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Neighborhood section on the 1004

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Ultraviolet

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Senior Member
Joined
Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
I have always provided data for the entire neighborhood in this section of the 1004 and then analyzed the subject market segment separately. If there is a difference in price trend, inventory and days on market between the overall market and the subject segment I report, discuss and reconcile the two.

Sometimes when there are multiple SFR segments in a neighborhood it isn't uncommon for certain segments to be performing differently. The low end may be doing well while the upper end is slow with a downward pricing trend - or vice versa.

Would it be incorrect to report data for all sections based on the entire neighborhood EXCEPT for the one unit housing trends, limiting this section to JUST the competition for the subject property? This doesn't sound right to me but I don't know everything! :shrug:

Any opinions?
 

Ultraviolet

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Senior Member
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Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
Thanks, Mike. I'm not completely insane, then - at least not today! :laugh:
 

Mike Kennedy

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Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
I do the same thing....... as we both know, overall market data is typically generic "pears" in nature which may, or may not be specifically relevant to a particular "Apple"....... when appraising an "apple" .........rifleshot the MOST comparative data as well.
 
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Ultraviolet

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Senior Member
Joined
Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
I completely agree.

My understanding (which may be wrong) is that data in the neighborhood section is an overview of the larger market. Generally speaking, when there's a true decline in prices all segments of any particular neighborhood will demonstrate that to some degree. Some less, some more, but an OVERALL downward trend is really what is being assessed in this section.

What about when there is an atypical property where the competition is really from a larger area because of a specific external, functional (or other) factor? If prices in the neighborhood are stable but the data indicates that prices for this specific property type are declining, how would one reconcile a downward market conditions adjustment for this property in a stable neighborhood. Would this not appear inconsistent to the reader who has a checklist and doesn't read the comments?


Please provide any commentary that is relevant, anyone! :)
 

hastalavista

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Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
I agree with you both.

I tend to think of an appraisal as a portrait and I'm trying to paint the subject and its value in the context of its specific market and the neighborhood in general.
I look at the market description as the general background I'm going to paint everything else (subject's specific neighborhood, the comps, and finally the subject) into.

And, just like a good quality portrait, it should be in proper perspective and resemble what really exists. If I achieve this, the viewer (reader) will know exactly what I'm talking about and be able to judge the subject's appeal (value) properly!
 

Mike Kennedy

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Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
check Declining....... insert BIG BOLD BLACK "SEE CRUCIAL, SPECIFIC, MARKET CONDITIONS COMMENTS ON ADDENDUM"

in SITE COMMENTS - unless the report is being reviewed in a FOREIGN LAND...... your comments WILL BE READ.
 

Lee in L.A.

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Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
The market analysis is getting to be the hardest part sometimes. This stuff can make you nuts. :shrug:

I finished one today south of the Blvd in Sherman Oaks. This area has been seeing in last few years teardowns selling for about $1M, and big new homes going up and selling for $2M or so. Overall market includes older smaller homes maybe 1200 - 2000 SF, and newer homes of 4000 - 5000 Sf or so shows declining medians and oversupply. More targeted market of homes built in last 10 years (all larger homes) shows steady prices so far, but big oversupply in that submarket. :fiddle:
 

Pat Butler

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Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
And be sure to remember that the lending industry decreased the amount of space for comments in this section of the form during the last revision. That means that they are looking for LESS analysis. Hard to believe, but factually true.
 

Lee in L.A.

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
And be sure to remember that the lending industry decreased the amount of space for comments in this section of the form during the last revision. That means that they are looking for LESS analysis. Hard to believe, but factually true.

All you need is space to type "See addendum." :leeann2:
 
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