The 1004 MC form & driving by the comparables

[vanguard]

Where in USPAP does it say that comparables must be viewed? It is not in my copy.

It is a part of your Scope of Work on the reports.

 

[vanguard]

The top of the grid on page two states the same thing. Have you been driving all the listings and sales for these and provided photos since the new forms have been in use? I hate the new form just as much as everyone else, but I think you are barking up the wrong tree...

At the present time lenders are requiring active listings on the grid so I include some of the current properties offered for sale on the grid. I realize it is somewhat redundant but I have had no complaints. I usually drive by and take photos of these.

 

[Howard Klahr]

The issue is not about performing an appropriate analysis and developing an opinion within a report. The issue is that the client supplied format to report the information can result in a misleading report.

USPAP Scope of Work rule also states - "An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased."

George - I personally very much appreciate your efforts in developing an Excel format of the form. Your efforts on behalf of our little forum community don't receive the recognition that it deserves.

The fact that the majority of residential appraisers will not fight implementation of the form is not relevant, but I agree that it is sadly a correct observation.

However, I still believe that it is wrong to enter information into the fields on the 1004 MC as they are defined. This does not mean that market information should not be collected, analysed and reported. No where did I advocate not performing a market analysis. My object is focused solely on format. Fannie clearly acknowledges that there are issues out there, and in fact require commentary about the issues as part of the instructions. It is my contention that a properly performed market analysis with the appropriate disclaimers should be incorporated in the report and just reference to the information within the form. Clearly this is within the context of the Directions Fannie Mae provided.

 

[vanguard]

I agree with you Robert. There is much about this new form that lacks clear direction. Yet many on this forum are rushing to fill it out, sign it and send it in. Some say they can do it in 10 minutes, some say up to a week. All are arguing about what they are going to charge. An accurate count of "comparable" sales and listings in the neighborhood, as defined on the first page of the report, would need to include 1) a definition of what is considered to be comparable and 2) all the comparable properties sold and listed, both MLS and FSBO, including developer. If you cannot defend those counts, then what you put in the boxes is misleading. Providing misleading information is a violation of USPAP. Until they revise the form, I am filling it out with an asterik in the boxes - * Unable to reliably complete this field due to...

This may be the only credible reponse to my query. Everyone else is off on a tangent. I do not see where the lines are drawn between what is on the grid and any stated "comparable sales" on the 1004 MC form. This is addressed in the Scope Of Work area in the appraisal reports (3). The Market Conditions form is an Addendum to the Appraisal report. You cannot disregard #3 in the Scope of Work section since you sign the report. It appears to be all encompassing. I wonder if the appraisal boards in each of the states are aware of this disparity.

 

[George Hatch]

If you've read the instructions on the 1004mc form where they define "comparables" one way, and the cert in the URAR where they define it differently, and you still think they are saying the same thing then your problem isn't with your state board.

 

[Don Clark]

The new forms label the selection in the "Inventory Analysis" and Median Sale & List Price" section as "Comparable Sales". Based on USPAP and the reporting requirements, the appraiser must view the comparables from the street. If they don't then a violation of USPAP has occurred.

Please tell me where in USPAP it says that? USPAP does not even require that yous inspect a subject property.

I realize that this might be contrived; however, it is a realistic concern for those who wish to be USPAP compliant.

No it's not.

I have heard that REL's Valuation has utilized a form similar to this; although, I do not know how successful it has been. I have been thinking about sending a letter off to each of the States Appraisal Boards regarding this concern.

And they would likely laugh at you

 

[CANative]

The issue is not about performing an appropriate analysis and developing an opinion within a report. The issue is that the client supplied format to report the information can result in a misleading report.

USPAP Scope of Work rule also states - "An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be biased."

George - I personally very much appreciate your efforts in developing an Excel format of the form. Your efforts on behalf of our little forum community don't receive the recognition that it deserves.

The fact that the majority of residential appraisers will not fight implementation of the form is not relevant, but I agree that it is sadly a correct observation.

However, I still believe that it is wrong to enter information into the fields on the 1004 MC as they are defined. This does not mean that market information should not be collected, analysed and reported. No where did I advocate not performing a market analysis. My object is focused solely on format. Fannie clearly acknowledges that there are issues out there, and in fact require commentary about the issues as part of the instructions. It is my contention that a properly performed market analysis with the appropriate disclaimers should be incorporated in the report and just reference to the information within the form. Clearly this is within the context of the Directions Fannie Mae provided.

I agree with you and George. I posted a long, long time ago about this form and it's potential problems for both appraisers AND clients. It looks like another simple-simon fannieform but the questions asked and the answers supplied imply a level of market analysis that most (residential mortgage appraisers) are simply not capable of even if they understood expectations implied. If they did there would not be:

1) questions about "how much to charge for the form" because the level of due diligence took a quantum leap and each assignment will be unique;

2) Am I qualified and have the experience to complete this assignment given the level of market analysis and reporting now required by the client?;

3) Am I willing to take on a much higher threshold of liability, now and going forward for who knows how long, for chump change or even nothing... the form implies expectations of a forecast.

4) Is (was) the 7 hour class I took on "filling out the form" really adequate?

I recommend any appraiser contemplating the use of this booby-trap laden form read Stephen F. Fanning's "Market Analysis for Real Estate" and keep a (current) copy of "The Appraisal of Real Estate" within arms reach at all times.

 

[Terrel L. Shields]

Remember the change in wording in 1999 that Fannie Mae undertook and TAF took exception to? And a lot of us included both certs in our reports? Fannie mae, 51¢ stock or not, rules the appraisal world (apparently)... Austin is right, fannie form appraisals are not "appraisals" they are a valuation paradigm that creates Fannie Value and calls it Market Value and backs down TAF and trumps USPAP....