Difference Between Neighborhood Section/1004mc

[Mike Garrett RAA]

I think it is WRONG! One unit housing, at least in my market, would included single family detached, single family attached (patio homes & townhomes), and condos. That is not the same as the top of page two or the MC form since those are COMPARABLE properties. Fannie can play all the games they want trying to justify their mistake in creating the MC form.

Also IN MY MARKET, the market isn't the same for, say, 2 story or 4 Level as it is for ranch style. Please stop trying to make me put square pegs in a round hole.

 

[Kim Whiting]

generally my neighborhood is all sales and my market is the 10-15 most similar to my subject. Those 10-15 go on page 1 and 2 and the 1004MC. They all coincide. No issues. I also note what the neighborhood contains in an addendum.

 

[Pam Wyant]

The only thing I could see differing might be the predominant value, since the 1004 MC doesn't ask for low price, high price or anything about age. Or am I missing something?

 

[Debra Dilley]

I know here we go again.

STIP

Please make the Property Values Trend selection consistent with the Median Comparable Sale Price Overall Trend selection on the 1004MC or explain the apparent inconsistency including a summary of the alternative market data that was analyzed to determine the Median Comparable Sale Price Overall Trend on the 1004MC. When the Property Values Trend reported in the Neighborhood section is not consistent with the Comparable Sale Price Overall Trend on the 1004MC, commentary must be provided. (NOTE: It is our interpretation of Fannie Mae guidelines, based upon significant research, that these trends should correlate, but we realize that there is not unanimity on this topic)

The Selling Guide Published 02/24/205 - Neighborhood Section of Appraisal Report (09/30/2015) appears to collaborate this. https://www.fanniemae.com/content/guide/selling/b4/1.3/03.html

What say you? How would you address this STIP?

is the only way to satisfy this is to use property type as the only search criteria for the 1004MC - this it won't be specific to the subject and the data won't make any sense other than to make them both match

 

[George Hatch]

As I understand it, Fannie/Freddie don't care how appraisers and underwriters who operate everywhere else outside of FannieWorld make the distinction between neighborhood and market segment, nor do they care how misleading it is to a third party or a court when you import the results of the 1004MC grid (for the subject's market segment) into that grid in the Neighborhood section as if it pertains to the entire composition of the neighborhood. All they care about is whether those numbers match.

A comment to that effect and a recap (in the addenda) of the *real* numbers that would otherwise belong in that section would explain to the reader what Fannie is demanding and what you are responding to. In that way you can attribute Fannie's stupidity and technical incompetency to Fannie instead of taking responsibility for it yourself.

 

[Debra Dilley]

I know here we go again.

STIP

Please make the Property Values Trend selection consistent with the Median Comparable Sale Price Overall Trend selection on the 1004MC or explain the apparent inconsistency including a summary of the alternative market data that was analyzed to determine the Median Comparable Sale Price Overall Trend on the 1004MC. When the Property Values Trend reported in the Neighborhood section is not consistent with the Comparable Sale Price Overall Trend on the 1004MC, commentary must be provided. (NOTE: It is our interpretation of Fannie Mae guidelines, based upon significant research, that these trends should correlate, but we realize that there is not unanimity on this topic)

The Selling Guide Published 02/24/205 - Neighborhood Section of Appraisal Report (09/30/2015) appears to collaborate this. https://www.fanniemae.com/content/guide/selling/b4/1.3/03.html

What say you? How would you address this STIP?

I'm having a big problem with this. If you make the 1004MC specific to the subject, just say new construction for detached homes, you run the 1004MC fill out the form, transfer the market trends to page 1, So you complete this report send it in. You then complete another report for a 2 bedroom, 1 bath detached home and you use 2 bedrooms in your 1004MC, run the report, use these trends for market data for the neighborhood on page 1, you have a completely different set of market trends. Both reports go to the same lender - they confused, as I would be, why aren't they the same. Can't think of anyway to make them both match other than to just use the property type as the only search criteria for the 1004MC?

 

[Fnbpos]

Everything on page 1 / neighborhood section is for the entire neighborhood expect the three trend indicator boxes which are specific to the MC data. i.e. COMPARABLES....

Now lets go a step further in this section of the report...... say the neighborhood is easy to define we all would agree on its boundaries. Then say we have had 25 sales in the past 12 months -- one at $100,000 and 24 sales between $125,000 and $178,000. Two properties sold for $130,000, but 18 of 25 sales sold between $150,000 and $178,000 with a median price of $160,000. Also, 10% of the neighborhood homes are on the LAKE but none have sold in the past 2 years. Based on your vast appraisal experience, you speculate that these lake front homes COULD or MAY or PROBABLY would sell for $250,000 to $300,000.

Question: Based on this information.... what are your entries for the low, high and predominant price for this appraisal ??? and why ?

 

[Debra Dilley]

Everything on page 1 / neighborhood section is for the entire neighborhood expect the three trend indicator boxes which are specific to the MC data. i.e. COMPARABLES....

Now lets go a step further in this section of the report...... say the neighborhood is easy to define we all would agree on its boundaries. Then say we have had 25 sales in the past 12 months -- one at $100,000 and 24 sales between $125,000 and $178,000. Two properties sold for $130,000, but 18 of 25 sales sold between $150,000 and $178,000 with a median price of $160,000. Also, 10% of the neighborhood homes are on the LAKE but none have sold in the past 2 years. Based on your vast appraisal experience, you speculate that these lake front homes COULD or MAY or PROBABLY would sell for $250,000 to $300,000.

Question: Based on this information.... what are your entries for the low, high and predominant price for this appraisal ??? and why ?

My head is spinning. If our property is not on the lake, I would state although the lake properties are in the neighborhood, they typically sell for much higher than the non lake properties and I would not include them in market data on page 1. It appears that none of the lake properties have sold and you're scr'd anyway. Talk about manipulating data. I have a problem right now with a new construction appraisal I'm working on. New construction typically has a longer market time due to their being listed prior to construction. Market time on the 1004MC is between 3 and 6 months. And, there is no way around this on the 1004MC because I chose to use only new construction for the 1004MC. But the neighborhood, is under 3 months. They are calling for this revision. I don't know a way around this other then to use no selection other than property type for the 1004MC. Then everything will always match. But, what buyer would even consider looking at a 4 bedroom dilapidated 2 story when they are looking for new unless it's for land. The review appraisers don't care what kind of explanation you have (sorry, I shouldn't have not included appraiser's, the people are usually just list checkers and have never had to complete an appraisal), because FANNIE says so. I am now completing my revision by using property type only. I use to get around the difference by just stating the facts and that FANNIE didn't say it had to match. I bet there wasn't an appraiser on the board who came up with this change. What would you do or what are you doing to comply.

 

[Mike Kennedy]

"1004MC FAQ MAY 2015
See Qs 16 & 17

Q16. What type of properties are to be analyzed for the data reported in the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report form?
The data regarding trends to be reported in the One-Unit Housing Trends section must be
reflective of those properties deemed to be competitive to the property being appraised.
Additional commentary should be provided on the other segment(s) of the neighborhood when segmentation is present to aid in understanding the overall neighborhood dynamics.

Q17.Are the trends that are reported on the Market Conditions Addendum to the Appraisal Report (Form 1004MC) the same trends that are to be reported in the One-Unit Housing Trends section of the appraisal report (Form 1004)?
Yes.
The conclusions regarding trends that are obtained from the Form 1004MC must be the same trends reported in the Neighborhood trends section of the Form 1004.

The information reported on both forms must be consistent to provide the lender with a clear and accurate understanding of the market trends and conditions present in the subject neighborhood,
based on properties that are considered competitive with the subject being appraised."
.
https://www.fanniemae.com/content/FAQ/appraisal-property-report-faqs.pdf

 

[The Bob]

What sense does it make to analyze a segment of the market the subject is not part of?

Lets take post #17. If I'm appraising one of the lakefront homes, how relevant is the data on non-lakefront homes to developing a credible OMV?