The 1004MC was introduced because of concern that appraisers were not adequately analyzing and reporting market conditions. This form provides a template for the reporting of certain prescribed information, while still allowing an appraiser to include any other information necessary to understand market conditions.
Since the 1004MC was released in 2009, the primary focus has been on the data grid presented in the top third of this form. However, in some locations the number of comparable sales and listings available are not sufficient to provide credible support for the analysis of market trends. Therefore, while it is important to understand the correct way to complete the grid on the 1004MC, it is equally important to understand what to do when the data in the grid alone is insufficient for credible trend analysis.
The instructions provided on the 1004MC should not be overlooked. The instructions provide fundamental guidance on the role that the form plays in the entire report and state what to do if certain information is unavailable or is only available as an average.
As discussed earlier, the instructions state that the information on the 1004MC must be used as the basis for the housing trends reported in the NEIGHBORHOOD section of the report. Note that the instructions do not say that the trends reported in the NEIGHBORHOOD section must be supported by the data in the grid on the 1004MC. Rather, the instructions refer to the entire 1004MC form. This distinction is necessary because there is often not enough data in the grid alone to provide reliable trend indications.
If the data in the grid is insufficient for trend analysis, the appraiser must consider additional information.
The following is from a Fannie Mae publication titled, Appraisal and Property Report Policies and Forms Frequently Asked Questions (FAQs), which is available at:
If there is limited comparable data within the subject’s neighborhood, that data should be reported, even if it is insufficient for trend analysis. The report should specifically note that the data in the 1004MC grid is insufficient for credible trend analysis. The appraiser should then analyze additional information that is sufficient to indicate trends. Additional data that one might consider could include things such as:
Regardless of the data used in the trends analysis, the instructions clearly state that support for the trends reported must be included within the report itself.
It is recognized that some of the data requested in the 1004MC grid is not available in all areas. In some cases the data may be reported as an average rather than as a median. In either case, an explanation must be provided.
The most common error in completing the 1004MC is failure to support trends when there is limited data in the 1004MC data grid.
Consider this example:
The commentary in this report correctly noted that there were not enough sales or listings to provide a statistically meaningful trend analysis. However, the appraiser did not go on to provide any other data or information to explain how the trends indicated in the NEIGHBORHOOD section of the report were supported. This is in direct conflict with the instruction that support for the reported trends must be included in the 1004MC.