1004MC, Lack of Data an Appraiser Guess

[Green Hornet]

I submit the report, 1004MC has 1 sales in each period. The listing data is similar. I don't check the trend boxes and explain why.

The client is telling me that HUD requires the boxes to be checked because the appraiser should be familiar enough with the market to basically guess the trends.

This sounds fishy, but in this environment, anything seems possible.

Does anyone have a link to such a statement from HUD?

 

[hastalavista]

The client is telling me that HUD requires the boxes to be checked because the appraiser should be familiar enough with the market to basically guess the trends.

This sounds fishy, but in this environment, anything seems possible.

Does anyone have a link to such a statement from HUD?

It is fishy; in as much as the appraiser shouldn't guess and HUD doesn't want guessing.

If the information is insufficient in the form-driven 1004mc analysis, the appraiser should state what other data/analyses he/she used to form an opinion of the market trends.
In my case, I typically rely on the larger, geographically-defined competitive market as a proxy. I state that the quantity of data contained within the 1004mc analysis is insufficient to draw any reliable conclusions, so I've relied on the larger competitive market analysis contained within the 1004 market conditions section.
Maybe 2 out of 10 times this is the case in my markets.

 

[OminousRun]

Check the stable boxes with "*" instead of "x", begin comment section below with * and proceed to explain that due to low sample size of available sales data inferences about the current trends within the subject's neighborhood cannot be made.

I would then follow that with a comment about general market trends of the subject's greater/expanded market area, such as "median residential property values have been declining in the subject's area since 2007.......yadda yadda"

 

[Green Hornet]

Thank you for your input. What Denis suggests is what I do when MC data is insufficient.

Until now, it has not been a problem.

I thought that maybe HUD had stuck such a comment in the fine print of a Q&A that I missed.

 

[Lee Lansford]

Up until lately (with increasing sales activity), I have more often than not been unable to distinguish a "trend" based upon the set of data that populate the 1004MC. Thus, I believe that it would be misleading for me to conclude a trend when the data are insufficient to reach a reasonably supported conclusion.

 

[Riick]

"As noted earlier in this report, trends derived from the data requested by the 1004mc may well be inaccurate; the amount of data available appears inadequate.
“As a result, the appraiser has merely checked off boxes above based on visible trends shown for time periods requested.
“Please see appraiser's MLS Market Data Addendum."

 

[Mile High Trout]

Just off hand, I write something like this:

Additional MC notes: The appraiser has checked MC boxes with congruent opinions developed from the 1004 form. The MC results are felt to be less pointed towards the appraisal assignment development in this specific assignment because limited data was available in the specific marketplace.

You could go on and on to meet your needs. If the market data was limited or you had to narrowly refine your search methods to come up with acceptable and pointed above grid figures and 1 unit data trends, that always creates problems with the MC.

Something I almost always include in the report is a description of my data research packet, and filters used to create such a packet. Then stating that that data packet was used for 1 unit, above grid figures, and MC trend figures. This typically satisfies the lender because they can be confident they are at least getting 2 out of 3 important and relevent data sets to rely on. Everyone knows the MC form is not working in every appraisal scenario.

I also state in MC data section that the MC is intended to provide a broad or very limited analysis of the marketplace. (subbing language depending on my approach - never use canned!) Going on to further state that the MC data may have been limited due to the necessary approach of limiting data the appraiser had to follow in order to produce credible 1004 results.

In my personal opinion, the MC works best for typical suburban sprawl for only med to large sized uniform neighborhoods. Outside of typical, the MC gets less reliable in my opinion. If that's your opinion, state it. The appraisal is a report regarding professional opinion. That's a full circle opinionated and congruent approach.

 

[Meandering]

Check stable, and comment that the market has been heavily manipulated over the past year, however as of the effective date the manipulation has died down but could be ramped up for the comming elections, or not, and that forcasting market manipulations and their potential consequences, intended or not, is beyond your expertise.

 

[Green Hornet]

Check stable, and comment that the market has been heavily manipulated over the past year, however as of the effective date the manipulation has died down but could be ramped up for the comming elections, or not, and that forcasting market manipulations and their potential consequences, intended or not, is beyond your expertise.

And then...their head explodes

 

[Mile High Trout]

Good one Marion.

Barometric pressure just skyrocketed!