URAR, Top Of Page 2

[Dublin ohio]

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

Seems like the author just wanted to do a little intellectual chest thumping coupled with a mild case of paranoia

 

[chad hampton]

I keep expanding till I get results. I don't overthink these things that have little to no affect on value. For the first 6-8 years of being an appraiser, I never even filled that section out and everything was fine.

I search subdivision first, if that doesn't present any meaningful results, then I expand to 2 subdivisions (if there is a competing subd nearby). If that produces nothing of substance, I go out 0.5 miles, then 1, then 2, etc.

Don't overthink the top of page #2 or the 1004mc. At AMC fees, I use all available brain power on the sales grid and selecting the best comps.

 

[jay trotta]

Agreed, IMO over time some of the things added to the concept, have little impact on value. Similar to the skin in the game concept, it sounds and looks great, but the end result is they are already back a to 0-3% down concept.

 

[TRESinc]

I keep expanding till I get results. I don't overthink these things that have little to no affect on value. For the first 6-8 years of being an appraiser, I never even filled that section out and everything was fine.

I search subdivision first, if that doesn't present any meaningful results, then I expand to 2 subdivisions (if there is a competing subd nearby). If that produces nothing of substance, I go out 0.5 miles, then 1, then 2, etc.

Don't overthink the top of page #2 or the 1004mc. At AMC fees, I use all available brain power on the sales grid and selecting the best comps.

why are you not doing it the correct way? both areas clearly, and specifically, state sale/listings in the subject's neighborhood. if there are no sale or listings and you expand you are presenting false information and misleading your clients and any users of your report.

 

[hastalavista]

(Well, I guess this discussion is more productive than arguing how many angles can dance on a head of a pin?)

Here is the top of page 2:


The first question blank-space represents the number of sales or listings "in the subject's neighborhood". Two important concepts here:
A. If there are zero sales, then there is no range
B. Expanding the neighborhood to capture sales is not the expectation or correct procedure

Personally, I don't think it is a big deal to put a "zero" or leave empty the range-blanks. A simple comment will explain what action was taken and why.... and no one is being misled. This might be the best example of where "N/A" really is applicable.

If there are zero sales from within the subject's defined neighborhood from within the last 12 months, then two other things should happen:
C. The report must supplement the analysis to develop a credible market-trend conclusion. This is when one would go to competing neighborhoods or analyze the larger market; to determine what the trend (declining, stable, increasing) is that affects the subject's property-type/submarket.
D. If there are zero sales within the defined neighborhood from within the last year, then this is the reason why (i) one should go back more than 12 months and that action shouldn't be questioned, and/or (ii) one should go out farther in distance to capture sales from competing neighborhoods and shouldn't be questioned.

Correctly completing the 1004MC, with all its flaws, when there are zero sales from within the subject's neighborhood, provides the most compelling reason for the report to do what some lenders/reviewers frown upon: go back further in time or go out farther in distance.

For the large majority of markets, the expectation is that there is some transaction activity of comparable sales within the last 12 months. When that is the case, it would be unexpected to go further back in time or out in distance without a very good reason ("Gee, Denis, you have 10 closed sales within your defined neighborhood that you've identified as comparable. Why'd you go back 1.5 years and outside of the neighborhood to get sales?").
However, when there are zero sales, then the expectation flips: One must go back in time or out farther in distance to capture sales that are comparable... they are just older than 12 months or located outside of the subject's neighborhood.

 

[Terrel L. Shields]

The term neighborhood should be abolished as a nothing burger. Is it like p o r n...you can't define it but you know it when you see it? Community indicates a better representation of the market forces. I know appraisers who call an entire school district rural and urban as "neighborhood" and others who limit it to the subdivision the subject is in, I view neither as correct. My community is called Fairmount, a very rural area where sales are rare. But its identity as a separate "place" is very suspect in a mobile world. My local town is a mix of commercial, residential and downtown areas. The town where my address lies is larger and clearly segmented into older and newer areas, a downtown, industrial park, highway businesses, etc. Neighborhood is not particularly descriptive of any of those.

In a city, perhaps it has a better meaning. But the lack of sales when the total population of properties is small is not a reflection of market demand. It is simply a matter of serendipity.

 

[hastalavista]

The term neighborhood should be abolished as a nothing burger. Is it like p o r n...you can't define it but you know it when you see it? .

"Neighborhood" and "Market Area" are well-defined and established terms. The problem isn't with those terms. The problem is (a) the GSE form melds part of both together and (b) many appraisers haven't taken the time to update their knowledge on market area analysis since their initial courses.

 

[Renee Healion]

MC form Here is what I have done when faced with very sparse data. I enter the sparse data in the time interval fields. Then for the checkboxes which represent trends, I look wider/back in order to have sufficient data to conclude a trend. Then in the comments, I explain what I did and why. This works for me when the issues are regional--when everyone in that segment is facing similar conditions.Then report the results elsewhere consistent with the MC results. Oh Denis you type fast, did we say something similar?

 

[TRESinc]

Correctly completing the 1004MC, with all its flaws, when there are zero sales from within the subject's neighborhood, provides the most compelling reason for the report to do what some lenders/reviewers frown upon: go back further in time or go out further in distance.

can't say i agree with that based on everything i have ever read or been taught about the 1004MC (and the top of page 2), if i am reading what you wrote correctly. they specifically want to know that data for the last 12 months. if there is no data, or very limited data, in that time frame then it should be reported as such. if the appraiser deems it necessary to expand in time to obtain relevant data to accurately report what is going on in the subject neighborhood then by all means they should, only on an addenda page. as i posted before the top of page 2 and the 1004MC are very specific in the data they want and the time they want it from. confusing the neighborhood with the market is not the proper way.

 

[hastalavista]

can't say i agree with that based on everything i have ever read or been taught about the 1004MC (and the top of page 2), if i am reading what you wrote correctly. they specifically want to know that data for the last 12 months. if there is no data, or very limited data, in that time frame then it should be reported as such. if the appraiser deems it necessary to expand in time to obtain relevant data to accurately report what is going on in the subject neighborhood then by all means they should, only on an addenda page. as i posted before the top of page 2 and the 1004MC are very specific in the data they want and the time they want it from. confusing the neighborhood with the market is not the proper way.

You are misinterpreting what I said; we are in agreement.
The 1004MC form is very specific in what it requires in terms of its trend analysis. The two key concepts are: (a) the subject's neighborhood and (b) the time periods going back 12 months.
The same form is specific in what is required if there is insufficient data within the above parameters to analyze and conclude a market condition (trend). Where it is not specific (and I don't see how it could be, without turning into a market analysis course) is what the best methods are to gather supplemental data that is relevant such that credible conclusions about market trends affecting the subject can be supported and concluded.

The "Trend" determination from the 1004MC is the trend reflected on page 1 (Marion posted the full excerpt). A trend determination must be made. If the method defined in the grid boxes of the 1004MC form do not produce enough data to conclude a credible trend indication, then the analysis is supplemented until such time where the appraiser can make a conclusion and support it.