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1004mc

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tbee407

Freshman Member
Joined
Feb 14, 2012
Professional Status
Banking/Mortgage Industry
State
West Virginia
My work often takes me to neighborhoods with limited listing activity. There have been occasions where the 1004MC report had a lot of zeroes in the boxes. I have seen other appraisers prepare an addendum that includes adjoining neighborhoods that they consider competitive. My question is....

Do you prepare the 1004MC and if is has limited to no information so be it and you state that that there is insufficient information from which to draw conclusions?

Or,

Do you prepare an additional 1004MC Addendum that includes listings from competitive areas and include it in your report?

Thanks!
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
The neighborhood is the neighborhood; that should not be expanded just because there are not sales that fit within the 12-month period.
The lack of sales in the neighborhood provides the rationale to go out to competing markets/neighborhoods and get comparables that are outside the defined neighborhood. That logic doesn't work the other way around (the lack of sales within the subject's neighborhood is the logic to expand the neighborhood).

The data may be so poor or scarce in the 1004MC that it cannot be relied upon a market analysis; if that is the case, the appraisal report is supposed supplement it with additional data.

Think about it: That form is designed to present data that was analyzed so that the report can make its market-condition conclusions. It is designed to present the data and summarize the analysis in the appraisal report.
If there is no data that fits the form's pre-determined analysis criteria, that doesn't relieve the report from doing a market analysis using other sources or means and summarizing the analysis in the appraisal report.
A market analysis summary is always required for an "appraisal report" format (the typical residential mortgage appraisals).
A 1004MC could have all "zeros" and be correct and acceptable. But in such a case the report would have to provide a summary of the analysis it did use to analyze the market.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
I have a similar problem sometimes when limiting my search area to neighborhood only. When that happens I try using a 1 square mile grid around the subject property. That some times helps. I know other appraisers who expand the search area to the entire MLS marketing area. I think this could be misleading.
 

A K

Elite Member
Joined
Jul 31, 2013
Professional Status
Certified Residential Appraiser
State
Maryland
What I see often is that the neighborhood is not defined properly which results in very little data in the 1004MC. A lot of times I see the subdivision defined as the neighborhood when the subdivision is inconsistent with the definition of neighborhood.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
]My work often takes me to neighborhoods with limited listing activity. There have been occasions where the 1004MC report had a lot of zeroes in the boxes. I have seen other appraisers prepare an addendum that includes adjoining neighborhoods that they consider competitive. My question is....
Do you prepare the 1004MC and if is has limited to no information so be it and you state that that there is insufficient information from which to draw conclusions?

Actually, the insufficient ( scarce ) data IS your conclusion. If your subject market area of search /neighborhood reveals no listings and only 2 sales in the past year, what does that tell you? Either that the property type is non conforming thus few sales, low demand, or low populated are or or no properties listed because nobody moves...whatever the explanation is for no listings/few sales.. Which then supports decision to include listings from a competing neighborhood and sales either further out or back in time due to such low activity. , or why there are multiple offers if so few listings.

Or,
Do you prepare an additional 1004MC Addendum that includes listings from competitive areas and include it in your report?

I typically don't though have on occasion. I tend to state instead that additional sales and listings were considered and retained in the work file. Or you could include other exhibits of market activity. That's up to you, what makes your report meaningful, what you are comfortable with, or what type of client you have.
 
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CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I have a similar problem sometimes when limiting my search area to neighborhood only. When that happens I try using a 1 square mile grid around the subject property. That some times helps. I know other appraisers who expand the search area to the entire MLS marketing area. I think this could be misleading.

lol...If I only stuck to the SW quadrant of one "city" which is about 70 square miles I would have only 1 sale and one listing in the last year and a half. So I'm using all 300+ square miles. The pickin's are still pretty slim. The closest one on Quarry is not even a usable comp due to it's commercial zoning.
willts sales sw.JPG
 

Fernando

Elite Member
Joined
Nov 7, 2016
Professional Status
Certified Residential Appraiser
State
California
Appraisers need to get sufficient data sample to do a reliable analysis. As an appraiser, you need to know whether to expand the correct area or expand the physical characteristics to get more data. Sometimes I have to readjust my criteria (hate that cause take more time) to get a trend in the market.

My recent report showed a stable market over past year. The odd part was that I did a similar house in November 2016 and the median was $825 in area but now the median is $875,000. Because 1004MC indicated stable, I called market stable. As long as market is stable or increasing, client/lender is happy.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Appraisers need to get sufficient data sample to do a reliable analysis.
If in tune with regional market conditions (say your MSA) then the conclusions from the MC should be an afterthought. Otherwise, you're pretty clueless using only the MC without much data.
raw.gif
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
A general, or regional market analysis is one thing, and the MC analysis is another thing. The 2 can give different results, thus appraisers have to understand what each means and which applies to the subject.

The directive from Fannie about MC form is they want the information from MC form (Mc form are the comps for subject, not a regional /wide search),, they want the comps for subject/research devoted to that to be the market conditions on page one. Thus, if the overall market is decreasing, but subject niche market is stable or increasing, use the results from the analysis of MC form and explain why the market conditions for subject and comps differ from a wider area market trend.
 

ucbruin

Elite Member
Joined
Mar 11, 2014
Professional Status
Certified Residential Appraiser
State
Massachusetts
A general, or regional market analysis is one thing, and the MC analysis is another thing. The 2 can give different results, thus appraisers have to understand what each means and which applies to the subject.

The directive from Fannie about MC form is they want the information from MC form (Mc form are the comps for subject, not a regional /wide search),, they want the comps for subject/research devoted to that to be the market conditions on page one. Thus, if the overall market is decreasing, but subject niche market is stable or increasing, use the results from the analysis of MC form and explain why the market conditions for subject and comps differ from a wider area market trend.

Am I contradicting myself when I say I agree with your opinion but I chose to use the general data rather than the MC data to report market conditions? :)

Page 1 data vs top of page 2/MC data....
 
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