Is a "Neighborhood Market" a credible term?

[Terrel L. Shields]

There is no such thing as commercial neighborhood.

By Fannie's definition there is.

Also, what about rural markets?

Exactly. I live in a community called "Fairmount" or the township name "Felker" - but this includes 2 newish greenfield subdivisions, a large lot executive homes subdivision, some houses 80 years old, some 30, some new, some 1,000 SF and a few that are above 3,000 SF. Like a lot of rural areas, the "styles" are all over the map. A rural fire dept and a city fire department splits the township into 2 fire districts, the mail routes are part one town and another, the school district likewise has some parts in one city and then another, and a small, incorporated town lies next to it. There is no uniformity except being uniformly ununiform.

 

[jay trotta]

By Fannie's definition there is.

Exactly. I live in a community called "Fairmount" or the township name "Felker" - but this includes 2 newish greenfield subdivisions, a large lot executive homes subdivision, some houses 80 years old, some 30, some new, some 1,000 SF and a few that are above 3,000 SF. Like a lot of rural areas, the "styles" are all over the map. A rural fire dept and a city fire department splits the township into 2 fire districts, the mail routes are part one town and another, the school district likewise has some parts in one city and then another, and a small, incorporated town lies next to it. There is no uniformity except being uniformly ununiform.

Exactly and IMO this is why we serve a purpose in the field. The F&F one peg fits every hole theory is just for them, all the best, glad we moved on some time back.

 

[alebrewer]

It makes sense to use the subdivision as the neighborhood ....it's easier to catch appraisers when they outside of the subdivision to use superior sales.

Unless there's not one.

 

[NC Appraising]

Unless there's not one.

Yep.

For rural markets, the 1004 or gse guidelines are not the best.

I truly belive after 20 years of being in this business, that if the form did not say neighborhood, we would not have so many confused appraisers.

There should have been two sections on the form.
1 for the market area
1 For the pud or subdivision.

Two totally different data sets.

Neighborhood has a different meaning to buyers, the gses, text books and appraisers.

Buyer: the pud, subdivision.

Gse: subdivision for the most part

Appraisers: 50/50. Never really knew.

Text books: group of complementary land uses. Ok....more of an explanation please.

 

[alebrewer]

1 For the pud or subdivision.

or neighborhood. But in general - I agree.

 

[Joe Flacco]

Neighborhood has never been the subdivision. It is just what appraisers did.

I also used subdivision for the first few years including training and licensed because that was how I was trained and how the other people in the office did it.

 

[NC Appraising]

Neighborhood has never been the subdivision. It is just what appraisers did.

I also used subdivision for the first few years including training and licensed because that was how I was trained and how the other people in the office did it.

I blame it on the gses. Here are the UAD instructions:

*Neighborhood Name*
The appraiser should enter a neighborhood name. It may be a name recognized by the
municipality in which the property is sited, such as a *subdivision* name. If there is not a
neighborhood name recognized by the municipality, enter the common name by which
residents refer to the location.
Reporting Format:
Neighborhood Name – Text



Per fannie definition of a neighborhood...group of complementary land uses...then they want us to use the subdivision as the neighborhood name....but the data is for the neighborhood and not the subdivision...but we name the neighborhood as the subdivision.

Riddle.


And we wonder why appraisers don't know what a neighborhood is?

Then add:

• Section XI, 403. “Neighborhood characteristics. These can be addressed by the types of structures and architectural styles in the neighborhood (detached, attached, row or townhouse, colonial, ranch, Victorian, etc.); current land use (single-family residential, commercial, industrial, etc.); typical site size (one-eighth acre, two acres, etc.); or street patterns or design (one-way street, cul-de-sac, court, etc.).”

Sounds like a subdivison to me.

 

[ZZGAMAZZ]

They are complimentary, within T's description, aren't they?

Yes indeed.

 

[ZZGAMAZZ]

Below are the two best sources on the subject.

Since I was not behind the formation of the 1004, I can only speculate.

I believe neighborhood was really ment to mean subdivision for the most part for the 1004. If you read gse and FHA guidelines, they wanted the appraiser to put in the subdivision name as the neighborhood. Also, they used terminology such as arctectual....

It makes sense to use the subdivision as the neighborhood ....it's easier to catch appraisers when they outside of the subdivision to use superior sales.
1. Predominant prices
2. Easier to decern a over improvement or a under improvement.
3. One mile radius guideline came from? How many neighborhoods are actually 1 mile? Few. Most subdivisions are tho.

The issue has always been the difference between what the gses/FHA wanted and what the appraisal text said a neighborhood was.

Also, what about rural markets? Really are no subdivisions in rural markets....good example of trying to put everything in the same box..form.

That is why many of the older appraisers would put in 100% built out and all data would be from the subdivision. *technically they were right if using the 1004 form. But was not right per the appraisal text books.

Differences Between Neighborhood & Market Areas & Analysis

Appraisers make a distinction between the neighborhood in which a residence is located and the market area in which comparable properties will be found.

appraisersblogs.com

https://www.datamasterusa.com/wp-content/uploads/2020/03/Black-Knight-1004MC-white-paper-1.pdf

https://appraisalfoundation.org/imis/docs/Valuation_Advisory_4_Identifying_Comparable_Properties_Upated_Final_09262013.pdf

Wow. Thank you for your advice and reference sources. The AF rocks!!!

 

[ZZGAMAZZ]

Below are the two best sources on the subject.

Since I was not behind the formation of the 1004, I can only speculate.

I believe neighborhood was really ment to mean subdivision for the most part for the 1004. If you read gse and FHA guidelines, they wanted the appraiser to put in the subdivision name as the neighborhood. Also, they used terminology such as arctectual....

It makes sense to use the subdivision as the neighborhood ....it's easier to catch appraisers when they outside of the subdivision to use superior sales.
1. Predominant prices
2. Easier to decern a over improvement or a under improvement.
3. One mile radius guideline came from? How many neighborhoods are actually 1 mile? Few. Most subdivisions are tho.

The issue has always been the difference between what the gses/FHA wanted and what the appraisal text said a neighborhood was.

Also, what about rural markets? Really are no subdivisions in rural markets....good example of trying to put everything in the same box..form.

That is why many of the older appraisers would put in 100% built out and all data would be from the subdivision. *technically they were right if using the 1004 form. But was not right per the appraisal text books.

Differences Between Neighborhood & Market Areas & Analysis

Appraisers make a distinction between the neighborhood in which a residence is located and the market area in which comparable properties will be found.

appraisersblogs.com

https://www.datamasterusa.com/wp-content/uploads/2020/03/Black-Knight-1004MC-white-paper-1.pdf

https://appraisalfoundation.org/imis/docs/Valuation_Advisory_4_Identifying_Comparable_Properties_Upated_Final_09262013.pdf

The Blog reference is outstanding; and I appreciate your response. I'm wondering whether an appraiser should address the distinction in the market analysis, or the neighborhood, section, including comments that notify an intended user that the page 1 "Trends" include more than competing properties???