Killing the 1004MC

[Mike Kennedy]

So we will go from appraising property to appraising methods of appraising properties and reconciling the methods to arrive at or corroborate a value, rather than doing it with first hand information obtained directly by the appraiser? Like maybe it is all a fiction, since we didn't go out there personally or check the data input first hand; however, we did a good job with reconciling the fictitious output?

Never forget - the requirement for an appraisal opinion, and now these newbie "reconcilements", is "credible" not "accurate" or even "realistic" or "verifiable" - it is an OPINION. Does it matter that a goodly percentage of both municipal assessment records and MLS data records are grossly incorrect in many markets - nah........

The Wiz of Oz was credible.

 

[prasercat]

Never forget - the requirement for an appraisal opinion, and now these newbie "reconcilements", is "credible" not "accurate" or even "realistic" or "verifiable" - it is an OPINION. Does it matter that a goodly percentage of both municipal assessment records and MLS data records are grossly incorrect in many markets - nah........

The Wiz of Oz was credible.

Actually, I like the word "credible", although it is implicit upon this definition that the intended users of appraisal services are qualified to make such a qualification. So, just like the definition of "market value", there are certain assumptions made concerning the participants in the process. In the end, it is circular reasoning or relative reasoning. What may be credible to one person, may not be to another (perhaps, one who is more experienced or less experienced, etc). However, it does offer more latitude to the appraiser and recognizes the limitations of analyzing complex, inefficient and imperfect markets, within which the word "accurate" could easily lead to a misunderstanding and too many lawsuits against appraisers.

Nothing like that can work unless there is random spot checking the system by a disinterested appraiser making sure both the outputs AND inputs are consistently reliable. Perhaps, with a determination as to how often there are problems and where those problems originate. This should be an appraisal specialty in itself, with increasing work - "Certified Automated Valuation Systems Integrity Appraiser" - CAVSIA (or something similar).

 

[vanguard]

Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent it is available and RELIABLE and must provide analysis as indicated below. If any required data is unavailable or is considered UNRELIABLE, the appraiser must provide an explanation. IT IS RECOGNIZED THAT NOT ALL DATA SOURCES WILL BE ABLE TO PROVIDE DATA FOR THE SHADED AREAS BELOW; IF IT IS AVAILABLE, HOWEVER, THE APPRAISER MUST INCLUDE THAT DATA IN THE ANALYSIS. If data sources provide all the required information as an average instead of the median, the appraiser should report the available figure and identify it as an average. 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. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.

I find it interesting that even though you may consider some of the data unreliable, Fannie/Freddie want you to include it on the form with an explanation. Why do they consider unreliable data supportive enough to include it in your analysis? I don’t. To report it and disclaim it at the same time appears to be misleading and a waste of verbiage. Placing the word “Unreliable” in the appropriate areas is less misleading than reporting and then recanting it.

 

[David Beavan]

The only way the form would make sense to me is if you were/are comparing one calendar your to the previous year or 2 years, you compare the data from May, June, July and August from this year to May, June, July and August of last year. Taking a 12 month period and breaking it down in three segments is not going to provide good data.

Everyone should have their house appraised on Sept. 1st, then the past 3 months in the 1004MC will look great and will always look like it's increasing since that's when most real estate activity takes place. Don't get your house appraised on Feb. 1st, because the previous 3 month period will be Jan, Dec and Nov, so it will look bad. That's why this form is useless to me.m2:

Well said.

 

[OSU Beavers]

Every one of them I have seen were just skippied up data containing ALL sales in a market area, not just those comparable to the subject. Even our local MAI just does one a month to reuse over and over again.

 

[Mike Garrett RAA]

Is a 90, 180, and 365 day period sufficient to determine a trend? Just completed an ERC and there are 8 lines where the APPRAISER can define the time periods used for the analysis.

I often find "insufficient data for meaningful trend analysis" when the search criteria is the "neighborhood" and "comparable sales" and the time period is, essentially, only a year. The data is the data, we shouldn't have to make it up and it should be meaningful.

 

[fractal7221]

Don't even look at the 1004MC anymore except to see that it is signed. Most of the appraisals I check have 10 or fewer sales/listings making them pretty useless from a statisical standpoint. Maybe if I was in markets were 30+ sample sizes were common I'd look at it. Not sure why the GSEs still want this useless form.