1004mc And Comps

[Peter LeQuire]

Not to be outdone, triplicate.

 

[Peter LeQuire]

Every time this comes up, I marvel at the confusion this has created and continues to create. Is it by design?

Why?

 

[The Bob]

We all know the problem with the 1004MC especially in rural markets or markets with little activity. We're advised to only use truly comparable sales which often leaves us with an inadequate sampling. But A Fannie FAQ talks about using comps that are not truly comparable.

Does this perhaps mean that we can use more sales to populate the 1004MC?

Q32. Is it acceptable for an appraiser to use sales that are not truly comparable to the subject?

Yes. If there is a shortage of truly comparable sales in the area where the subject property is located, either due to the nature of the property improvements or the relatively low number of sales transactions in the neighborhood, the appraiser might need to use as comparable sales, properties that are not truly comparable to the subject property. In some situations, sales of properties that are not truly comparable to the subject may simply be the best available and the most appropriate for the appraiser’s analysis. The use of these sales is acceptable provided the appraiser adequately documents the analysis and explains why these sales were used. This may often be the case in rural locations where the best and most appropriate sales may not be truly comparable to the subject being appraised.

That question is not specific to the 1004MC.

In a situation where there are no truly comparable properties, I would still put "N/A" or "0" in the MC grid and then comment on the broader market in the comments section of the 1004MC and use that data to support my conclusions for "Single Unit Housing Trends" on page 1. The top of page 2 would show "N/A" or "0" also.

 

[hastalavista]

We all know the problem with the 1004MC especially in rural markets or markets with little activity. We're advised to only use truly comparable sales which often leaves us with an inadequate sampling. But A Fannie FAQ talks about using comps that are not truly comparable.

Does this perhaps mean that we can use more sales to populate the 1004MC?

I vote no as well.
Indeed, in a CE presentation I give, I argue that the lack of data to populate the 1004MC provides reason and supports the decision for going (a) further back in time, (b) farther out in distance, or (c) using properties that would not normally be categorized as comparable to the subject.

So I'd populate the 1004MC with the 2 sales and zero listings that the comparable search captures (of course, like you, I clearly state what the search criteria is... in fact, I'd argue this is required information on the form). Then, I state that it is evident from the 1004MC analysis that ideal sales to use as comparables do not exist. Therefore, I did blah, blah, blah; the result is the 4-sales in the grid which represent the best comparables to consider and analyze for this assignment.

 

[J Grant]

Agree with Denis and those in that camp.

The lack of data in MC form supports decision and need to go further back in time for comps ( since MC form only addresses past year sales), or for distant but competing market areas when appropriate.

Lack of sales or listings on an MC form can also indicate lack of marketability or conformity of a property, both of which are important to Fannie. A property showing scant sales could be in an area with few comps due to being rural or the like, or it could indicate a property that is an oddball and thus sees few like sales. Which can then bring up questions of conformity to area, possibility of over improvement and other issues. I believe this is why Fannie wants to narrow the data by design on the MC form. I also agree the limitations imposes a need for additional analysis or data, which most of us would do anyway.

 

[Pam Wyant]

It is a screwed up form that is a poor substitute for a real analysis, unless the subject is in a cookie cutter subdivision with a lot of market activity.

 

[Lee Lansford]

Every time this comes up, I marvel at the confusion this has created and continues to create. Is it by design?

Why?

No confusion on my end of things regarding this matter. None whatsoever.

How's everything on your end of things, Peter? Life is good, yes? Yes.

 

[Jo Ann Meyer Stratton]

Since I am in an area with few offerings for sale and even fewer closed sales, the 1004MC at times has three sales for the entire 12 months and maybe two current listings. I do a search for both competing and comparable properties (net and gross adjustments typical exceed 15-25%), then print out a one line list of those offerings. I include that page in my report as well as graphs for all residential properties in the county. With only about 350 closed sales of all properties per year of all types and price ranges and a graph of the median price range over the past ten years, I think I have plenty of support for the trends that I indicate on both the 1004MC and the front page. Haven't heard a single complaint or comment from any client since the 1004MC started, even if many blanks on the 1004MC are zero. So it all goes back to explain, explain, and then explain some more.

 

[Tim The Enchanter]

If the data is too limited using reasonably comparable sales, it still goes in my 1004MC.
Then I comment that it is too limited to be meaningful, so the expanded market analysis was relied on.
Then, I expand into adjacent areas, or to a wider GLA range, or both or whatever, to get enough data to make sense out of things.
Hopefully.

 

[jay trotta]

If you are in the Land of Plenty, it may work; it has never worked in my area; therefore, it is a known "STIP" provider that I can't get rid of and wastes an unbelievable amount of time. I have tried attaching & get call backs to put it on the form. The connect the Dot people are out in farce, even though most have never done any field work.