URAR, Top Of Page 2

[Laughing Heir]

http://www.workingre.com/are-you-committing-appraisal-fraud/

I am curious about what other appraisers think of the author's argument that he presents in Scenario One. I have an assignment in my queue right now where there are no sales in the neighborhood, which has not happened to me on a residential assignment yet.

If you have one (1) sale at $100,000, wouldn't the scale be from $100,000 to $100,000? And, if you had a sale at $100,000 and another at $125,000, then the scale would run from $100,000 to $125,000. And so on. Why would the logic change if there are zero sales in the neighborhood?

What I'm inferring from this article is that the scale at the top of page 2 reflects whatever subjective criteria the appraiser may have used to delineate his or her market segment in that neighborhood (i.e., $1,000 to $100,000 in the WorkingRE article).

TLDR- if there are zero sales in a neighborhood, why would you not define the resulting price scale as an empty data set?

 

[Joe Flacco]

If there are zero sales or listings then the price range stays blank.

She is doing it wrong.

 

[Joe Flacco]

Pretty funny that she says it is fraud to put $0 - $0 though.

 

[Dublin ohio]

The individual in the article may be "technically" correct. But putting in a range of $1000-$100,000 makes no more sense than $0-$0 and IMHO could be considered misleading. How can you have a range with no sales or listings.? You could also possibly interpret a range of $0-$0 as not being a range. Which is actually what you have with no sales or listings. What about if you have only 1 sale or listing. Still no real "range" It is a fallacy of the form we are required to use. Simple solution. If you think it is needed. Just explain the illogical format of the form and move on. As far as being mathematically correct. Stating 0 when there are no sales or listings or a sale price taken from a listing does not necessarily involve a mathematical calculation on the appraisers part.

 

[Dublin ohio]

If there are zero sales or listings then the price range stays blank.

She is doing it wrong.

I agree. But the push back from the clients would probably be substantial. They generally expect to see something in those areas. Either way. Do not see how it would ever be an issue with any regulatory body. In the context of the area being referenced. 0=none no matter how you look at it.

 

[Dublin ohio]

What I'm inferring from this article is that the scale at the top of page 2 reflects whatever subjective criteria the appraiser may have used to delineate his or her market segment in that neighborhood (i.e., $1,000 to $100,000 in the WorkingRE article

With no sales or listings. Where would you get a current range for that market segment?

 

[Laughing Heir]

Must have been a slow month. I could think of dozens of bigger traps in the FNMA forms than using a "0" when a null value is warranted.

 

[Laughing Heir]

With no sales or listings. Where would you get a current range for that market segment?

That's the main point of my post. I have no clue what that paragraph in the linked article is attempting to convey. And, if the author is correct in what he writes, I want to be sure that I do not continue making that mistake in my form reports.

 

[Meandering]

Page 1 neighborhood, and top of page 2 of the URAR must be consistent with the 1004MC. Announcement SEL-2010-09.

https://www.fanniemae.com/content/announcement/sel1009.pdf

TLDR- if there are zero sales in a neighborhood, why would you not define the resulting price scale as an empty data set?

If there are zero comps, their price range is zero to zero,


When completing the One-Unit Housing Trends portion of the Neighborhood section of the appraisal report forms, the trends
must be reflective of those properties deemed to be competitive to the property being appraised. If the neighborhood contains properties that are truly competitive (that is, market participants make no distinction between the properties), then all the properties within the neighborhood would be reflected in the One-Unit Housing Trends section. However, when a segmented or bifurcated market is present, the One-Unit Housing Trends portion must reflect those properties from the same segment of the market as the property being appraised. This ensures that the analysis being performed is based on competitive properties.

For example
if the neighborhood contains a mix of property types not considered competitive by market participants, then a segmented or bifurcated market is present. Additionally, the conclusions reported in this portion of the appraisal will be supported by the analysis contained in the Market Conditions Addendum to the Appraisal Report (Form 1004MC)

the appraiser should also provide commentary on the other segment(s) of the neighborhood when segmentation is present.
Market Conditions Addendum to the Appraisal Report (Form 1004MC)
The lender must confirm that current market conditions are identified and analyzed in the valuation process and described
in the appraisal report.

Form 1004MC is required for all mortgage loans delivered to Fannie Mae with appraisals of one- to four-unit properties. It is
intended to provide the lender with a clear and accurate understanding of the market trends and conditions prevalent in the
subject neighborhood. The conclusions regarding trends that are obtained from the 1004MC Form must be reported in the
Neighborhood section of the report form.

In situations when there is not sufficient data to provide a meaningful analysis for the defined neighborhood, the form must be completed based on the information available, and an explanation must be provided. The lack of data may be an indication of the market conditions. If additional analysis of nearby areas that include competitive properties is performed, it mustbe discussed in the summary/conclusions section of the form. In any scenario, the Neighborhood section of the appraisal report must include the appraiser’s conclusions regarding the housing trends.For additional information concerning Form 1004MC, see B4-1.2-01, Appraisal Report Forms and Exhibits (04/15/2014)
https://www.fanniemae.com/content/guide/sel050118.pdf

.
.

 

[Laughing Heir]

Thanks, Marion. That was my plan until I came across that article in WorkingRE. So, I figured the Forum would either validate my gut reaction or absolutely flame me for making this error in my reports. Either way, happy to get some feedback.