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Deleted member 128537
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This is what I do. It may not be what Fannie wants, but at that point I don't care.
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1004mc
- Thread starter tbee407
- Start date
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This is what I do. It may not be what Fannie wants, but at that point I don't care.
form1025
Member
- Joined
- Jul 11, 2009
- Professional Status
- Certified Residential Appraiser
- State
- Illinois
D
Deleted member 134708
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"one-unit housing trends" page 1
"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" 1004MC
1004MC and page 1 must match" FNMA
To reconcile these conflicting statements pre-printed on the form the reader has in their hands, I explain which instructions I followed, why, how and what data is where, where came from etc. I do this with a 3 page PDF printout.
No matter which way you do it, the FNMA way or the 1004/MC pre-printed instructions way....You must state which way you did it and why. Otherwise the report would be misleading.
I read "one-unit housing trends".....yet you followed FNMA and checked increasing based on comps only and did not tell me.
I just read FNMA selling guide, I assume you followed the selling guide FAQ and the page 1 trends are comps only, not "one-unit housing trends." You followed the instructions and did "one-Unit" and not just comps. You didn't tell me you followed the instructions (which seems ludicrous to have to explain that) which could be misleading.
I follow the instructions pre-printed on the forms....explain to reader with 3 pages of PDF market conditions, what data is where, why, what and how.
FNMA can very easily solve this problem. Change out 1 unit housing to say "comparable properties" and be done with the FAQ and argument.
"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" 1004MC
1004MC and page 1 must match" FNMA
To reconcile these conflicting statements pre-printed on the form the reader has in their hands, I explain which instructions I followed, why, how and what data is where, where came from etc. I do this with a 3 page PDF printout.
No matter which way you do it, the FNMA way or the 1004/MC pre-printed instructions way....You must state which way you did it and why. Otherwise the report would be misleading.
I read "one-unit housing trends".....yet you followed FNMA and checked increasing based on comps only and did not tell me.
I just read FNMA selling guide, I assume you followed the selling guide FAQ and the page 1 trends are comps only, not "one-unit housing trends." You followed the instructions and did "one-Unit" and not just comps. You didn't tell me you followed the instructions (which seems ludicrous to have to explain that) which could be misleading.
I follow the instructions pre-printed on the forms....explain to reader with 3 pages of PDF market conditions, what data is where, why, what and how.
FNMA can very easily solve this problem. Change out 1 unit housing to say "comparable properties" and be done with the FAQ and argument.
norapp
Member
- Joined
- Jul 11, 2016
- Professional Status
- Certified Residential Appraiser
- State
- New York
My Neighborhood Boundaries On Page 1 Is My Search Area. If There Are Not Enough Sales Or Listings I State This. The MC Report Is Only For Sales You Considered As Possible Comps. When There Is Not Enough To Develop A Comprehensive Report I Run A Report For All 1 Family's In The Search Area And Write A Line Or Two About The Market As A Whole. My General Remarks Start With My Criteria For This Report Is For Similar Sales Built Between ---- With A GLA Between ---- And ---- Sf. I Also Include This Comment Re: Listings. Listing Data Is Not Always Reliable As Listings Expire, Cancelled/Withdrawn Or Have A Status Change From Active To Pending/Contingent. The Only Reliable Data For Listings Is The Current Data. Absorption Rates For Listings Can Nor Be Confirmed With The Information Available. Also The Data For The Above Report Is Only For Similar Homes Does Not Include All Sales Or Reflect The Market As A Whole
D
Deleted member 128537
Guest
Problem: Just reading this thread tells me that the 1004MC is a waste of time. I do it one way. Someone else does it another way. So why do it at all. The only reason is because FNMA doesn't trust appraisers to give them the straight scoop on market data. HOWEVER I have seen appraisers use the 1004MC and it still is a bunch of BS. They say the market is "in balance" when there is a 2 year supply of homes on market. But according to their search criteria (which they don't disclose) it's in balance.
I went through this back in 2005 and 2007 before the crash. I was marking "over supply" in my area, and lenders were literally going berserk. But I said, "Well if the # of sales is 70 for 6 months, and there are 200 listings, then what does that tell you?"
The fact is that if an appraiser doesn't want to do the market analysis correctly the 1004MC isn't going to make one twit of difference.
I went through this back in 2005 and 2007 before the crash. I was marking "over supply" in my area, and lenders were literally going berserk. But I said, "Well if the # of sales is 70 for 6 months, and there are 200 listings, then what does that tell you?"
The fact is that if an appraiser doesn't want to do the market analysis correctly the 1004MC isn't going to make one twit of difference.
hastalavista
Elite Member
- Joined
- May 16, 2005
- Professional Status
- Certified General Appraiser
- State
- California
But isn't that the case with any component of the valuation analysis?
D
Deleted member 128537
Guest
I agree! But the solution by some is to simply add more forms to the report. Increase the scope is the solution it seems. But it doesn't matter in the long run because just increasing the # of forms and the scope doesn't solve the problem if the appraiser doesn't analyze the data correctly. It's just more stuff where there are errors.
Put it this way: You can throw more s*** against the wall, but at the end it's just a pile of s****.
hastalavista
Elite Member
- Joined
- May 16, 2005
- Professional Status
- Certified General Appraiser
- State
- California
IMO, and I base this on 100's of residential appraisals I've reviewed, this is the situation as I see it:
Pre-1004mc:
Two groups of reports:
A. Those who did an adequate or better level of market analysis and included it in the report that met the minimum standard requirements
and
B. Those who did not
Group #B was, relatively speaking, very large.
Post-1004mc:
C. Those who do an adequate or better level of market analysis which, for GSE-guideline required work includes the 1004mc, and it meets the minimum standard requirements
and
D. Those that do not meet the minimum standards even with the 1004mc
My observation is that the size of group #D is smaller relative to what group #B's size pre-1004mc.
I don't like the form (never have). It doesn't change what I do think is necessary and it really doesn't add that much more work to what I do. That could be a function of my market and the tools I use (and pay for) to automate the form-filling function of the 1004mc. My fees reflect that.
But I do think it has reduced the number of reports, based on my observations, that fail to provide an adequate market analysis necessary to meet the minimum requirements.
IMO, it has moved the needle toward "better" vs. what was before. But "better" overall isn't where we should be.
Many reports still have a long way to go. But at least many report writers are now starting to move in that direction. And, as evidenced by this thread, what constitutes the necessary market analysis is a hot topic.
This was never a residential discussion (that I recall) pre-bust and only appeared on the radar screen at the bust.
And, I would venture to predict that if a market starts to significantly shift in one direction or another, those who do a sub-adequate job in their 1004mc reliance and presentation will start to see requests for additional, supplemental information.
So my point is this (and is based on my observations):
1. The 1004mc form in many cases is inadequate but clearly the instructions to use the form take into account that contingency (supplement as necessary)
2. With the introduction of the 1004mc, what exists now as far as market analysis and reporting, on average, is better than what existed before, on average
3. While the level of analysis has, on average, improved, it is no where near where it should be
#1 is a fact.
#2 is my observation (but the GSEs report the same thing)
#3 is not a GSE issue but an appraiser issue. The appraiser can always supplement the 1004mc to do what is necessary for the market analysis to be relevant.
UAD didn't change the condition of the homes nor should it have impacted how we analyze those conditions. It merely required us to present the data a certain way. It doesn't change the way we analyze the data to make comparisons and adjust for differences.
The 1004mc doesn't change what the market is or impact how the market is reacting. It merely requires us to present the data a certain way. It doesn't change the way we analyze the market to make comparisons and adjust for changes in condition.
Sometimes I have an assignment where I need to go into detail about the strengths and weaknesses of the data, how that may impact the analysis, and what I did to overcome those weaknesses.
I just do that often and specific to the market analysis when I'm analyzing market conditions and the 1004mc is part of that analysis. The 1004mc might cost me an extra $3 in the report and an extra 5-minutes for the automated process to populate the data fields and for me to comment on that specific data and for me to reference the intended user to the supplemental data. I've factored that into my fee.
If it is factored into my fee, it isn't extra work.
Like I said to another poster:
If the argument is that 1004mc takes additional time that I don't find necessary or useful (but the client requires it) so we should factor that into our fee, I'll join in on that argument all day long.
What I won't let myself do (regardless of the satisfaction it may bring or the ease in getting on to the next assignment) is to complete it incorrectly contrary to what the instructions (expectations) require. The whole point of my supplemental market analysis is to do what I think is necessary to make a credible conclusion; my supplemental will either confirm the 1004mc's indication or conclude a more credible conclusion.
The same goes for the cost approach. Just because I don't think it is necessary, if I do it, I'm going to do it correctly. A client or state auditor isn't going to accept,
The data considered and analyzed in the sales comparison approach is superior to that of the cost approach and therefore I'm relying on the SCA.
I do the same for the 1004mc:
The data considered and analyzed in my supplemental market analysis is superior to the 1004mc and therefore I am relying on my supplemental analysis to make my market condition conclusions.
After 7 years of having this form, are we really still arguing about it and how to deal with it (This question is not directed at you HSH but to all of us collectively)?
I can think of a lot of other areas where I'd like to vent my frustration. The 1004mc isn't one of them because there is a workaround that addresses all of its shortcomings.
Pre-1004mc:
Two groups of reports:
A. Those who did an adequate or better level of market analysis and included it in the report that met the minimum standard requirements
and
B. Those who did not
Group #B was, relatively speaking, very large.
Post-1004mc:
C. Those who do an adequate or better level of market analysis which, for GSE-guideline required work includes the 1004mc, and it meets the minimum standard requirements
and
D. Those that do not meet the minimum standards even with the 1004mc
My observation is that the size of group #D is smaller relative to what group #B's size pre-1004mc.
I don't like the form (never have). It doesn't change what I do think is necessary and it really doesn't add that much more work to what I do. That could be a function of my market and the tools I use (and pay for) to automate the form-filling function of the 1004mc. My fees reflect that.
But I do think it has reduced the number of reports, based on my observations, that fail to provide an adequate market analysis necessary to meet the minimum requirements.
IMO, it has moved the needle toward "better" vs. what was before. But "better" overall isn't where we should be.
Many reports still have a long way to go. But at least many report writers are now starting to move in that direction. And, as evidenced by this thread, what constitutes the necessary market analysis is a hot topic.
This was never a residential discussion (that I recall) pre-bust and only appeared on the radar screen at the bust.
And, I would venture to predict that if a market starts to significantly shift in one direction or another, those who do a sub-adequate job in their 1004mc reliance and presentation will start to see requests for additional, supplemental information.
So my point is this (and is based on my observations):
1. The 1004mc form in many cases is inadequate but clearly the instructions to use the form take into account that contingency (supplement as necessary)
2. With the introduction of the 1004mc, what exists now as far as market analysis and reporting, on average, is better than what existed before, on average
3. While the level of analysis has, on average, improved, it is no where near where it should be
#1 is a fact.
#2 is my observation (but the GSEs report the same thing)
#3 is not a GSE issue but an appraiser issue. The appraiser can always supplement the 1004mc to do what is necessary for the market analysis to be relevant.
UAD didn't change the condition of the homes nor should it have impacted how we analyze those conditions. It merely required us to present the data a certain way. It doesn't change the way we analyze the data to make comparisons and adjust for differences.
The 1004mc doesn't change what the market is or impact how the market is reacting. It merely requires us to present the data a certain way. It doesn't change the way we analyze the market to make comparisons and adjust for changes in condition.
Sometimes I have an assignment where I need to go into detail about the strengths and weaknesses of the data, how that may impact the analysis, and what I did to overcome those weaknesses.
I just do that often and specific to the market analysis when I'm analyzing market conditions and the 1004mc is part of that analysis. The 1004mc might cost me an extra $3 in the report and an extra 5-minutes for the automated process to populate the data fields and for me to comment on that specific data and for me to reference the intended user to the supplemental data. I've factored that into my fee.
If it is factored into my fee, it isn't extra work.
Like I said to another poster:
If the argument is that 1004mc takes additional time that I don't find necessary or useful (but the client requires it) so we should factor that into our fee, I'll join in on that argument all day long.
What I won't let myself do (regardless of the satisfaction it may bring or the ease in getting on to the next assignment) is to complete it incorrectly contrary to what the instructions (expectations) require. The whole point of my supplemental market analysis is to do what I think is necessary to make a credible conclusion; my supplemental will either confirm the 1004mc's indication or conclude a more credible conclusion.
The same goes for the cost approach. Just because I don't think it is necessary, if I do it, I'm going to do it correctly. A client or state auditor isn't going to accept,
"You did this wrong. Why?"
"Because it is meaningless, no one looks at it, and so who cares!"
I'll do it correctly and address the reliability of my results in my value reconciliation:"Because it is meaningless, no one looks at it, and so who cares!"
The data considered and analyzed in the sales comparison approach is superior to that of the cost approach and therefore I'm relying on the SCA.
I do the same for the 1004mc:
The data considered and analyzed in my supplemental market analysis is superior to the 1004mc and therefore I am relying on my supplemental analysis to make my market condition conclusions.
After 7 years of having this form, are we really still arguing about it and how to deal with it (This question is not directed at you HSH but to all of us collectively)?
I can think of a lot of other areas where I'd like to vent my frustration. The 1004mc isn't one of them because there is a workaround that addresses all of its shortcomings.
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Valueseeker
Junior Member
- Joined
- May 19, 2016
- Professional Status
- Certified Residential Appraiser
- State
- Massachusetts
Hey resguy,
I'm too late to ask in the conversation but I wanted to know how you handle this if pg1 matches the top of page 2.
What if you have to go outside the neighborhood and yourcomp your using is higher or lower than the range you've indicated?
I'd like to do it the way you suggest but I don't know what would happen in this scenario?
Neighborhood values- i state all the single unit values and that goes on page 1 and on the MC I will refine it with additional filters to what is comparable to the subject and use that data for the MC and top of page 2. Is this ok to do? This is the way I learned to do it.
The neighborhood data (if there's enough of it) is what I explain and fill out for the trend boxes.
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