New 1025 Value Per Unit / Rm / Gba / Bdrms

[Webbed Feet]

To All,

There is something new on the March 2005 1025 2-4 family form... And all I can say is "What were they thinking ???? !!!! "

Below the sales comparison grid and below the adjusted sale price of comparable are grids for the calculation of adjusted price per "Unit", Room", and "Bdrm" ..which I am fine with.. similar to the old form only it had this up at the top of the sale comparison.

But next! .. .. We have math grids for "VALUE" per "Unit", "GBA", "Rm", and "Bdrms" with instructions below for the appraiser to reconciliate the above indicators of "Value" .... Please, somebody, everybody, check me on the following....

Whenever an appraiser expresses something labeled "Value" as a quantity in an appraisal that expression is an opinion. ... Just exactly like we express an opinion of "Site Value" in the Cost Approach. ... One could say so doing is an appraisal inside an appraisal as the market value of the site is being expressed.... But Fannie, please excuse me!.... Residential real estate appraisers are now to start expressing an opinion of the market value of one unit out of two to four of them? .... The market value of one room out of a total of several? ... The market value of one foot of GBA out of many? .... The market value of one bedroom out of a total of several? ..... All when it is not possible to sell these individual units of measurement individually? ... Then reconcile it??????????????

Yes, yes, yes.... It can be speculated some very well meaning person substituted "Value" due to space concerns when it was meant for "Adj. Price per" to go in there.. (unless BT has made a big fat form error here and this is not what Fannie sent out)... No appraiser, state appraisal board, the ASB, or any other entity should have to come out and redefine a part of this form to mean something else other than what it says. ... I doubt that any appraiser in the country is going to have definitions in their addendums to explain and define what "Value" it is they are using if any of that gets filled out.... Plus I believe it would be a major violation of appraisal practices to be, if it was even possible, expressing the "Value" of components and then adding them back up together in order to indicate a total value to the market of the components like that.

There is no other assumption that can be made other than it is "Market Value" being referred to here... A concept in such an application that is completely preposterous. .. Yes, investors may certainly look at a "Price" or "Cost" per unit in analyzing real estate. .. But residential appraisers do not opine "Values" per components... I certainly do not intend to find myself in court attempting to explain why I opined "Value" to a single bedroom or single foot of GBA, then reconciled it. .. I fully intend to create an addendum paragraph in every 1025 report in order to explain this and why it's not filled out nor reconciled... If confronted with an underwriting demand I fill it out... I will be forced to require the demanding person to provide me a definition of "Value per Bedroom", "Value per Unit", "Value per GBA", and "Value per Room" to use in my appraisal so I can be in compliance with USPAP. ... Because all appraisers are required to define the "Values" they are making opinions about, and I am not about to say these are "Market Values"... For all I know.. these should be "Income Values" and based on market rents..... See the problem(s)? ..

I can see it coming now... next form revision from Fannie and they'll be asking for exposure time and sales history of a single bedroom or foot of GBA.


Sincerely,

Barry Dayton

 

[Em Tee]

Couldn't have said it any better!!! I hate that stinkin new form!

 

[Otis Key]

Very well expressed Barry. I thought it was just me when I did that last one right after the forms came out but obviously I was wrong, not to mention I didn't at that time have the time to look it over and think it out like you have done. Looks like I'll have to do the same as you plan when I get some free time.

BTW,

I doubt that any appraiser in the country is going to have definitions in their addendums to explain and define what "Value" it is they are using if any of that gets filled out....

you may have just made us all aware that we may need to do just that or providing a very long winded explanation as to the fact that we are NOT providing, nor did we analyze, a value per unit/bedroom/bath, etc.

 

[Rick Neighbors]

1025

Thanks Barry for pointing that out. I am going to be doing my first 1025 on the new forms tomorrow. Just got the request today.

Any other glitches found, or words of wisdom to share?

Rick

 

[Webbed Feet]

Mr. Neighbors,

Yes, look out for the prior sales history of the subject and first three sales comps being moved to the bottom of page two, a location that makes little sense. If you do not use a la mode software and get a review appraiser who does, look out for problems caused by a la mode making parts of the rental grid portion cells accessable for filling in information that the other software vendors have not. As Fannie never intended them to be filled out that way. Resulting in needing some similar to the following for a reponse to a reviewer or UW.

Grids for total square footage for subject and rental comparable, grids for total monthly rent for all rental comparable: It is believed the reviewer is referring to page two of xxxxxx in the report were the rental comparable grid is and referring to that specific grid. If so the totals being requested are already on the form. The "total square footage" totals are labeled "Gross Building Area" on it’s own row of the grid. The "total monthly rent" totals are labeled "Current Monthly Rent" near the top just under the proximity row on its own row of the grid. I am unable to enter any other cells that might be involved on the form using my software "ClickFORMS" for this purpose.

Barry Dayton

 

[CANative]

There's another glitch in the sales grid on this form and it's probably Fannie's fault.

On the adjusted price per unit/room/bedroom lines the calculation method is wrong because when it's using the adjusted sale price to do the math it's using the comps unit/room/bed count. In other words, you have to manually do the calculations to adjust the number of rooms/units/bedrooms using the subjects numbers.

E.G. If comp 3 has 18 rooms but the subject has only 15, you need to caclulate the per room value by dividing it's 15 rooms by the adjusted price instead of the comps 18 rooms that the software tries to use. Same for all the others.