1004MC
510) Competing Property
07/11/09
Dear H2,
I am a little confused by the 1004MC form. In the instructions area at the top of the form it says sales and listings must "compete" with the subject and then in the inventory analysis it ask for "comparable" sales and listings. I was appraising a 50 year old home of about 950 sq ft and although there were other similar size homes in the area, some were built as recently as 2004 and are selling for about the same as the 50 year old subject due to some REO activity. But I would not try to use a 5 year old comp for a 50 year old subject even though it may be a "competing property". What do you think they mean ?
E. Brown ebrown@atc.cc
Dear E. Brown,
The concept of a competing property that I use for the 1004MC form is that assuming the subject property became unavailable, what listings/sales would a potential buyer of the subject property consider as a reasonable substitute in the same neighborhood.
H2
I am a little confused by the 1004MC form. In the instructions area at the top of the form it says sales and listings must "compete" with the subject and then in the inventory analysis it ask for "comparable" sales and listings. I was appraising a 50 year old home of about 950 sq ft and although there were other similar size homes in the area, some were built as recently as 2004 and are selling for about the same as the 50 year old subject due to some REO activity. But I would not try to use a 5 year old comp for a 50 year old subject even though it may be a "competing property". What do you think they mean ?
E. Brown ebrown@atc.cc
Dear E. Brown,
The concept of a competing property that I use for the 1004MC form is that assuming the subject property became unavailable, what listings/sales would a potential buyer of the subject property consider as a reasonable substitute in the same neighborhood.
H2
509) Log House Comps
07/05/09
Dear H2,
Your new 1004MC book is GREAT!
Question: Suppose I am appraising an unusual home (a log home for example) in an established residential neighborhood of Cape Cod homes. There are no log homes either listed for sale or sold in a 30 mile radius for the last 1 year. On the 1004MC, would the entries be 0 (zero) for listings and sales?
Thanks!
Bob walker.realestate@verizon.net
Dear Bob,
I think you have to ask yourself "what would a buyer accept as a substitute if the log house you are appraising were not available and they had to buy something else in the same market area." These houses would be acceptable comparable sales, and should be considered when you complete the 1004MC form.
H2
P.S. Glad you like the book!
Your new 1004MC book is GREAT!
Question: Suppose I am appraising an unusual home (a log home for example) in an established residential neighborhood of Cape Cod homes. There are no log homes either listed for sale or sold in a 30 mile radius for the last 1 year. On the 1004MC, would the entries be 0 (zero) for listings and sales?
Thanks!
Bob walker.realestate@verizon.net
Dear Bob,
I think you have to ask yourself "what would a buyer accept as a substitute if the log house you are appraising were not available and they had to buy something else in the same market area." These houses would be acceptable comparable sales, and should be considered when you complete the 1004MC form.
H2
P.S. Glad you like the book!
499) 1004MC & Mobile Homes
06/09/09
Dear H2,
No one seems to know if the 1004 applies to mobile homes.
Baron Kahle appraisalquick@hotmail.com
Dear Baron,
Good question! However, if you are using a Mobile Home form from Fannie or Freddie or FHA, we think the answer is YES, as it is required for all 1-4 family residences and a mobile home that would meet Fannie/Freddie underwriting requirements would meet that definition.
H2
No one seems to know if the 1004 applies to mobile homes.
Baron Kahle appraisalquick@hotmail.com
Dear Baron,
Good question! However, if you are using a Mobile Home form from Fannie or Freddie or FHA, we think the answer is YES, as it is required for all 1-4 family residences and a mobile home that would meet Fannie/Freddie underwriting requirements would meet that definition.
H2
495) Lack of Data for 1004MC
05/27/09
Dear H2,
I received your newest guide on the Market Conditions Addendum. I appreciated your comment about needing at least 18 items to basically make sense of the statistics. I live in an area where in each neighborhood there are usually 1 or 2 comparable properties, and often none at all. Because there were only 42 total sales in our entire county last year, I decided to do the market conditions addendum for the entire county and commented on it. Also, our MLS doesn't provide most of the information required. Any suggestions for me on how I should provide this information? Basically, I state at the end that this market conditions addendum is not relevant to our area, because of the lack of available data, but underwriters, obviously, don't like that comment. Any suggestions on how to complete the report for my area would sure be appreciated!
Holly A. Harwig holly@northofnorth.com
Dear Holly,
Your complaint is being expressed by many appraisers. The instructions on the form make it clear that you are expected to provide only what is available. However, as part of the Scope of Work, as stated on the form, you must provide an explanation of what you did to try and get the data and further state why you were unsuccessful. Do not be afraid to use the word "unknown" and an asterisk in boxes leading to a comment that there was not sufficient data available to provide the asked for trend, average etc. I don't recommend that you comment that the whole form is not relevant as this is probably not true. Most likely you will have provided some information and explanations about what you did and found that may be relevant to an underwriter.
H2
I received your newest guide on the Market Conditions Addendum. I appreciated your comment about needing at least 18 items to basically make sense of the statistics. I live in an area where in each neighborhood there are usually 1 or 2 comparable properties, and often none at all. Because there were only 42 total sales in our entire county last year, I decided to do the market conditions addendum for the entire county and commented on it. Also, our MLS doesn't provide most of the information required. Any suggestions for me on how I should provide this information? Basically, I state at the end that this market conditions addendum is not relevant to our area, because of the lack of available data, but underwriters, obviously, don't like that comment. Any suggestions on how to complete the report for my area would sure be appreciated!
Holly A. Harwig holly@northofnorth.com
Dear Holly,
Your complaint is being expressed by many appraisers. The instructions on the form make it clear that you are expected to provide only what is available. However, as part of the Scope of Work, as stated on the form, you must provide an explanation of what you did to try and get the data and further state why you were unsuccessful. Do not be afraid to use the word "unknown" and an asterisk in boxes leading to a comment that there was not sufficient data available to provide the asked for trend, average etc. I don't recommend that you comment that the whole form is not relevant as this is probably not true. Most likely you will have provided some information and explanations about what you did and found that may be relevant to an underwriter.
H2
493) 1004MC Condo
05/22/09
Dear H2,
On the new 1004MC -- the first one I'm doing is a condo. Should I leave the top completely blank and fill out just the condo section?
Diane Graham dgraham295@comcast.net
Dear Diane,
As I explain in my book, Harrison's Illustrated Guide: How to Fill Out the Market Conditions Addendum to an Appraisal (1004MC-71), for a condo or co-op project you must complete the whole form.
H2
Editor's note: To order your copy of the FHA Handbook, click here.
On the new 1004MC -- the first one I'm doing is a condo. Should I leave the top completely blank and fill out just the condo section?
Diane Graham dgraham295@comcast.net
Dear Diane,
As I explain in my book, Harrison's Illustrated Guide: How to Fill Out the Market Conditions Addendum to an Appraisal (1004MC-71), for a condo or co-op project you must complete the whole form.
H2
Editor's note: To order your copy of the FHA Handbook, click here.
492) Interior Sketch
05/21/09
Dear H2,
I was just looking through your guide to completing the 1004MC form and the condominium guide. On page CS-32 you have a sketch of improvements which shows the interior walls and the rooms are labeled. I was under the impression that you only did room sketches and room labels if there is a functional obsolesence. Am I wrong in my thinking?
Thank you,
Don W Dillard dillardappraisal@aol.com
Dear Don,
The USPAP is silent on this subject. Different lender/clients have their own rules about what kind of exhibits are required. You need to determine this as part of the scope of work dialogue. Our sample appraisal contains many things that some lender/clients may or may not require.
H2
I was just looking through your guide to completing the 1004MC form and the condominium guide. On page CS-32 you have a sketch of improvements which shows the interior walls and the rooms are labeled. I was under the impression that you only did room sketches and room labels if there is a functional obsolesence. Am I wrong in my thinking?
Thank you,
Don W Dillard dillardappraisal@aol.com
Dear Don,
The USPAP is silent on this subject. Different lender/clients have their own rules about what kind of exhibits are required. You need to determine this as part of the scope of work dialogue. Our sample appraisal contains many things that some lender/clients may or may not require.
H2
491) 1004MC Sale
05/17/09
Hello Henry,
I purchased your guide on How to Fill Out a Market Conditions Addendum to the Appraisal Report. Per your instructions, in order to come up with the Median Sale Price as % of List Price, we should divide the Median Comparable Sale Price by the Median Comparable List Price of Unsold Listings. However, the eFannieMae.com 1004MC training video reports that we should divide the Median Comparable Sale Price by the Median Comparable List Price of only the closed settled comparable sales. This was also confirmed in an email sent to me by Mark Rattermann, who presented the 1004MC training video.
Frank Zappia fzappia@realvaluations.com
Dear Frank,
You and Mark Rattermann are correct. This was one of the clarifications Fannie Mae made when they issued the 3/09 version of the form. For a complete update on the new version of the form, with analysis and comments, go to our Update page at: www.revmag.com/1004MCupdate.
H2
I purchased your guide on How to Fill Out a Market Conditions Addendum to the Appraisal Report. Per your instructions, in order to come up with the Median Sale Price as % of List Price, we should divide the Median Comparable Sale Price by the Median Comparable List Price of Unsold Listings. However, the eFannieMae.com 1004MC training video reports that we should divide the Median Comparable Sale Price by the Median Comparable List Price of only the closed settled comparable sales. This was also confirmed in an email sent to me by Mark Rattermann, who presented the 1004MC training video.
Frank Zappia fzappia@realvaluations.com
Dear Frank,
You and Mark Rattermann are correct. This was one of the clarifications Fannie Mae made when they issued the 3/09 version of the form. For a complete update on the new version of the form, with analysis and comments, go to our Update page at: www.revmag.com/1004MCupdate.
H2
489) 1004MC Form
05/15/09
Dear H2,
Do we need to do the 1004MC for all drive bys or drive bys with interior inspections?
DAN CU.APPRAISAL@PACBELL.NET
Dear Dan,
Fannie Mae and Freddie Mac require a 1004MC/71 Market Conditions Addendum for "all mortgage loans delivered to them for one to four unit properties." If the loan is not going to be for delivered to Fannie Mae or Freddie Mac, it is up to the lender/client to tell you what type of report they need.
H2
Do we need to do the 1004MC for all drive bys or drive bys with interior inspections?
DAN CU.APPRAISAL@PACBELL.NET
Dear Dan,
Fannie Mae and Freddie Mac require a 1004MC/71 Market Conditions Addendum for "all mortgage loans delivered to them for one to four unit properties." If the loan is not going to be for delivered to Fannie Mae or Freddie Mac, it is up to the lender/client to tell you what type of report they need.
H2
485) 1004MC Backup
05/07/09
Dear H2,
Where do I find the facts on having to submit a graph or worksheet showing the data used in the new 1004mc form? Is it required along with the 1004mc form in the body of the appraisal report that is being submitted to a lender? Thanks!
Lisa lhippard@wisperhome.com
Dear Lisa,
The USPAP does not address what appraisal form to use or what must be reported. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon the overall assignment. Fannie Mae, Freddie Mac and FHA require the new Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. I am not aware of any requirement to include in the report the data used to fill out the report. For each appraisal assignment you take, the USPAP requires that you have a scope of work dialogue with the Lender/Client. One subject you should discuss is what backup data they require.
H2
Where do I find the facts on having to submit a graph or worksheet showing the data used in the new 1004mc form? Is it required along with the 1004mc form in the body of the appraisal report that is being submitted to a lender? Thanks!
Lisa lhippard@wisperhome.com
Dear Lisa,
The USPAP does not address what appraisal form to use or what must be reported. Fannie Mae, Freddie Mac, FHA and ERC have different requirements depending upon the overall assignment. Fannie Mae, Freddie Mac and FHA require the new Market Conditions Addendum form for any appraisal with a effective date starting 4/1/09. I am not aware of any requirement to include in the report the data used to fill out the report. For each appraisal assignment you take, the USPAP requires that you have a scope of work dialogue with the Lender/Client. One subject you should discuss is what backup data they require.
H2
481) Multi-Family & 1004MC
04/28/09
Dear H2,
Does the market conditions report have to be used on a multi-family?
Thank you
Cindy Grantham clgappraisals@forestranch.com
Dear Cindy,
Yes, as of April 1st, the 1004MC/71 form must be used for all Fannie Mae, Freddie Mac and FHA multi-family appraisals.
H2
Does the market conditions report have to be used on a multi-family?
Thank you
Cindy Grantham clgappraisals@forestranch.com
Dear Cindy,
Yes, as of April 1st, the 1004MC/71 form must be used for all Fannie Mae, Freddie Mac and FHA multi-family appraisals.
H2
477) Comps on 1004MC
04/15/09
Dear H2,
How should both sections of the 1004MC be filled out in relation to condos? I have a lender that has rejected the form as I have filled it out. They are requesting the the top portion be filled out to reflect all comps in the neighborhood and the bottom filled out to reflect only the comparables from the specific development. Is this correct?
Marlene Deason marlenepacheco@sbcglobal.net
Dear Marlene,
Yes - the lender is correct. Of course, even in the upper section of the form, only sales that are comparable to (competitive with) the subject property should be use.
H2
How should both sections of the 1004MC be filled out in relation to condos? I have a lender that has rejected the form as I have filled it out. They are requesting the the top portion be filled out to reflect all comps in the neighborhood and the bottom filled out to reflect only the comparables from the specific development. Is this correct?
Marlene Deason marlenepacheco@sbcglobal.net
Dear Marlene,
Yes - the lender is correct. Of course, even in the upper section of the form, only sales that are comparable to (competitive with) the subject property should be use.
H2
475) Settled Sale
04/10/09
Dear H2,
First - Thanks for publishing the How to Fill Out a Market Conditions Addendum guide. I have purchased the book and am filling out my first 1004MC form for a new construction condo appraisal. Can I find out what the term "settled" sale means? I'm not familiar with the term. Does it mean closed sales only, or pending and closed, or other? Thank you.
By the way -- I have purchased many of your earlier guides and have found them helpful in many cases. Thank you for writing them!
Sandra L. Pike sandrapike@appraisenow.com
Dear Sandra,
A settled sale is one that has closed (the closing has been completed). Thanks for the kind words about my books. I am very glad you've found them helpful.
H2
First - Thanks for publishing the How to Fill Out a Market Conditions Addendum guide. I have purchased the book and am filling out my first 1004MC form for a new construction condo appraisal. Can I find out what the term "settled" sale means? I'm not familiar with the term. Does it mean closed sales only, or pending and closed, or other? Thank you.
By the way -- I have purchased many of your earlier guides and have found them helpful in many cases. Thank you for writing them!
Sandra L. Pike sandrapike@appraisenow.com
Dear Sandra,
A settled sale is one that has closed (the closing has been completed). Thanks for the kind words about my books. I am very glad you've found them helpful.
H2
473) 1004MC Listing Periods
04/03/09
Dear H2,
1004MC Form question: Should only the listings that came onto the market during the specific time range be included in the form? Or should the cummulative listing be included?
Davis M. Watson davisw@centurytel.net
Dear Davis,
A listing that was active during the period (current to 3 months, prior 4 to 6 months and prior 7 to 12 months) should be included in each period on the 1004MC/71 form. For example, a listing that came on the market 10 months prior to the effective date of the appraisal and was still active and unsold on the effective date of the appraisal should be shown in all three periods.
H2
1004MC Form question: Should only the listings that came onto the market during the specific time range be included in the form? Or should the cummulative listing be included?
Davis M. Watson davisw@centurytel.net
Dear Davis,
A listing that was active during the period (current to 3 months, prior 4 to 6 months and prior 7 to 12 months) should be included in each period on the 1004MC/71 form. For example, a listing that came on the market 10 months prior to the effective date of the appraisal and was still active and unsold on the effective date of the appraisal should be shown in all three periods.
H2
471) 1004MC Not Required
03/23/09
Dear H2,
I've received conflicting information regarding the 1004MC form. If an appriasal is done for mortgage lending purposes, does this form need to be included? What if the client says they are not selling to FNMA or FHLMC and they don't request it? I will not do this extra work without an additional fee and do not want to penalize clients who are not asking for it. I would prefer not to have my name and email address published with this question. Thanks!
Name Withheld By Request
Dear Friend,
As of March 23, only Fannie Mae and Freddie Mac are requiring the Market Conditions Addendum form. Lender/clients who are not planning to sell the mortgages to Fannie Mae or Freddie Mac may not want the form and may be unwilling to pay for it. This is something you need to determine as part of the required scope of work dialogue you have with the lender/client. You need to protect yourself from being asked to supply the form later, when the lender/client decides that they need it. The best way is to get the appraisal assignment in writing. If this is not possible, your work file should contain notes saying that you explained to the client why the form is sometimes needed and who authorized you not to provide it with your appraisal.
H2
I've received conflicting information regarding the 1004MC form. If an appriasal is done for mortgage lending purposes, does this form need to be included? What if the client says they are not selling to FNMA or FHLMC and they don't request it? I will not do this extra work without an additional fee and do not want to penalize clients who are not asking for it. I would prefer not to have my name and email address published with this question. Thanks!
Name Withheld By Request
Dear Friend,
As of March 23, only Fannie Mae and Freddie Mac are requiring the Market Conditions Addendum form. Lender/clients who are not planning to sell the mortgages to Fannie Mae or Freddie Mac may not want the form and may be unwilling to pay for it. This is something you need to determine as part of the required scope of work dialogue you have with the lender/client. You need to protect yourself from being asked to supply the form later, when the lender/client decides that they need it. The best way is to get the appraisal assignment in writing. If this is not possible, your work file should contain notes saying that you explained to the client why the form is sometimes needed and who authorized you not to provide it with your appraisal.
H2
461) New 1004MC Mini-Guide
03/01/09
Dear H2,
Have you received any questions about the new 1004MC form market conditions addendum to the appraisal report?
Cathy Goutierrez cathyg358@bellsouth.net
Dear Cathy,
I have been flooded with requests. As a result I am just finishing up a Mini-Guide on how to fill out the 1004MC Form that will be available from Forms and Worms next week. We will also feature an article on the form in our upcoming online issue of REV Magazine.
1. You can pre-order the Mini-Guide -- Item #300113; price $24.95 -- from Forms and Worms at 1-800-243-4545 or www.formsandworms.com
2. There's also a CD-Rom available with the entire book in PDF format, which includes a copy of an Excel freeware program that you can use to fill out and print a copy of the completed 1004MC Form. The CD-Rom is Item #200200 for $24.95.
3. A combo deal of the printed Book & CD-Rom is also available: Item #300213 for $29.95.
4. Finally - there's a special offer: Buy the URAR Illustrated Guide & the Exterior Only (2055) Illustrated Guide combo, and get a FREE COPY of the new Mini-Guide to the 1004MC Form. Request Special Offer item #400286 for just $49.95.
H2
Have you received any questions about the new 1004MC form market conditions addendum to the appraisal report?
Cathy Goutierrez cathyg358@bellsouth.net
Dear Cathy,
I have been flooded with requests. As a result I am just finishing up a Mini-Guide on how to fill out the 1004MC Form that will be available from Forms and Worms next week. We will also feature an article on the form in our upcoming online issue of REV Magazine.
1. You can pre-order the Mini-Guide -- Item #300113; price $24.95 -- from Forms and Worms at 1-800-243-4545 or www.formsandworms.com
2. There's also a CD-Rom available with the entire book in PDF format, which includes a copy of an Excel freeware program that you can use to fill out and print a copy of the completed 1004MC Form. The CD-Rom is Item #200200 for $24.95.
3. A combo deal of the printed Book & CD-Rom is also available: Item #300213 for $29.95.
4. Finally - there's a special offer: Buy the URAR Illustrated Guide & the Exterior Only (2055) Illustrated Guide combo, and get a FREE COPY of the new Mini-Guide to the 1004MC Form. Request Special Offer item #400286 for just $49.95.
H2
457) Using the 1004MC
02/22/09
Dear H2,
1004MC Require April 1, 2009. I just went through a pratice run in filling out this form. I see it taking an hour or more to complete. Would a fee increase be justified beginning in April? And, if so, can you say what a reasonable amount would be?
Leroy Thomas III LT3Appraisers@aol.com
Dear Leroy,
There is no doubt that it will take longer to do an appraisal when the 1004MC is required. Unfortunately, it is against the law for me to recommend fees.
H2
1004MC Require April 1, 2009. I just went through a pratice run in filling out this form. I see it taking an hour or more to complete. Would a fee increase be justified beginning in April? And, if so, can you say what a reasonable amount would be?
Leroy Thomas III LT3Appraisers@aol.com
Dear Leroy,
There is no doubt that it will take longer to do an appraisal when the 1004MC is required. Unfortunately, it is against the law for me to recommend fees.
H2
451) 1004MC
02/12/09
Dear Henry,
Do you have any advice or help you can offer in completing the new 1004MC form which will be required by Fannie and Freddie as of April 1st? It looks really complicated!
Thanks!
Cathy Goutierrez cathyg358@bellsouth.net
Dear Cathy,
We've just sent the new Illustrated Guide: How to Fill Out the Market Conditions Addendum to the Real Estate Appraisal (Fannie Mae 1004MC-Freddie Mac 71) to the printer. It will be available from Forms and Worms for shipping next week. We will also be running a significant article on the form in our upcoming online issue of REV Magazine.
1. You can pre-order the Illustrated Guide plus CD-Rom -- Item #300213; price $49.95 -- from Forms and Worms right now, at 1-800-243-4545 or www.formsandworms.com Get $10 off with Coupon Code REV09.
2. There's also a CD-Rom available with the entire book in PDF format, which includes the Condominium Case Study and a sample completed 1004MC Form. The CD-Rom is Item #200200 for $34.95.
3. Finally - there's a special offer: Buy the URAR Illustrated Guide & the Exterior Only (2055) Illustrated Guide combo, and new Guide to the 1004MC Form and SAVE $60. Request Special Offer item #400286 for just $69.95.
H2
Do you have any advice or help you can offer in completing the new 1004MC form which will be required by Fannie and Freddie as of April 1st? It looks really complicated!
Thanks!
Cathy Goutierrez cathyg358@bellsouth.net
We've just sent the new Illustrated Guide: How to Fill Out the Market Conditions Addendum to the Real Estate Appraisal (Fannie Mae 1004MC-Freddie Mac 71) to the printer. It will be available from Forms and Worms for shipping next week. We will also be running a significant article on the form in our upcoming online issue of REV Magazine.
1. You can pre-order the Illustrated Guide plus CD-Rom -- Item #300213; price $49.95 -- from Forms and Worms right now, at 1-800-243-4545 or www.formsandworms.com Get $10 off with Coupon Code REV09.
2. There's also a CD-Rom available with the entire book in PDF format, which includes the Condominium Case Study and a sample completed 1004MC Form. The CD-Rom is Item #200200 for $34.95.
3. Finally - there's a special offer: Buy the URAR Illustrated Guide & the Exterior Only (2055) Illustrated Guide combo, and new Guide to the 1004MC Form and SAVE $60. Request Special Offer item #400286 for just $69.95.
H2