Would Adding A 1004mc To A Completed Appraisal Comply With USPAP?

[Have Laser-Will Travel]

so you only analyze the subject's market when performing an appraisal, not the neighborhood?

You’ve moved to a different subject. Do you like to argue?

 

[Mejappz]

The 1004MC is a flawed model. If you follow the directions and use it to trend “neighborhood” activity. The results can be skewed or useless.

On the other hand, if you use it to trend a competitive market segment it can be somewhat useful If the area is homogeneous and has plenty of good data. That being said it’s the last tool I would use to complete credible market analysis.

 

[Have Laser-Will Travel]

so you only analyze the subject's market when performing an appraisal, not the neighborhood?

You’ve moved to a different subject. Do you like to argue?

If it is different, then why do the instructions on the 1004MC explicitly state that the data in the 1004MC MUST be the basis for what is reported on page 1? Inquiring minds want to know.

There were no 1004MC instructions when I started the report. Different models bring different results. The 1004MC and its results were not performed and to now include them makes them part of the analysis and that changes the scope and the need for a new assignment.

 

[Have Laser-Will Travel]

The 1004MC is a flawed model. If you follow the directions and use it to trend “neighborhood” activity. The results can be skewed or useless.

On the other hand, if you use it to trend a competitive market segment it can be somewhat useful If the area is homogeneous and has plenty of good data. That being said it’s the last tool I would use to complete credible market analysis.

The industry agrees with you. Why someone thinks that it suddenly becomes valid when it’s for a jumbo, I don’t know.

 

[Have Laser-Will Travel]

If it is different, then why do the instructions on the 1004MC explicitly state that the data in the 1004MC MUST be the basis for what is reported on page 1? Inquiring minds want to know.

You are probably still doing retypes too!

 

[DWiley]

You are probably still doing retypes too!

Funny that you chastised someone else for ad hominem, yet resulted to the same thing yourself. In case you do not have one handy, here are the instructions printed right on the 1004MC:

Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form.​

So, again I would wonder, why would a properly completed 1004MC cause any conflict with a properly completed main form? Can you answer that, or will you simply result to more ad hominem? I find that the majority who denigrate the 1004MC are/were not completing it correctly

 

[J Grant]

Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.

The above instructions would be true whether or not the appraiser used an MC form. Just because the data is reported in the neighborhood section , does not mean the data is all the sales or an average of sales in the neighborhood !! The data are, see above, are properties that compete with our subject property. That is what we as appraisers should be interested in, no matter the form and no matter about fannie.. So what if MC form is weak, if we can't figure out the trend for properties relevant to our subject, we should not be appraising the subject.

An appraiser can provide additional broader market data to supplement the MC form, or if no MC form is used, indicate it is broader market data and may not apply to subject if subject property market shows a different trend.

I report the increasing prices and 60 DOM trend of 1000 sf starter home for my 6000 sf luxury subject, when the subject competition shows stable or decking prices and 10-12 months DOM, I provided misleading results

Too much data can be as bad as not enough data, if the wrong data is relied on rather than the relevant data.

There may be scarce "data" for or subject but an appraisal is not about "data" it is about the analysis of that data. And we don't just analyze data, we analyze information yielded from data.. You only have 3 listings for jumbo house but all three of them are lower price than the sales and on the market over a year- you have enough data because it was enough to provide the information about the listing trend.

 

[J Grant]

You are probably still doing retypes too!

You are getting a free master class from DWiley, count yourself lucky. I disagree with him on some AMC issues but he truly knows his appraisal stuff...

 

[Eli]

I have even done two 1004 mc's on some. There are plenty of ways to expand the report to explain (summarize) the trends and data on page 1. As noted by some, they prefer their own ways instead of the 1004mc. On that 6,300 luxury home, I would probably just do one 1004mc. LOL I would not have enough data to complete another 1004mc that would be meaningful. I would just have to reconcile what I had.

 

[DWiley]

Instructions: The appraiser must use the information required on this form as the basis for his/her conclusions, and must provide support for those conclusions, regarding housing trends and overall market conditions as reported in the Neighborhood section of the appraisal report form. The appraiser must fill in all the information to the extent it is available and reliable and must provide analysis as indicated below. If any required data is unavailable or is considered unreliable, the appraiser must provide an explanation. It is recognized that not all data sources will be able to provide data for the shaded areas below; if it is available, however, the appraiser must include the data in the analysis. If data sources provide the required information as an average instead of the median, the appraiser should report the available figure and identify it as an average. Sales and listings must be properties that compete with the subject property, determined by applying the criteria that would be used by a prospective buyer of the subject property. The appraiser must explain any anomalies in the data, such as seasonal markets, new construction, foreclosures, etc.

The above instructions would be true whether or not the appraiser used an MC form. But note above, because teh data is reported in the neighborhood section , does not mean the data is all the sales or an average of salesw in the neighborhood !! The data are, see above, properties that compete with our subject property. That is what fannie wants to see on the trend line who cares what 1000 sf houses are doing if your subject is a 6000 sf luxury home?

An appraiser can provide additional broader market data or contrast broader market to subject property and competitive comp property trends, but not use it for the trends in neighborhood section.

PS if there were no forms and no fannie, this is just common sense and ethical appraisal practice. If I report the increasing prices and 60 DOM trend of 1000 sf starter home for my 6000 sf luxyr subject, when the subject competition shows stable or decling prices and 10-12 months DOM, I provided misleading results

Too much data can be as bad as not enough data, if the wrong data is relied on rather than the relevant data.

There may be scarce "data" for or subject but an appraisal is not about "data" it is about the analysis of that data. And we don't just analyze data, we analyze information yielded from data.. You only have 3 listings for jumbo house but all three of them are lower price than the sales and on the market over a year- you have enough data because it was enough to provide the information about the listing trend.

This is a good synopsis of the key point that many appraisers missed when the 1004MC form was introduced. We are appraising a specific subject property. So, when describing the market trends in the neighborhood section of the report, the most relevant data is the data that pertains to properties that would compete with the subject. That is why the 1004MC was designed as it was and why the instructions say what they say. Many appraisers, used to the way they had always done things, pushed back on that notion, even though most would agree when the idea is presented as simply as JG presented it with the use of a 1000SF home vs a 6000SF home.

And, JG, thanks for the kind comments.