you had the larger more expensive homes pulling up the value of the section where the smaller and less expensive homes were located.

I can't remember the appraiser that was really good on here but the parameters being searched need to be properties that actually compete with the subject property.

Shelby County is so heterogeneous in many many ways. People working in cookie cutterville don't have to worry about those things.

Many appraisers on this forum have admitted they work cookie cutterville.

 

[Tom D]

DWiley, You are correct, but i forgot that. I always filled it in right, but accidentally.

When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report, 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.

Many appraisers on this forum have admitted they work cookie cutterville.

HEY, just because all my little urban row homes look alike doesn't make me using that template an easier appraisal. Just like subject 20 minutes away. with all the comps within 3 city blocks. Now that doesn't makes my appraisals cookie cutterville. It's called a cookie cutteradelphia.

 

[Zoe]

Take for example in 1 unit housing trends in the neighborhood boundaries. I might have a low of $5k and a high $5 million. I tend to navigate towards the median for my predominant although average and median are usually pretty close and that range includes properties that don't compete with the subject property. Same on differences in age within the neighborhood boundaries.