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Mc Addendum Question

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cds01

Freshman Member
Joined
Dec 1, 2015
Professional Status
Certified Residential Appraiser
State
Texas
I have always been taught the MC addendum should be created using parameters that encompass every comparable sale used within a report. Occasionally though, maybe to demonstrate marketability/estimate market impact for a particular amenity/view/water view/etc etc etc, I may be using a comparable sale that really is less comparable that the others used within the report, and a buyer of the subject would be unlikely to consider for one reason or another. Is it okay to put a comp within the sales comparison grid whose data is not contained within the MC and just explain it? Assume no super-adequacy for the given characteristic.

A good example might be I have a house built in 2005 on a larger lot, and attempting to bracket site, and the only sale available within the defined neighborhood was built in say 1970s that has been updated enough to have similar effective condition, and appears roughly same quality -- enough so that it even adjusts in line with other comps. If I have to change my MC to include that comp's age characteristics, the clear trends and pricing for houses of similar GLA/Quality/Age (say 2000-2010) would now be full of inappropriate data and give me an MC that is skewed.

Another example might be a rural property with a workshop and for whatever reason, no recent sales of shops in the immediate area. My nearest comparable workshop sale is 6 miles away, but my neighborhood is say a roughly 3x3 mile square defined by major county roads. Again, shops being common, but just not one sold lately in that defined area just out of luck of the draw.

If I change the MC to include a 6 mile radius and get that comp, I might be digging into suburban areas which are full of trash results that don't help generate quality MC data. Furthermore, I open up the can of worms of should it be just a straight up 6 mile radius or should I move the neighborhood borders out to the next major set of county roads/interstates/whatever, or go up to a round 10 miles (I've been asked why I used a 6/7/8 mile radius versus 5/10/15 miles.... AMCs love round numbers it seems).

Am I violating any rules by making an MC that doesn't contain a comp used within the grid so long as I am explaining it? At the end of the day, I'm trying to create a report that has value to the client and an MC that makes sense and identifies changes in the market (if any).
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
I see some of the issue raised by attempting to "bracket" everything. I do not alter the neighborhood boundaries just to pull in a "sale" for comparable purposes.

Why put a "sale" that is, most likely, not a comparable (a buyer of the subject would be unlikely to consider for one reason or another) in a comparable grid?
 

cds01

Freshman Member
Joined
Dec 1, 2015
Professional Status
Certified Residential Appraiser
State
Texas
Primarily it is as a matter of making sure everything that has value-add is counted. Across-the-grid upward adjustments are typically frowned upon.
 

DWiley

Elite Member
Joined
Apr 4, 2007
Professional Status
Certified Residential Appraiser
State
Tennessee
The data grid at the top of the 1004MC should reflect comparable homes that are located in the subject neighborhood. Period.

One may address other data, if needed, in other sections of the 1004MC.
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
As DWilly correctly pointed out, the data portion on the 1004MC form is strictly for comparable properties within the subject's neighborhood. You've already stated what the neighborhood boundaries are on page 1 of the 1004. This data, as limited as it may be, is not allowed to be altered. The data is to match the top of page 2 above the SCA grid. Typically, the data is so small that it can not be a good indicator of trends. (which is to line up with page one, btw) Therefore, the 1004MC says that we need to expand our search parameters so that we can give a supported opinion when we check the trend boxes. What that means: you will have to expand the 1004MC to your additional comments where you show graphs, interviews, stats, etc to support your trend boxes that you checked. Note: this is in addition to the data on the 1004MC, which stays the same...strictly for comparable properties within the subject's neighborhood, which may look like the market is in decline, whereas in reality, your market is increasing and you check Increasing market.

Basically your comments on the 1004MC form will say> "due to the limited data of comparable properties, it is not a reliable indicator of trend. Therefore additional market studies were performed to support the market trend...see additional comments"
 

Vermonter

Senior Member
Joined
Mar 21, 2007
Professional Status
Certified Residential Appraiser
State
Vermont
I have always been taught the MC addendum should be created using parameters that encompass every comparable sale used within a report..

Nope. You define your neighborhood first. The neighborhood boundaries aren't determined by the number of sales, but by the use. Could be 1 block, a zip code, a school district, a whole town or possibly an entire county. Whatever it is, you should be consistent.

The data grid at the top of the 1004MC should reflect comparable homes that are located in the subject neighborhood. Period.

One may address other data, if needed, in other sections of the 1004MC.

Can't get any simpler than this. If there are no comparable sale in your defined neighborhood, then that's what you put in the MC. Obviously you have to use other methods to determine the housing trends, but that's the correct way to do it.
 

glenn walker

Elite Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
I see a lot of 1004-MC with Prior 7-12 Months & Prior 4-6 Months filled in with mostly ( 0- or N/A ) then we get to the Current-3 month time period the appraiser has 3 sales in the grid that sold in the 3 month time period The appraiser checks page one housing trend box increasing and the Current- 3 month trend as increasing. When contacted the appraiser says the last sale sold for more than the other two sales ** In cases like this wouldn't it be more realistic for the appraiser to take the middle road and check the STABLE-BOX especially if other methods were employed but inconclusive.
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
In cases like this wouldn't it be more realistic for the appraiser to take the middle road and check the STABLE-BOX especially if other methods were employed but inconclusive.
In cases like that, the appraiser should have his license revoked. You can't establish market trend by 3 sales.
 
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