So, What Can I Expect with My Florida Home Appraisal?

It’s the question all Florida Realtors and Mortgage Brokers should be able to answer as the new year approaches.   Things   with Florida home appraisals are changing.   Read on to find out how…

Fannie Mae is establishing additional appraisal requirements to go along with the existing Uniform Standards of Professional Appraisal Practice (USPAP).   The NEW Form 1004MC - “MARKET CONDITIONS ADDENDUM to the APPRAISAL REPORT” – will be required on all Florida appraisal reports for single to 4-family home loans dated on or after April 1, 2009. However, as I will explain, many appraisers and lenders are asking for the   information found on the 1004MC now!

Basically, the 1004MC asks for more information about market trends, supply and demand, marketing times, prior listings, and the like.

I’ve provided answers to some of the questions I’ve been asked most about the 1004MC.   I hope they help to clear some things up for everyone.

As a Florida Realtor or Florida Mortgage Broker, Why Should I Care?

You should care because the new information requirements of the 1004MC can cause significant delays in closing your client’s Florida home loan on time.   It’s not enough to say “Hey, that’s the Appraiser’s job, not mine!”

Folks, this falls into the “Help the Appraiser Help You” category.   I’m not suggesting that you try to influence their decision in any way whatsoever.   I’m just saying that customer service matters as much to our internal customers as it does to those we service externally.

Streamlining the Florida Home Loan Process by Helping Out Your Appraiser

You need to bone up on this addendum so you can be sure your client’s Florida home loan comes through with as few glitches as possible.   Here are some points to keep in mind:

• Banks and other lenders are becoming more stringent than ever, and as an informed Realtor or Florida Mortgage Broker, YOU can do a lot to be sure your client’s loan goes smoothly.

• The 1004MC requires detailed information that hasn’t previously been requested.   Keep in mind that this issue pertains to both Fannie and Freddie products.
• You need to understand how appraisers reach their   conclusions about the area’s market conditions AND how these conditions affect the value of your client’s property.   Knowing what appraisers must include on their reports will help you understand why a value (versus the sales price) has increased or decreased.
• Collecting this information early on not only helps the appraiser, but can help you when listing homes.
• YOU can help provide the necessary information to speed up the appraisal and the entire lending process. Be the Super Hero!

Here are some answers the most frequently asked 1004MC questions I have received from my Realtor clients to date:

When will the Market Conditions Addendum go into effect for Florida home appraisals?

Lenders are already requiring much if not all of the information listed on the 1004MC.   However, the “official date” for the addendum to take effect is April 1, 2009.

Note: If your Florida home appraiser isn’t already requesting this additional information, you can expect them to start any time now.

What if my client’s Florida home has been listed more than once within the past 12 months?

Appraisers are required to report details if the property has been listed multiple times. As a Florida Home Loan provider or Realtor, you can help make sure this information is readily available ahead of time.

Note: Even now, Florida home loans are being held up at closing when this information is not available.

Is it necessary to disclose seller concessions for use on the Florida home appraisal?

Yes.   All concessions, whether seller or third-party of any kind, must be listed on the appraisal. This also applies to any concessions updated or added AFTER the appraisal completion.

Note: You will have a big problem at the closing table if the concession dollar amount on the HUD-1 does not match the figure in the appraiser’s comments.

Can the Florida appraiser still parse out smaller acreage totals for comps if my client’s is buying or selling the only large lot in the area?

No.   If large acreage is not normal for the area, appraisers can no longer parse out a small acre total from a larger one to make a comparable analysis.   For example, they may not take out 4-acres from your client’s 24-acre parcel to determine value against another nearby 4-acre parcel.

Appraisers must count the entire value of the land, which might really mess up its value.   However, you can remedy any pricing difficulty by successfully applying for a new land parcel description that legally separates the home’s lot from the rest of the acreage prior to closing.

Will Florida Appraisers still have to check with third parties to evaluate Florida homes listed as new construction?

No.   And this should be seen as good news!   Appraisers may now use information provided from the Builder or Realtor instead of verifying with a third party service.   The only stipulation is that there must be HUD-1’s available to verify sales prices associated with new construction comps. (Check with your title company for help with this.)

So… You Got All of That?   To Help Keep Things Straight – Here’s a Short Recap of What Florida Appraisers Will Be Looking For:

• The percentage of listings vs. actual sales over the past 6 months
• Number of days on the market
• Information on all seller concessions in relation to what is “usual and customary” for your area
• The area’s median sales price vs. list price
• The average listing price vs. sales price
• The extent of foreclosures in the area

So do yourself, and your Florida home loan clients a great service by collecting as much of this information for your appraiser as possible. They’ll thank you for it!

Referenced: Leslie Petersen – MortgageCurrentcy.com

Additional Resources

• Back To Basics – How Do We Make Appraisals More Reliable? (appraisalnewsonline.typepad.com)
• Fannie Mae Relaxes Standards For Refinancing [Refinancing] (consumerist.com)
• The Appraisal Foundation Offers Online USPAP Course (appraisalnewsonline.typepad.com)

I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!

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