1004mc

[DWiley]

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.

I wish I could give this one 10 likes. Forget underwriter mentality. The subdivision is not the neighborhood. Homes within a mile are not the neighborhood.

 

[residentialguy]

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?

Actually, you do both!

The data on the form itself (which is strictly reserved for true comparables within the subject's neighborhood) does not have to line up the "overall trends" boxes on the form or page one; most likely the data is too small to be a reliable indicator of trends. Never change that data. It is what is is. Please re-read that until it sinks in.

When that happens, (which is probably 95% of the time in most markets), you need to do ADDITIONAL analyses with expanded parameters until you can see/prove/show the actual trends. You do this in your additional comments. That combined with the form becomes your market analysis.

So, your boxes on the form still contains zeros, but your additional analyses that you included provided you with supportive data to fill the trends.

You may be thinking "why keep the comp data in the neighborhood if it is too small to represent an accurate trend?" Answer: Couple reasons. They want to know what other comparable homes are doing in the subject's neighborhood. It also is used to populate the top of page 2. If you have to go out of your neighborhood or back further in time to find comps for your SCA, now you have proof to show why. Why did I have to use a comp in a different neighborhood? Look at the 1004MC data...there are no comps available!

 

[J Grant]

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....

It's not my opinion, it's the directive from Fannie, they want the results of MC analysis on page 1 trend section. So if you "choose" to use general data rather than MC data for market conditions, you should disclose it,
otherwise you are being misleading, because the MC form is a Fannie form and if you use it, the expectation is you follow the directive about it...what clients would expect.

Imo the form on page one should have two sections one for MC results and one for general market trend, to avoid this where some appraisers follow the directive and some don;t, and to differentiate one from the other. But the forms are not set up that way. Just because we have to use an MC form and apply result of analysis of MC data to neighborhood trend, does not mean we can not also comment or include exhibits about general market data/trends as well.

 

[J Grant]

I wish I could give this one 10 likes. Forget underwriter mentality. The subdivision is not the neighborhood. Homes within a mile are not the neighborhood.

exactly. The "neighborhood" for a subject is that area the typically motivated buyer would consider as a substitute for subject ( and we should be getting our comps from that same area ) . Sometimes the neighborhood is the subdivision or under a mile, other times it is a larger area and over a mile. The predominant characteristics of subject property determine what alternate substitute comps location for it would be.

 

[Rich Heyn]

Here's a link to the first of a five-part series of blogs on the 1004MC. It directly addresses the issue at hand.

https://www.aciweb.com/1004mc-no-data-now-what/

 

[ucbruin]

It's not my opinion, it's the directive from Fannie, they want the results of MC analysis on page 1 trend section. So if you "choose" to use general data rather than MC data for market conditions, you should disclose it,
otherwise you are being misleading, because the MC form is a Fannie form and if you use it, the expectation is you follow the directive about it...what clients would expect.

Imo the form on page one should have two sections one for MC results and one for general market trend, to avoid this where some appraisers follow the directive and some don;t, and to differentiate one from the other. But the forms are not set up that way. Just because we have to use an MC form and apply result of analysis of MC data to neighborhood trend, does not mean we can not also comment or include exhibits about general market data/trends as well.

1, Yes I do explain why page 1 and MC may differ.
2. Maybe I'm way off but doesn't RH's post/link support my interpretation?

 

[Mike Garrett RAA]

We have two experts posting on this, Danny Wiley and Rich Heyn...consider this source and act accordingly.

 

[J Grant]

1, Yes I do explain why page 1 and MC may differ.
2. Maybe I'm way off but doesn't RH's post/link support my interpretation?

No, because what you said is you use general market data. What the post article says ( excellent) is that if data on grid is too limited for a sales trend page one analysis, expand search to competitive properties for the subject ( which is not the same as general market data)

 

[residentialguy]

We have three experts posting on this, Danny Wiley, Residentialguy and Rich Heyn...consider this source and act accordingly.

Corrected it for you

 

[residentialguy]

1, Yes I do explain why page 1 and MC may differ.
2. Maybe I'm way off but doesn't RH's post/link support my interpretation?

They should not differ.