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FHA Listings

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MNRural

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Joined
Oct 11, 2006
Professional Status
Certified General Appraiser
State
Minnesota
I'm guessing this has been addressed, but I don't have time to do a search. FHA is vague on when listings are required. Does anyone know when? When a changing market only? Just because property values are increasing does this make it a 'changing' market? Just curious what others have interpreted.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
Its just a lender overlay and it became common for lenders to ask for listings or pending sales.
 

MNRural

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Joined
Oct 11, 2006
Professional Status
Certified General Appraiser
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Minnesota
Not sure what do you mean by overlay? "cover the surface of (a thing) with a coating"
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
The two listings (or pending) comp requirements is under the heading (F) FHA Appraisal Requirements in Changing Markets. So yes, in markets that are increasing or decreasing you must include listings/pendings.

See the 9/30/2016 revision of 4000.1, Pages 523 - 524.

(a) Increasing Markets
In an increasing market, positive Market Condition Adjustments should be applied if there is sufficient proof of the trend from a credible source based on a thorough analysis of specific market trends and as evidenced by a sale and resale comparison.

(2) Required Analysis and Reporting

The Appraiser must accurately report market conditions and determine when housing trends are increasing, stable or declining. The Appraiser must provide a summary comment as to the continuance of the current trend or if the trend appears to be changing, and provide support for all conclusions. If the Appraiser bases the adjustment on a published source, the Appraiser must include a copy of which must be included in the addendum.

The Appraiser must include an absorption rate analysis, and at least two comparable sales that closed within 90 Days prior to the effective date of the appraisal. If the Appraiser cannot comply with this requirement due to the lack of market data, a detailed explanation is required.

The Appraiser must include a minimum of two active listings or pending sales on the appraisal grid (in addition to at least three recently settled sales).

For active listings or pending sales, the Appraiser must:

 ensure they are market tested and have reasonable market exposure to avoid the use of overpriced properties as comparable properties;
 use the actual contract purchase price, or, when not available, adjust comparable properties to reflect listing to sale price ratios;
 include the original list price, any revised list prices, and calculate the total Days on Market (DOM). The Appraiser must provide an explanation for the DOM that does not approximate periods reported in the “Neighborhood” section of the appraisal reporting form;
 reconcile the Adjusted Values of active listings or pending sales with the Adjusted Values of the settled sales provided; and
 if the Adjusted Values of the settled comparable properties are higher than the Adjusted Values of the active listings or pending sales, determine if a Market Condition Adjustment is appropriate.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
In my market we are either going up or down so I guess listings are going to be included for a long time and CAN did a great job of laying it out :)
 

NC Appraising

Senior Member
Joined
Apr 28, 2006
Professional Status
Certified Residential Appraiser
State
North Carolina
Dear XXXX,

Thank you for contacting the FHA Resource Center. A response to your inquiry is provided below. If the information does not fully address your question, please forward this email (do not reply) to (1-800-225-5342) or visit our online knowledge base at www.HUD.gov/answers, 24 hours/7 days a week.

Yes pending sales or listings at least two must be provided. See below (4000.1 page 524 currently, PDF version).


MY EMAIL:

Good Morning,

I am seeing an increase in lenders requiring 2 active or pending listings for FHA appraisals, whether the market is stable, declining or increasing.

Does HUD now require 2 active or pending listings for all market trends?

Please be specific when HUD required 2 active or pending listings.

***Also, if none are available can we just comment? In this current market, and in rural or surburban markets, 1-2 active listings are hard to find. Of course we can use non-comparable listings and make "very large" adjustments, but how does that led to a more credible report?



From FHA Online Q&A:
The appraiser must accurately report market conditions and determine when housing trends are increasing, stable or declining. The Appraiser must provide a summary comment as to the continuance of the current trend or if the trend appears to be changing, and provide support for all conclusions. If the appraiser bases the adjustment on a published source, the Appraiser must include a copy of which must be included in the addendum. The appraiser must include an absorption rate analysis, and at least two comparable sales that closed within 90 Days prior to the effective date of the appraisal. If the appraiser cannot comply with this requirement due to the lack of market data, a detailed explanation is required. *** The appraiser must include a minimum of two active listings or pending sales on the appraisal grid (in addition to at least three recently settled sales).*********

ME:
How I read the above, if the appraiser cannot find 2 closed sales within the past 90 day's, then just explain. As for the active listings, it say's the appraiser "must" and cannot just explain. I am I reading this right?
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
If you mark the boxes on Page 1 as anything other than "Stable" then listings/pendings are required.

Easy.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Do the inventory/absorption rate analysis and stick that in the report. I don't rely on the 1004MC results as the final word.

abosrption rate chart.JPG
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Most of my FHA clients want 2 active listings no matter what the market is doing. It is a lender specific requirement.
 
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