Residential Reporting: Hitting All of The Bases
Chapter 3
Other Forms and
Reports
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Residential Reporting: Hitting All of The Bases
Chapter 3: Key Terms
 Appraisal Review The act or process of developing and
communicating an opinion about the quality of another
appraiser’s work that was performed as part of an
appraisal or appraisal review assignment.
 Broker Price Opinion (BPO) A method used by lenders
and others to determine elements of value and
marketability for a property.
 Recertification of Value A process performed to
confirm whether or not the conditions of a prior appraisal
have been met. A Recertification of Value does not
change the effective date of the value opinion.
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Residential Reporting: Hitting All of The Bases
Introduction
 Numerous other reporting forms and formats
communicate the appraiser’s opinions and conclusions
in various assignments.
 Some reporting forms used primarily for mortgage
lending may be specified by the client and the use
agreed to by the appraiser, based on the level of risk
perceived by the lender.
 Other forms are specific to a particular appraisal
discipline, such as appraisal review or for a specific type
of property, such as manufactured homes,
condominiums, etc.
 Many of the most common appraisal reporting forms will
be discussed.
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Residential Reporting: Hitting All of The Bases
Other Common Appraisal
Reporting Forms
 Common appraisal forms used to communicate
an appraisal of residential real property for a
mortgage finance transaction will be reviewed.
 In most cases, the key differences of the
particular form and the Uniform Residential
Appraisal Report (URAR) will be discussed.
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Residential Reporting: Hitting All of The Bases
Exterior-Only Inspection
Appraisal Report
 Referenced by both Fannie Mae and Freddie
Mac as Form 2055.
 Designed for reporting an exterior-only appraisal
of a single-family dwelling, including planned
unit developments (PUDs), but not
manufactured homes.
 May not be used for condominiums or
cooperative units.
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Residential Reporting: Hitting All of The Bases
Form 2055: Scope of Work
 Required during development process when Form 2055
is being used for reporting.
 Very similar to that required for the URAR.
 Form spells out that the appraiser must, at a minimum:
 Perform a visual inspection of the exterior areas of the
subject property from the street.
 Inspect the neighborhood.
 Inspect each of the comparable sales from the street.
 Research, verify, and analyze data from reliable public
and/or private sources.
 Report the analysis, opinions, and conclusions in the
appraisal report.
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Residential Reporting: Hitting All of The Bases
Form 2055: Scope of Work
(cont.)
 Scope of work integral with Form 2055 indicates
appraiser is only inspecting the exterior of the
subject property from the street.
 Additional instruction, unique to Form 2055,
specifies requirements for the appraiser in
performing an appraisal utilizing the form.
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Residential Reporting: Hitting All of The Bases
Form 2055: Scope of Work
(cont.)
 "The appraiser must be able to obtain adequate
information about the physical characteristics (including,
but not limited to, condition, room count, gross living
area, etc.) of the subject property from the exterior-only
inspection and from reliable public and/or private
sources to perform this appraisal. The appraiser should
use the same type of data sources that he or she uses
for comparable sales such as, but not limited to, multiple
listing services, tax and assessment records, prior
inspections, appraisal files, information provided by the
property owner, etc."
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Residential Reporting: Hitting All of The Bases
Form 2055: Scope of Work
(cont.)
 Since the integrity and accuracy of the data
obtained from most of these sources are
believed to reflect the actual state of the portions
of the property that the appraiser cannot see first
hand, but is not certain, the use of an
extraordinary assumption would be appropriate.
 As discussed in Chapter 1, when an appraiser
employs an extraordinary assumption in the
development process, its use must be
appropriately disclosed in the appraisal report,
per Standards Rule 2-2 (a), (b), and (c)(x).
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Residential Reporting: Hitting All of The Bases
UAD Requirements of Form 2055
 Key differences regarding the UAD requirements
for completing Form 2055 mirror those of the
URAR form with the exception of the
requirement to provide information regarding
any material work done to the kitchen or
bathrooms in the prior 15 years, the level or
work completed, and the timeframe for work
completed to those areas.
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Residential Reporting: Hitting All of The Bases
Form 2055: Statement of
Assumptions and Limiting
Conditions
 This section of Form 2055 is very similar to the
corresponding section in the URAR. All
assumptions and conditions are the same,
except that Form 2055 removes the statement
regarding the sketch.
 The appraiser is not required to provide a sketch
for the dimensions of the improvement, since the
appraiser did not enter the premises to
determine the exact layout of the property.
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Residential Reporting: Hitting All of The Bases
Form 2055: Statement of
Assumptions and Limiting
Conditions (cont.)
 As with the URAR, the appraiser is not held
responsible for legal matters affecting the
property, nor is the appraiser expected to give
testimony in court about the appraisal unless
arrangements are made beforehand.
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Residential Reporting: Hitting All of The Bases
Form 2055: Statement of
Assumptions and Limiting
Conditions (cont.)
 Appraiser certifies that he or she has examined
available flood maps and noted in the appraisal
any adverse conditions that may affect the
property.
 Aside from those things noted in the appraisal
report, the appraiser makes the assumption
there are no hidden or unapparent deficiencies
present that would lower the property's value.
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Residential Reporting: Hitting All of The Bases
Form 2055: Statement of
Assumptions and Limiting
Conditions (cont.)
 If any repairs are noted or required, the
appraiser assumes they will be performed in a
professional manner.
 Appraiser does not make any guarantees about
the property, nor does the appraiser assume any
liability for items that are unknown at the time of
the appraisal or could only be discovered by a
person with specific expertise in a given
discipline.
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Residential Reporting: Hitting All of The Bases
Form 2055: Appraiser’s
Certification
 Certification is very similar to the corresponding
section in the URAR.
 The appraiser's certifications (and the
supervisory appraiser's certifications) are the
same, except Form 2055 removes any
statements that refer to inspecting the interior of
the subject property.
 Like the URAR, the certifications detail actions
that the appraiser performed in developing an
opinion of value for the subject property.
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Residential Reporting: Hitting All of The Bases
Form 2055: Appraiser’s
Certification (cont.)
 As noted with the URAR form in Chapter 2, the
appraiser is not permitted to modify or delete
any part of the certifications.
 Appraiser may only add additional certifications
that do not materially alter the appraisal report,
such as state-specific requirements— those
statements that must be added due to
requirements of a trade organization of which
the appraiser is a member.
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Residential Reporting: Hitting All of The Bases
Form 2055: Exhibits Required
 Exhibit requirements are less than those for the URAR.
 Appraiser must attach a street map that shows the
location of the subject property and all of the comparable
sales used in the sales comparison approach.
 Appraiser must also include a photograph of the front of
the subject property.
 Appraiser must attach as an exhibit any other data
deemed necessary to support the value opinions and
conclusions found in the appraisal report.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report
 Used for the appraisal of an individual unit in a
condominium project, including a condominium
that is part of a PUD.
 Not designed for valuing cooperative units or for
manufactured homes that are part of a project or
complex.
 Appraiser performs most of the same steps as in
a regular appraisal.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report (cont.)
 Some additional project data needed, so Fannie
Mae and Freddie Mac developed the individual
condominium unit appraisal report to ensure that
all necessary information is presented in the
appraisal report to the lender-client.
 Fannie Mae designates this form as Form 1073
and Freddie Mac designates the report form as
Form 465.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report (cont.)
 Similar to the URAR (Form 1004) discussed in
Chapter 2, but has additional sections requiring
the reporting of details of entire condominium
project.
 One important difference is there is no cost
approach reported (or developed) for
condominium units.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report (cont.)
 Because of their co-ownership structure,
condominium units have unique appraisal
requirements.
 Fannie Mae and Freddie Mac recognize this.
 Condominiums are properties developed for
co-ownership, where each co-owner has a
separate interest in an individual unit and an
undivided interest in the common areas
(grounds, lobby, hallways, etc.,) of the property.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report (cont.)
 Condominium residents must follow the
declarations and bylaws set forth by the founder
of the condominium.
 These bylaws are maintained and enforced by
the owners' association.
 Most condominiums are designed for residential
use.
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Residential Reporting: Hitting All of The Bases
Individual Condominium Unit
Appraisal Report (cont.)
 Typical condominiums look like apartments, but
residents usually have exclusive ownership of
their units.
 A condominium is a legal concept rather than a
design concept, so condominiums could also be
free standing units.
 Condominiums should not be confused with
PUDs or cooperatives.
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Residential Reporting: Hitting All of The Bases
Planned Unit Developments
(PUDs)
 PUDs are special subdivisions that do not have
to comply with standard zoning and subdivision
regulations.
 Residential and non-residential buildings are
often combined in the overall plan, and common
areas may be owned by the homeowners'
association for the benefit of all residents.
 Since no co-ownership is involved, a PUD is
appraised using the standard URAR form, with
the "Project Information for PUDs" section filled
in.
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Residential Reporting: Hitting All of The Bases
Cooperatives
 Cooperatives are buildings owned by corporations, with
the residents as shareholders who each receive a
proprietary lease on an individual unit and the right to
use common areas.
 Title to the cooperative building is held by a corporation
formed for that purpose. A person who wants to live in
the building buys shares in the corporation and is given a
proprietary lease for a unit in the building.
 Proprietary leases have longer terms than ordinary
leases and give the shareholder more rights than an
ordinary tenant.
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Residential Reporting: Hitting All of The Bases
Cooperatives (cont.)
 To transfer a cooperative interest, a shareholder
conveys his or her stock and assigns the
proprietary lease to the new shareholder.
 The value of a cooperative is determined by the
estimated market value of the cooperative
interest and accompanying occupancy rights.
 Reporting the appraisal of a cooperative unit
uses a different form, which is not discussed in
this text.
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Residential Reporting: Hitting All of The Bases
Condominiums
 If the condominium unit is free-standing and no common
areas are co-owned, the URAR form is used.
 In this case, the appraiser must include comments and
information about the homeowners' association,
condominium fees, and quality of maintenance.
 Most condominiums have common ownership of some
areas.
 Because of this and the shared external maintenance,
the appraiser must report the characteristics of the entire
condominium project as a whole, in addition to reporting
specific information applicable to subject unit.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Scope of Work


Similar to that required for the URAR.
The appraiser must, at a minimum:






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Perform a complete visual inspection of the
interior and exterior areas of the subject unit.
Inspect and analyze the condominium project.
Inspect the neighborhood.
Inspect each of the comparable sales from the
street.
Research, verify, and analyze data from reliable
public and/or private sources.
Report his or her analysis, opinions, and
conclusions in the appraisal report.
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Residential Reporting: Hitting All of The Bases
Form 1073/465:
UAD Requirements
 For the most part, the UAD reporting
requirements somewhat mirror those of the
URAR form with several exceptions.
 Specific fields must be UAD compliant for
reporting.
(continues)
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Residential Reporting: Hitting All of The Bases
Form 1073/465:
UAD Requirements (cont.)








Unit #
Project Name
Project Description
General Description
Developer/Builder in Control of HOA
Any Commercial Space in the Project
Condominium Unit Housing Trends
# of Levels
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Residential Reporting: Hitting All of The Bases
Form 1073/465:
UAD Requirements (cont.)
 No field for reporting site area as the concept is not
consistent with the definition of a condominium.
 Design or style also is not a required reporting element.
 Other fields appear in the URAR which may be reported
in a slightly different manner in the condominium report,
such as heating/cooling sources.
 Some fields common to both forms may be included
under different sections of the respective report.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Statement of
Assumptions and Limiting
Conditions
 Significantly the same as the URAR.
 Appraiser is not held responsible for legal
matters affecting the property and is not
expected to give testimony in court about the
appraisal unless arrangements are made
beforehand.
 Appraiser certifies that he or she has examined
available flood maps and has noted any adverse
conditions that may affect the property.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Statement of
Assumptions and Limiting
Conditions (cont.)
 Aside from those things noted in the appraisal
report, appraiser makes the assumption that no
hidden or unapparent deficiencies that would
adversely affect the property's value are present.
 Appraiser assumes any repairs noted will be
performed in a professional manner.
 Appraiser is not making any guarantees about
the property, nor is the appraiser assuming any
liability for unknown items.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Project
Information
 In addition to specific information about the
condominium unit, the appraisal report requires
information relating to the project or complex in
which the unit is located.
 Since the desirability of the unit is also
associated with the appeal of the complex, there
is an entire section in the appraisal form for
clearly reporting sufficient data so that the
lender-client may understand the subject’s
project and its characteristics.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Project
Information (cont.)
 Reporting fields are specific to two categories: condition
and ownership.
 Fields regarding condition address desirability of the
subject's condominium project compared to other
competing condominium projects in the same market
area.
 Was the project created by converting existing buildings
into condominiums?
 Are the units, common elements, and recreation facilities
complete?
 Is there any commercial space in the project?
 Describe the condition of the project and quality of
construction.
 Describe the common elements and recreation facilities.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Project
Information (cont.)
 Reporting fields specific to ownership provide the
appraiser the opportunity to describe additional
measures of desirability within the condominium project.
 Includes source of fees and likelihood that they will rise,
as well as the owner-occupancy level of the complex.
 Is the developer/builder in control of the homeowners’
association?
 Does any single entity (individual, investor group,
corporation, etc.,) own more than 10% of the total number of
units in the project?
 Are any common elements leased to or by the homeowners’
association?
 Is the project subject to ground rent?
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Project
Information (cont.)
 Fannie Mae and others will not approve
mortgages in condominium complexes where
owner-occupancy falls below a specified level.
 Details must be reported regarding the current
primary occupancy and number of units in
various stages of completion for all phases of
the condominium project.
 Fees paid by unit owners are an important
aspect of desirability of a condominium.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Project
Information (cont.)
 Poor management and budgetary planning or
insufficient reserves can lead to sudden fee
increases in the future.
 A major concern of most lender-clients is the
soundness of the condominium project's
management company and that there are
enough funds available for future repairs.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Appraiser’s
Certification
 Certifications are the same as the URAR.
 They detail actions that the appraiser performed
in reaching a conclusion of value for the subject
property, including research and verification of
data to give the client confidence in the results
as well as other required disclosures.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Exhibits
Required
 Addenda for Form 1073 are similar to those for
the URAR.
 Appraiser must attach a street map showing the
location of the subject property and comparable
sales used in the sales comparison approach.
 For a condominium unit in a complex, appraiser
must include an interior sketch of the unit,
including calculations for gross living area.
 As an alternative, appraiser may attach a copy
of the building plat to the appraisal report
instead of a floor plan sketch.
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Residential Reporting: Hitting All of The Bases
Form 1073/465: Exhibits
Required
 Appraiser must also include clear and
descriptive photographs that show the front and
rear of the subject unit, as well as a street
scene.
 Pictures of each comp used must show the front
of the property and may be copied from other
sources.
 Appraiser must attach as an exhibit any other
data deemed necessary to support the value
opinions and conclusions found in the appraisal
report.
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Residential Reporting: Hitting All of The Bases
Manufactured Home Appraisal
Report Form
 Also known as Fannie Mae Form 1004C or for
Freddie Mac, Form 70B.
 Form is designed for the appraisal of a one-unit
manufactured home.
 Includes a unit located in a planned unit
development (PUD).
 If manufactured home is part of a condominium
project or cooperative, additional information
about the project must be supplied on a
separate form and attached as an addendum to
the reporting form.
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Residential Reporting: Hitting All of The Bases
Manufactured Home Appraisal
Report Form (cont.)
 Fannie Mae defines manufactured housing units
as single-width or multi-width units constructed
off-site and transported to the permanent site.
 There, they are completed and/or attached to
the foundation.
 Under this definition, the dwelling is built to HUD
specifications with a HUD certification label
attached and recognized as a manufactured
home.
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Residential Reporting: Hitting All of The Bases
Manufactured Home Appraisal
Report Form (cont.)
 No UAD reporting requirements.
 Scope of Work section as well as the Statement
of Assumptions and Limiting Conditions are
consistent with other forms that have been
discussed, as is the Appraiser’s Certification.
 Required exhibits also are mirrored.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields
 Several reporting fields are unique.
 These fields require relatively brief yes or no
responses or explanations, but may have
required the appraiser to conduct additional
research or investigation during the
development process of the appraisal.
 Most of these fields address improvements and
are focused at reporting the permanence of the
structure on the site.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields (cont.)
 These required fields include:
 Is the manufactured home attached to a
permanent foundation system?
 Have the towing hitch, wheels, and axles been
removed?
 Is the manufactured home permanently connected
to a septic tank or sewage system and other
utilities?
 Appraiser is also asked to describe any
additions or modifications to the structure (e.g.,
a deck), and to rate the quality of construction
based on objective criteria.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields (cont.)
 Most significant reporting section of the form is
the HUD data plate section.
 Purpose of this section is to report data
significant to compliance with HUD and local
requirements.
 HUD data plate or compliance certificate is
located on the interior of the subject, and the
HUD certification label is located on the exterior
of each section of the home.
 Both of these contain much of the information
needed to complete this section of the form.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields (cont.)
 These required fields include:
 Is the manufactured home attached to a
permanent foundation system?
 Have the towing hitch, wheels, and axles been
removed?
 Is the manufactured home permanently connected
to a septic tank or sewage system and other
utilities?
 Appraiser is also asked to describe any
additions or modifications to the structure (e.g.,
a deck), and to rate the quality of construction
based on objective criteria.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields (cont.)
 These required fields include:
 Is the manufactured home attached to a
permanent foundation system?
 Have the towing hitch, wheels, and axles been
removed?
 Is the manufactured home permanently connected
to a septic tank or sewage system and other
utilities?
 Appraiser is also asked to describe any
additions or modifications to the structure (e.g.,
a deck), and to rate the quality of construction
based on objective criteria.
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Residential Reporting: Hitting All of The Bases
Form 1004C: Unique Reporting
Fields (cont.)
 One section of Form 1004C that varies from the
standard URAR is the Cost section.
 In calculating costs of the structure, there is a breakdown
of the subject's dimensions by modular section of the
home.
 Calculations can be performed for each section of singlewidth or multi-width units independently, with the results
added together at the end.
 Cost field for entering the amount needed for delivery,
installation, and setup of the manufactured units.
 Ensures that all potential replacement costs are
considered.
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Residential Reporting: Hitting All of The Bases
Small Residential Income
Property Appraisal Report
 Fannie Mae Form 1025/Freddie Mac Form 72, is
the most common reporting form used for
reporting the appraisal of a two- to four-family
property for use by a lender client.
 Form is a seven-page report and provides an
orderly and systematic flow of information and
commentary.
 Full form can be found in the Appendix.
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Residential Reporting: Hitting All of The Bases
Small Residential Income
Property Appraisal Report (cont.)
 Adopted for use by other lending entities such
as the FHA and VA and other lenders.
 Although some clients and intended users might
have guidelines and requirements that are
different than Fannie Mae, most of Fannie Mae’s
guidelines and requirements represent at least a
minimum level of expectations by all lenders.
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Residential Reporting: Hitting All of The Bases
Small Residential Income
Property Appraisal Report (cont.)
 Scope of Work section, as well as the Statement of
Assumptions and Limiting Conditions is consistent with
other forms that have been discussed, as is the
Appraiser’s Certification.
 Required exhibits also are mirrored, with the exception
that an Operating Income Statement must be attached to
the report when form 1025/72 is being used.
 No UAD reporting requirements applicable to the Small
Residential Income Property Appraisal Report.
 Several differences when using Form 1025/72 when
compared to other appraisal forms.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Occupancy
 For owner-occupied two- to four-family
properties, more than one checkmark box may
need to be checked.
 Same holds true for properties where one or
more units might be vacant on the effective date
of the appraisal.
 In such case, further discussion should be
included in the comments section or in the
addenda.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: 2-4 Unit Housing
Age/Price
 Appraisal report must indicate the age range
and predominant age of properties in the subject
neighborhood.
 Age range must reflect the oldest and newest
ages for similar types of properties.
 Appraiser can state the predominant age as a
single figure or as a range, if more appropriate,
and should select properties that represent the
age range and predominant age, rather than
merely relying on the same properties used to
illustrate the price range and predominant price.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: 2-4 Unit Housing
Age/Price (cont.)
 Age of a property should be within the general age range
of the neighborhood.
 Normally, neighborhoods are developed over a relatively
narrow span of time so that most dwelling units will fall
within a particular age range.
 A property that has an age outside of the general age
range must receive special consideration.
 Unless there is strong evidence of long-term
neighborhood stability, a new dwelling in an old
neighborhood will carry some marginal risk.
 Conversely, an old dwelling in a newly developed area is
generally acceptable if renovation will result in its
conforming to the neighborhood.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: General
Description
 Appraiser indicates if the property contains two, three, or
four units and if any are considered accessory units.
 An accessory unit is defined as a habitable living unit
added to, created within, or detached from another
dwelling that provides the basic requirements for living,
sleeping, eating, cooking, and sanitation.
 Accessory units are commonly recognized as a separate
additional living unit, including separate kitchen,
sleeping, and bathroom facilities attached or detached
from the primary residential unit on the same lot.
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Form 1025/72: General
Description (cont.)
 Attached units contained within a single-family
home, such as a mother-in-law apartment and
garage loft apartment, are common types of
accessory dwelling units.
 Accessory units often involve the conversion of a
garage, basement, or small addition to a singlefamily home.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: General
Description (cont.)
 A special concern of the appraiser (and lender)
is the legality of such accessory units.
 Some accessory units may predate the adoption
of local zoning regulations and may be classified
as legal nonconforming units.
 Therefore, expanded discussion of the subject’s
zoning and compliance is warranted in the
report.
 The remainder of the information in the section
contains reporting elements similar to other
residential appraisal forms.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Foundation
 More than one selection might be required, which will
cause the appraiser to further expand on the provisions
in separate commentary.
 In some areas, basement living units are common.
 Therefore, depending on the particular market, the
presence of finished below-grade units could be viewed
differently than finished below-grade areas in singlefamily dwellings.
 In these cases, the below grade area is included in the
gross building area (GBA)—the total area of a building
measured from the exterior walls that include common
areas (e.g., hallways, entryways, common laundry
rooms).
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Foundation
(cont.)
 An outside entry/exit in a small residential
property could be the only, or an additional,
means of ingress/egress; a walk-out provision to
a patio from the lower level of a particular living
unit; or the primary means of entry/exit for a
below-grade living unit.
 Appraiser should include an explanation of how
the provision affects value, its commonality to
the market, and if the provision is compliant with
local building code.
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Form 1025/72: Appliances
 Appliances included with the property and
provided to tenants are noted along with the
total number of each type.
 Appraiser should note if appliances are built-in
or considered personal property, but included in
the real property appraisal.
 In some cases, appliances can prove significant
to value while in other cases, they may not be.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Description of
Units
 This section of the 1025/72 form is handled much the
same by the appraiser as in other common report types,
except this section breaks down the rooms per unit.
 It should be noted here that where other areas of the
reporting form (such as comparable rentals and the
sales comparison approach) require the appraiser to
report gross building area (GBA), this section of the form
requires the reporting of gross living area (GLA).
 The total area derived from these two methods may not
be equal.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Subject Rent
Schedule
 Includes appraiser’s opinion of market rent for
the subject that is supported from market level
comparable rental data.
 Also in the schedule is the reporting of other
sources of income for the subject property in
addition to rental income from the living units.
 Commentary area of this section allows the
appraiser to discuss his logic and reasoning
used in forming his opinion of market rent for the
subject property.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Sales Comparison
Approach
 The section for reporting the sales comparison
approach may seem somewhat similar to that
found in the URAR reporting form for singlefamily properties
 There are some distinctive differences as the
appraiser must state the sales price in units of
comparison and also identify a market level rent
for the property and derive a GRM from the
data.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Sale Price and
Rent for Subject and Comparable
Sales
 This section is significantly different from the
URAR reporting form.
 Here, the sale price of the subject (if applicable)
is identified by a unit of comparison of sale price
per:




Square foot of GBA
Unit
Room
Bedroom
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Sale Price and
Rent for Subject and Comparable
Sales (cont.)
 In addition, the appraiser states the gross
monthly market rent as well as a gross rent
multiplier (GRM) derived from the data, using
the VIM technique.
 Value (Sale Price) ÷ Gross Monthly Market
Rent = Multiplier
 The appraiser will also report if any rent controls
are in place for the subject property or the
comparables.
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Residential Reporting: Hitting All of The Bases
Form 1025/72: Sale Price and
Rent for Subject and Comparable
Sales (cont.)
 Other notable unique elements of the 1025/72 form are
the reporting of gross building area (GBA) and the
breakdown of the subject property and the comparable
sales by total number of rooms, bedrooms, and baths for
each unit.
 Final adjusted price of the comparable sales is then
stated per unit, per room, and per bedroom.
 Appraiser’s value indication is then reconciled and stated
based upon per unit, per room, per square foot of GBA,
and per bedroom by using the quantity of each element
present in the subject, multiplied by the unit indication
produced through analysis of the comparable data.
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Residential Reporting: Hitting All of The Bases
Operating Income Statement
 Fannie Mae Form 216/Freddie Mac Form 998, is
a required exhibit to accompany the 1025/72
Small Residential Income Property Appraisal
Report for a two- to four-unit income property.
 Here, we will discuss the completion of the form.
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Residential Reporting: Hitting All of The Bases
Form 216/998: General
Instructions and Rent Summary
 General instructions state that completion of the form is
a joint effort of the loan applicant, appraiser, and lender’s
underwriter. Rental is based on an unfurnished unit.
 Even though the borrower is permitted to complete the
form, most often the appraiser will prepare the form,
considering information provided by the borrower, and
then have it reviewed by the lender’s underwriter.
 Note: Lender must ensure the appraiser has operating
statements; expense statements related to mortgage
insurance premiums, homeowners’ association dues,
leasehold payments, or subordinate financing payments;
and any other pertinent information related to the property.
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Residential Reporting: Hitting All of The Bases
Form 216/998: General
Instructions and Rent Summary
(cont.)
 If borrower prepares the form, appraiser must
review the form and comment on the
reasonableness of the projected operating
income.
 Rent schedule included with this section is
straightforward, stating which units are currently
rented, expiration date of any lease agreement,
contract and market rent, as well as the party
responsible for payment of specified utility
expenses.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months
 Real estate taxes and hazard insurance are not
included in the expenses on the Operating
Income Statement.
 These expenses are handled a little differently in
the 216/998 form as they are later included in
the owner’s monthly housing expense.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 Fannie Mae offers the following from their website
regarding expenses:
 Any income or operating expenses that relate to an
owner-occupied unit in a two- to four-family property
should not be included.
 Heating, Cooking, Hot Water
If any of these items are provided by the applicant as
part of the rent for a unit, the projected cost and type of
fuel used should be included. When the costs for heating
relate to public areas only, an appropriate notation
should be made.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 Electricity
This should include only those projected expenses that
will be incurred by the applicant over and above any
similar expense for heating, cooking, or hot water
already taken into account. If the expense relates to the
cost of electricity for public areas only, an appropriate
notation should be made.
 Water/Sewer
These projected expenses should not be included when
they are part of the real estate tax bill or when the units
are serviced by an on-site private system.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 Casual Labor
This includes the costs for public area cleaning,
snow removal, etc., even though the applicant
may not elect to contract for such services.
 Interior Paint/Decorating
This includes the costs of contract labor and
materials that are required to maintain the
interiors of the living units.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 General Repairs/Maintenance
This includes the costs of contract labor and materials
that are required to maintain the public corridors,
stairways, roofs, mechanical systems, grounds, etc.
 Management Expenses
These are the customary expenses that a professional
management company would charge to manage the
property.
 Supplies
This includes the costs of items like light bulbs, janitorial
supplies, etc.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 Total Replacement Reserves
This represents the total average yearly reserves that
were computed in the "Replacement Reserve Schedule"
portion of the form. Generally, all equipment that has a
remaining life of more than one year—such as
refrigerators, stoves, clothes washers/dryers, trash
compactors, etc.—should be expensed on a
replacement cost basis--even if actual reserves are not
provided for in the operating statement or are not
customary in the local market.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Annual Income
and Expense Projection for Next
12 Months (cont.)
 It is important to note when completing this
section of the form, income and expenses for
owner-occupied units are not included.
 Also, the amount entered for total replacement
reserves is the total indicated by the
Replacement Reserve Schedule which is found
on Page 2 of the form.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Replacement
Reserve Schedule
 General instructions from Fannie Mae for completing this
section state that replacement reserves must be
calculated regardless of whether actual reserves are
provided for on the owner’s operating statements or are
customary in the local market.
 Replacement reserve calculations reflect the estimated
cost of the component that has a remaining life of more
than one year, designated on a single unit basis (with the
exception of roof and carpeting) and then multiplied by
the number of units.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Replacement
Reserve Schedule (cont.)
 Example: A four-unit apartment building has appliances
furnished by the landlord.
 If refrigerators in the four units are three years old, and
refrigerators typically last ten years, the refrigerators
have a remaining life of seven years.
 Anticipated replacement cost at that time is $800 per
refrigerator.
 Replacement reserve for refrigerators on the 216/998
form would be reported as:
 $800 (each) ÷ 7 (years) x 4 (units) = $457.14 (annual reserve for
refrigerators)
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation
 The final operating income reconciliation, with
the exception of monthly housing expense, is a
summary of the conclusions reached thus far in
the analysis.
 The section has two lines with two separate
analyses.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 The first analysis addresses monthly operating
income of the property, based on annual income
and expense projection from Page 1 of the form.
 Here, effective gross income from the projection
is entered and total operating expenses are
subtracted to arrive at annual operating income.
 Annual operating income is then divided by 12 to
conclude at a monthly operating income.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 Example: Annual income and expense projection
indicates a property has an effective gross
income of $34,200 and operating expenses of
$11,970, annually.
 The analysis reported on the first line of the form
would be reported like this:
 $34,200 (EGI) - $11,970 (Total Operating Expenses) =
$22,230 (Annual Operating Income) ÷ 12 = $1,852.50
(Monthly Operating Income)
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 The second analysis in the operating income
reconciliation concludes on a net monthly cash flow for
the property by subtracting monthly housing expense
from monthly operating income.
 Monthly housing expense is the sum of principal and
interest; hazard, flood, and mortgage insurance
premiums (as applicable); real estate taxes; special
assessments; homeowners’ association dues; leasehold
payments; and any subordinate financing payments on
mortgages secured by the subject property (e.g., second
mortgage).
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 Appraiser must communicate with the client regarding the
treatment of this analysis.
 Amount to be entered on the form for monthly housing
expense will need to be supplied by the client, and often
at least some of this information is not furnished at the
time the assignment is accepted.
 If necessary information is not furnished or available to
the appraiser, the analysis should not be performed by
the appraiser, but rather left to the underwriter to
complete.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 Example: Continuing with the previous example,
the appraiser has been furnished a total monthly
housing expense by the client of $1,995.91.
 Analysis would be reported as:
 $1,852.50 (Monthly Operating Income) - $1.995.91
(Monthly Housing Expense) = -$143.41 (Net Cash
Flow)
 It can be seen here that the cash flow is negative
in this case.
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Residential Reporting: Hitting All of The Bases
Form 216/998: Operating Income
Reconciliation (cont.)
 This may not be at all uncommon in some
assignments, and would be especially true when
one of the property’s units is owner-occupied.
 In this circumstance, the borrower must have
sufficient income to off-set the negative cash
flow, which is part of the underwriting decision.
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Residential Reporting: Hitting All of The Bases
Appraisal Reviews, Updates, and
Broker Price Opinions
 In this section, various forms and reporting
methods will be discussed which, while not
labeled as an appraisal report, may include
development of a value opinion by an appraiser.
 Included in the discussion at the end of this
section is an overview of Broker Price Opinions
(BPO), which may actually be an appraisal when
performed by an appraiser within appraisal
practice.
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Residential Reporting: Hitting All of The Bases
Appraisal Reviews
 In an appraisal review, the review appraiser is
developing an opinion of the quality of another
appraiser’s work that was part of an appraisal or
appraisal review assignment.
 There are a number of reasons a lender or client
may order a review appraisal.
 One reason could be as simple as a standard
diligence for quality control, or the client could
be concerned about a specific appraiser’s work.
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Residential Reporting: Hitting All of The Bases
Appraisal Reviews (cont.)
 Some larger lenders have standard policies requiring a
review appraisal for loans above a certain loan-to-value
ratio, above a certain mortgage amount, or on a certain
percentage of completed appraisals.
 Many times, scope of work in an assignment may extend
to the review appraiser going beyond an opinion of
quality of another appraiser’s work and include the
review appraiser developing their own opinion of value.
 Whether the review appraiser agrees or disagrees with
the value opinion found in the work being reviewed, that
opinion is an appraisal.
 Thus, the review assignment is two-fold—both a review
and an appraisal.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations
 USPAP devotes all of STANDARD 3 to detailing
the appraiser’s obligations in developing
appraisal review opinions and reporting the
results.
 USPAP defines appraisal review as: the act or
process of developing and communicating an
opinion about the quality of another appraiser’s
work that was performed as part of an appraisal
or appraisal review assignment.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Standards Rules 3-4 through 3-7 address the
performance requirements related to appraisal
review reporting. Most of the reviewer’s specific
obligations are cited in Standards Rules 3-4 and
3-5, which are presented here.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 A. Standards Rule 3-4 presents general
requirements for reporting that apply to an
appraisal review assignment.
 Each written or oral Appraisal Review Report
must be separate from the work under review
and must:
 (a) clearly and accurately set forth the appraisal
review in a manner that will not be misleading;
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 (b) contain sufficient information to enable the
intended users of the appraisal review to
understand the report properly; and
 (c) clearly and accurately disclose all
assumptions, extraordinary assumptions,
hypothetical conditions, and limiting conditions
used in the assignment.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 The Comment to Standards Rule 3-4 clarifies
the purpose of an Appraisal Review Report and
elaborates that the report level and content is
specific to the needs of the client and intended
users, the intended use, and other requirements
applicable to the assignment:
 Comment: An Appraisal Review Report
communicates the results of an appraisal review,
which can have as its subject another appraiser’s
work in an appraisal or appraisal review
assignment.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 The report content and level of information in the
Appraisal Review Report is specific to the needs
of the client, other intended users, the intended
use, and requirements applicable to the
assignment. The reporting requirements set forth
in this Standard are the minimum for an Appraisal
Review Report.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Standards Rule 3-5 expands on the
requirements of the minimum report content,
which is similar to the reporting requirements of
other Standards:
 The content of an Appraisal Review Report must
be consistent with the intended use of the
appraisal review and, at a minimum:
 (a) state the identity of the client and any intended
users, by name or type;
 (b) state the intended use of the appraisal review;
 (c) state the purpose of the appraisal review
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 (d) state information sufficient to identify:
 (i) the work under review, including any
ownership interest in the property that is the
subject of the work under review;
 (ii) the date of the work under review;
 (iii) the effective date of the opinions or
conclusions in the work under review; and
 (iv) the appraiser(s) who completed the work
under review, unless the identity is withheld by
the client.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Comment: If the identity of the appraiser(s) in the work
under review is withheld by the client, that fact must be
stated in the appraisal review report.
 (e) state the effective date of the appraisal review;
 (f) clearly and conspicuously:
 state all extraordinary assumptions and hypothetical
conditions; and
 state that their use might have affected the assignment
results.
 (g) state the scope of work used to develop the appraisal
review;
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Comment: Because intended users’ reliance on
an appraisal review may be affected by the
scope of work, the appraisal review report must
enable them to be properly informed and not
misled. Sufficient information includes disclosure
of research and analyses performed and might
also include disclosure of research and analyses
not performed.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 When any portion of the work involves
significant appraisal, appraisal review, or
appraisal consulting assistance, the reviewer
must state the extent of that assistance. The
signing reviewer must also state the name(s) of
those providing the significant assistance in the
certification, in accordance with Standards Rule
3-6.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 (h) state the reviewer’s opinions and conclusions
about the work under review, including the
reasons for any disagreement;
 Comment: The report must provide sufficient
information to enable the client and intended
users to understand the rationale for the
reviewer’s opinions and conclusions.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 The remainder of the discussion of Standards
Rule 3-5 is applicable whenever the scope of
work in the review assignment includes
reviewer’s development of value opinion, review
opinion, or appraisal consulting conclusion for
the subject of the review assignment:
 (i) when the scope of work includes the reviewer’s
development of an opinion of value or review
opinion related to the work under review, the
reviewer must:
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 (i) state which information, analyses, opinions,
and conclusions in the work under review that the
reviewer accepted as credible and used in
developing the reviewer’s opinion and
conclusions;
 (ii) at a minimum, summarize any additional
information relied on and the reasoning for the
reviewer’s opinion of value or review opinion
related to the work under review;
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 (iii) clearly and conspicuously:
 state all extraordinary assumptions and
hypothetical conditions connected with the
reviewer’s opinion of value or review opinion
related to the work under review; and
 state that their use might have affected the
assignment results.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Comment: The reviewer may include his or her
own opinion of value or review opinion related to
the work under review within the appraisal
review report itself without preparing a separate
report. However, data and analyses provided by
the reviewer to support a different opinion or
conclusion must match, at a minimum, except
for the certification requirements, the reporting
requirements for an Appraisal Report for a real
property appraisal (Standards Rule 2-2(a)).
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Note: Reports for other asset types and
appraisal disciplines must match, at a minimum,
the reporting obligations of that particular
reporting standard.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Standards Rule 3-6 addresses the appraiser’s
certification in an appraisal review report, which
is mostly similar to that found in a real property
appraisal report. Standards Rule 3-7 addresses
an oral appraisal review report.
 Advisory Opinion 20, Section D provides
significant illustration of reporting obligations
when the reviewer’s scope of work includes
developing his own opinions or conclusions.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Key points found in the illustration:
 A reviewer should carefully compose the
particular language stating his or her opinions
and conclusions to avoid misleading the user of
the appraisal review report as to the scope of
work completed in the assignment and the
meaning of the reviewer’s stated opinions and
conclusions.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 A reviewer must note any additional information
relied upon and the reasoning and basis for the
reviewer’s opinion of value must be summarized,
in contrast to the other requirements in this
section that must only be stated.
 Changes to the report content by the reviewer to
support a different value conclusion must match,
at a minimum, the reporting requirements for an
Appraisal Report.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 Advisory Opinion 20 provides illustration of
sample language that may be used when the
reviewer is only developing an opinion of
another appraiser’s work. The particular
language used should be consistent with the
scope of work.
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 The following are examples of language that
might be used in an appraisal review report that
does not express an opinion of value and thus
does not constitute evidence of an appraisal by
the reviewer:
 “the value opinion stated in the appraisal report
is (or is not) adequately supported”
 “the value conclusion is (or is not) appropriate
and reasonable given the data and analyses
presented”
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 “the value opinion stated in the report under
review was (or was not) developed in
compliance with applicable standards and
requirements”
 “the content, analyses, and conclusions stated in
the report under review are (or are not) in
compliance with applicable standards and
requirements”
 “I reject the value conclusion as lacking
credibility due to the errors and/or
inconsistencies found”
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Residential Reporting: Hitting All of The Bases
USPAP Appraisal Review
Obligations (cont.)
 “the value conclusion is not appropriate due to
(for example) a significant math error in the
Sales Comparison Approach—if calculated
properly, the value conclusion would change to
$XXX; however, the reader is cautioned that this
solely represents a recalculation and not a
different opinion of value by the reviewer”
 “I accept (or approve) the appraisal report for
use by XYZ bank (or agency).”
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USPAP Appraisal Review
Obligations (cont.)
 Advisory Opinion 20 also provides illustration of
sample language that may be used when the
reviewer’s scope of work includes
developing their own opinions and
conclusions.
 Again, the particular language used should be
consistent with the scope of work.
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USPAP Appraisal Review
Obligations (cont.)
 The following are examples of language that
signify a value opinion (i.e., either by
concurrence or by indication of a numeric point,
a range, or a relationship to a numeric
benchmark). These examples DO constitute
evidence of a value opinion (i.e., appraisal) by
the reviewer, thereby making the appraisal
review one that includes an appraisal.
 “I concur (or do not concur) with the value”
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USPAP Appraisal Review
Obligations (cont.)
 “I agree (or disagree) with the value”
 “in my opinion, the value is (the same)”
 “in my opinion, the value is incorrect and should
be $XXX”
 “in my opinion, the value is too high (or too low)”
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Residential Reporting: Hitting All of The Bases
One-Unit Residential Appraisal
Field Review Report Form
 Many appraisal review assignments are of the
field review variety, which includes an exterior
inspection of the subject property, within the
review, from the street.
 The field review form for one-unit residential
properties is the One-Unit Residential Appraisal
Field Review Report (Fannie Mae Form
2000/Freddie Mac Form 1032).
 A copy of the form can be found in the Appendix.
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One-Unit Residential Appraisal
Field Review Report Form (cont.)
 The first page of the form is basically a series of
general responses.
 After completing the information at the top,
including the effective date of the original
appraisal under review, the appraiser assesses
the quality of the original appraisal by filling out
Section I on the first page of the review
appraisal form.
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One-Unit Residential Appraisal
Field Review Report Form (cont.)
 This section consists of a series of “Yes” or “No”
responses about the completeness and
accuracy of each item on the original appraisal
report.
 Section I must be completed for all review
assignments.
 Many of the "Yes" responses also ask for a brief
summary and the "No" responses require an
explanation.
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One-Unit Residential Appraisal
Field Review Report Form (cont.)
 There are many reasons a review appraiser
might not agree with all or part of the original
appraisal.
 For example, the reviewer may determine that
some descriptions are not clear or some
calculations are wrong.
 In particular, the last field poses the question, "Is
the opinion of market value in the appraisal
report under review accurate as of the effective
date of the appraisal report?"
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One-Unit Residential Appraisal
Field Review Report Form (cont.)
 Answering "No" to this question requires the
reviewer to complete Section II.
 At this point, the review becomes a two-part
assignment, as the appraiser must now develop
an opinion of value for the property.
 The field review report form is also used for
reviewing appraisals of one-unit condos, PUDs,
cooperatives, and manufactured homes.
 A different review report form is used for multifamily properties.
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Appraisal Updates
 Often, appraisers are requested to update or
recertify the value from an appraisal report that
was previously completed.
 Appraisers should be aware that these concepts
are considered to be very different within the
context of USPAP.
 Appraisal updates and recertification of value
are discussed in USPAP Advisory Opinion 3.
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Appraisal Updates (cont.)
 An excerpt from the Advisory Opinion describes the
differences:
 The term “Recertification of Value” is often mistakenly
used by some clients in lieu of the term “Update.” A
Recertification of Value is performed to confirm whether
or not the conditions of a prior appraisal have been met.
A Recertification of Value does not change the effective
date of the value opinion. If a client uses this term in an
assignment request that includes an updated value
opinion, then it constitutes a new appraisal assignment
that must be completed as discussed…(in Advisory
Opinion 3).
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Appraisal Updates (cont.)
 In other words, a recertification of value might be most
commonly seen during the final completion inspection
performed for a property that was appraised “subject to
completion,” or for repairs that have now been
completed which were only proposed at the time of the
appraisal.
 In an updated appraisal, the value opinion found in the
prior appraisal must either be affirmed or a new value
opinion is developed.
 In such case (for real property) the appraiser’s opinion
that the value is the same or something different must be
developed in accordance with STANDARD 1.
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Appraisal Updates (cont.)
 In most cases, what client’s are asking for when using
the terms “recertification” or “update” is an updated
appraisal as of a more recent effective date. In other
words, the value has or has not changed, and if the
value has changed, what is it?
 USPAP Advisory Opinion 3 specifies three options for
providing an update appraisal.
 Provide a new report by starting from scratch.
 Provide a new report by attaching portions of the previous
appraisal.
 Provide a new report by referencing portions of the
previous appraisal.
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Appraisal Updates (cont.)
 For most residential appraisal updates for lender
clients, a standard industry form known as the
Appraisal Update and/or Completion Report is
utilized.
 Fannie Mae refers to the form as Form 1004D;
Freddie Mac refers to it as Form 442.
 There is a sample of the form in the Appendix.
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Appraisal Update and/or
Completion Report
 The Appraisal Update and/or Completion Report
is intended to provide the lender or client with an
update of a previously completed appraisal and
or to provide a certificate of completion related
to a previous appraisal.
 There are a number of situations for which this
form is appropriate.
 Sometimes, this is due to a delayed closing.
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Appraisal Update and/or
Completion Report (cont.)
 If a significant amount of time has passed
between the effective date of the appraisal and a
proposed transaction, the lender or client may
require an update to reaffirm the opinion of value
presented in the report.
 There is no set amount of time for this and time
limits often vary from one lender to the next.
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Appraisal Update and/or
Completion Report (cont.)
 Another instance where an update appraisal
might be provided, instead of a full appraisal, is
recurring valuations.
 For example, if a lender extends a line of credit
based on the value of real estate, a periodic
update appraisal may be required as a condition
for keeping the line of credit open.
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Appraisal Update and/or
Completion Report (cont.)
 This update would be used in lieu of a new
appraisal, provided the opinion of value is the
same as the original value or falls within a range
determined by the lender or client.
 If the value is thought to have changed
significantly, the lender or client might order a
new appraisal.
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Appraisal Update and/or
Completion Report (cont.)
 Appraiser performing an appraisal update must
complete the information at the top of the form,
including the property address, legal description,
borrower name, and contract information.
 Form must also include data referencing the
original appraisal report: effective date, original
appraised value, original appraiser, and original
lender or client.
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Appraisal Update and/or
Completion Report (cont.)

Scope of work preprinted in the report form
states that the appraiser must, at a minimum:
1. Concur with the original appraisal.
2. Perform an exterior inspection of the subject
property from the street.
3. Research, verify, and analyze the current market
to determine if the property has declined in value
since the effective date of the original appraisal.
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Appraisal Update and/or
Completion Report (cont.)
 The simple act of checking the “Yes or "No" box,
in response to any decline in value of the subject
property, is the result of the development
process in compliance with STANDARD 1.
 This Certificate of Completion section of the
report provides for the appraiser to confirm that
any requirements or conditions stated in the
original appraisal report have been met.
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Appraisal Update and/or
Completion Report (cont.)
 Note that the certification statements state the
appraiser has performed a "visual inspection" of
the property—interior or exterior is not specified,
as that depends on the conditions in the original
appraisal.
 Photographs are required addenda for new
construction and may be appropriate in other
circumstances.
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Broker Price Opinions
 A Broker Price Opinion, or BPO as it is
generally called, is a method used by lenders
and others to determine elements of value and
marketability for a property.
 State laws vary regarding who can do what kind
of valuation.
 Before accepting any valuation assignment,
agents must determine whether a BPO is a legal
practice for a real estate sales agent in their
area.
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Broker Price Opinions (cont.)
 Some states have regulations which prohibit real
estate agents from completing BPOs for
payment.
 Some states simply do not allow agents to
perform a BPO at all, with or without a fee.
 Some states restrict agents to performing a CMA
or BPO in cases where they are either pricing
the home for a potential listing, or assisting a
buyer client in determining an asking price.
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 There are various reasons why an appraiser
might want to educate themselves with BPOs
and BPO reporting.
 For some appraisers, the concept is considered
as competition to an appraisal.
 For other appraisers, they could provide a BPO
(depending on the jurisdiction) as an appraiser
or in some other capacity, such as a real estate
broker or agent.
 In such case, appraisers must carefully consider
their role when performing a BPO.
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Broker Price Opinions (cont.)
 Consider this scenario, which is similarly
addressed in USPAP Advisory Opinion 21,
Illustration #1:
 An individual who provides both real estate
brokerage and appraisal services, is often
requested to perform a BPO by certain
entities. Does the individual have any
obligations to USPAP when performing a
BPO?
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 The individual must first recognize if the state in
which he is practicing has any specific laws or
regulations for appraisers who are also
credentialed as real estate brokers (or agents).
 If there is no regulatory prohibition affecting him
from performing a BPO, USPAP provides
flexibility for individuals who have multiple roles
and professional capacities, such as an
individual who is both a real estate broker and
an appraiser.
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 If the individual was contacted by the entity to
perform the BPO and he is signing the BPO as a
real estate broker (or agent), his only obligation
is to not misrepresent his role. However, if the
individual was contacted to perform the BPO
due to being an appraiser and is signing the
BPO as an appraiser, USPAP would apply.
 If an individual acting as an appraiser in
compliance with USPAP provides an opinion of
value, it is an appraisal that must comply with
Standards 1 and 2.
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 BPOs also became popular for lenders when a borrower
wanted to refinance, remove PMI, or apply for a home
equity loan (when permissible by law or regulation).
 It was less expensive than hiring an appraiser, and real
estate agents were considered to be knowledgeable
about property values in their area.
 Appraisers generally resented this incursion into their
business by real estate agents, and justifiably noted that
not all agents performing BPOs were competent to do
so.
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Broker Price Opinions (cont.)
 The Dodd-Frank Act recognizes BPOs for
certain uses, such as loan modifications and
certain foreclosure actions, but prohibits the use
of BPOs for loan origination.
 Financial institutions are prohibited by DoddFrank from using BPOs in lieu of an appraisal for
purchase money loan origination purposes.
 Fannie Mae and Freddie Mac, prior to DoddFrank, declared that they would not use BPOs
for loan origination purposes.
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 Legislation was passed in Nevada, as an
example, that clearly describes the broad range
of situations in which agents or brokers may
deliver BPOs (generally, for most purposes
other than as the sole basis for a lending
decision).
 In addition, the FDIC has recognized the use of
BPOs to establish loan-to-value ratios as part of
its Loss Sharing Proposal to Promote Affordable
Loan Modifications.
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Residential Reporting: Hitting All of The Bases
Broker Price Opinions (cont.)
 The Federal Reserve Board has adopted BPOs
as part of its Homeownership Preservation
Policy for Residential Mortgage Assets.
 Further, Title XI of FIRREA, as well as the
proposed Interagency Appraisal and Evaluation
Guidelines, both make clear that BPOs are
appropriate in a wide range of circumstances.
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Broker Price Opinions (cont.)
 Entitles desiring a BPO frequently hire a
middleman, often known as an Asset
Management Company, or a similar label.
 Asset management companies offer services
from pre-foreclosure to the end of the
foreclosure process when the property is sold.
 They are also in charge of ordering BPOs.
 These companies are contracted by lenders to
handle the process of pricing and selling the
property.
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Broker Price Opinions (cont.)
 This process includes obtaining an opinion of
value for a property.
 The valuation manager is in charge of finding a
qualified individual in the area where the
property is located to perform the BPO.
 Often, an appraisal is also ordered as well.
 Some companies exclusively use BPOs.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
 Basically three types of BPO Assignments:
 Desktop BPO Assignments
 Exterior BPO Assignments
 Interior BPO Assignments
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Desktop BPO Assignments are performed by
utilizing property information from tax records
and from the MLS, if the property is or has been
on the market.
 This is a “sight unseen” type of order, since no
direct exterior observation takes place.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Exterior BPO Assignments, require the
individual undertaking the BPO to drive by the
property and take specific pictures of the
exterior.
 These pictures should be taken without the
agent contacting the occupant or owner.
 This type of order generally requires three sold
comps and three active listing comps.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Individuals performing an exterior BPO
Assignment are required by BPO companies to
take their own color pictures and personally
observe anything in the neighborhood that might
affect value, such as:
 The neighboring properties.
 The types of housing represented (e.g., single
family, two-unit, etc.).
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 How the properties are maintained in the
neighborhood.
 The proximity of the subject property to amenities
such as major roads, schools, shopping, and
public transportation.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Since location tremendously affects property
value, the individual undertaking a BPO should
know how the neighborhood compares to other
neighborhoods on the market as well as the
property condition and the overall curb appeal of
the home.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Interior BPO Assignments are performed on
vacant properties and sometimes, occupied
properties.
 Contact information will be given on the order for
gaining access to the property.
 Pictures are required of the exterior, each room
of the interior, and any damages to the property.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 It is also a good practice to take pictures of the
basement, the furnace, electrical system, and
any other mechanicals, even if these may not be
required.
 These pictures can be helpful as a reference,
especially if repairs or replacement is needed.
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Frequently, properties will have personal
belongings that the owners or tenants have left
behind.
 If the property has been cleaned out, it is a good
idea to take pictures of the contents in the rooms
and on the exterior of the property to help justify
an estimate on the report for a “trash-out.”
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Residential Reporting: Hitting All of The Bases
Types of BPO Assignments
(cont.)
 Most asset management companies budget for
a trash out; however, removing the trash does
not impact value.
 Generally, the asset management company will
have companies they work with that will come to
the area for the trash-out, or the task will be
assigned to the future listing agents to procure
estimates from local companies for the cost.
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Residential Reporting: Hitting All of The Bases
BPO Reports
 The BPO report includes comments regarding local
market conditions, neighborhood characteristics, subject
property condition and characteristics, as well as
information on listings and recent sold comparables.
 Most reports require three listed and three sold
comparables.
 Some will require less or even more, depending on the
requirements of the client. Information regarding the
owner in the report is generally limited to answering the
question, “Is the property owner-occupied?”
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 BPO forms may be set up in various formats,
specific for each BPO company.
 While many of the forms share fundamental
similarities, there is no particular uniform
industry form.
 Some electronic forms will have drop-down
boxes for answer choices, as well as blank
boxes to fill in the requested information.
 Many of these boxes are required fields that
must be filled out, or the form cannot be
submitted.
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 If a drop-down box does not have the specific
choice needed, the nearest correct response
should be chosen.
 For example, if the subject style is a Cape Cod,
but the choices are 1 story, 1.5 stories, or 2
stories, then the nearest correct response would
be 1.5 story.
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 Typical BPO forms include text boxes for
explanations on why a comp is superior or
inferior to subject.
 The form may also include a section for listing
comps, similar to the form for the sold
comparables.
 Listed comps will usually also ask for the original
list date and original list price.
 Some forms might require the date of the most
recent price reduction.
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 Most MLS services provide this in a history file.
 The history file contains information on the list
price and dates and any updated price and date
changes.
 Information regarding the days on the market
(DOM) is also shown in the history file.
 If the property has been listed several times, the
total days that the property has been on the
market should be included.
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 BPO forms will also vary with respect to
information required. Some will request
additional information such as





Design and appeal
Seller concessions
REO or fair market
If the property is investor owned
Finished basement rooms
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Residential Reporting: Hitting All of The Bases
BPO Reports (cont.)
 All BPO forms require general property
information on the subject and the comparables,
such as the address, square footage, rooms,
garage, distance, days on market, condition, etc.
 There are a few BPO orders from companies
that request a more detailed breakdown of
square footage.
 For example, the report might for the total above
ground square footage, then the main floor
square footage, and finish with the second floor
square footage.
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Residential Reporting: Hitting All of The Bases
Reporting Market Conditions and
Neighborhood Characteristics
 BPO forms have various sections to address general
market conditions or neighborhood characteristics.
Examples of these sections include:







Market stability (e.g., depressed, slow, or improving)
Percentage of change in the last month or year
Employment situation (e.g., declining, stable, increased)
Number of sales in the neighborhood
Number of competing listings in the neighborhood
Number of competing listings that are REOs
Competing listings (e.g., normal supply, shortage, or
oversupply)
 Estimated percentages of owner vs. tenants in
neighborhood
 Normal marketing time for the area
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Residential Reporting: Hitting All of The Bases
Reporting Subject Marketability
 Typical BPO reporting fields addressing the subject
property’s marketability is similar to that reported in an
appraisal. Example fields include:
 Price range of listings in the neighborhood (e.g., a low to
high value)
 Is the subject an over improvement, under improvement, or
appropriate for the neighborhood?
 Normal marketing time in the area
 Types of financing for which the subject qualifies.
 Type of property (e.g., single family detached, single family
attached, mobile home, condo, townhouse)
 Homeowners association fees ($____ monthly $____ yearly)
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Residential Reporting: Hitting All of The Bases
Reporting Subject Marketability
(cont.)
 The individual performing a BPO should also be
aware of general market characteristics that are
present in the particular market, such as:
 Population changes
 Economic changes (such as a change in the
workforce)
 National influences, such as interest rates
 Incentives to buyers (such as first time buyer tax
incentives)
 Unemployment
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Residential Reporting: Hitting All of The Bases
Reporting Marketing History
 Many of these reporting elements may differ
somewhat from the type and extent of
information typically reported in an appraisal.
BPO reporting fields typically include:






Is subject currently listed?
Name of listing brokerage
Listing brokerage contact number
MLS number of the property
Has the subject been listed in the last 12 Months?
Last date of sale and the sale price
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Residential Reporting: Hitting All of The Bases
Reporting Marketing History
(cont.)
 Some forms will have an area for comments or
explanation relating to any perceived limitations
or anticipated resell obstacles, as well any
negative or positive property noted.
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Residential Reporting: Hitting All of The Bases
Reporting Property
Characteristics
 The next section on the form commonly includes
information regarding the subject property, using fill-inthe-blanks or drop-down boxes that will list a series of
choices.
 For example, when the form asks for the number of
rooms, a drop-down menu appears and the number of
rooms in the subject property is selected.
 Depending on the form, this information will either be in
its own section, or on the left of the comp information, so
that it is visible when filling in the comp information.
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Residential Reporting: Hitting All of The Bases
Reporting Property
Characteristics (cont.)
 If the assignment is a desktop or exterior
inspection variety, characteristics of the subject
can be taken from tax records, information from
the MLS, if the subject was previously on the
market or is currently listed. Information for listed
and sold comps will generally come from the
MLS; however, when the sale is privately
transacted, the information will come from public
records.
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Residential Reporting: Hitting All of The Bases
Reporting Property
Characteristics (cont.)
 If the property is not in a public records state,
the agent will have to use MLS sales, unless the
details of a private sale can be verified.
 The form will not ask for personal information
about the owner of sold or listed comps. It is
useful for the agent to have the names of the
grantor (seller), grantee (buyer), and the parcel
number of the property in the property file.
 This information is generally property- or marketspecific.
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Residential Reporting: Hitting All of The Bases
BPO Repair Worksheet Section
 Most BPO reports will have a repair worksheet section.
 The section will have a blank table for insertion of
recommended repairs.
 This section is followed by a column where the repair
costs can be estimated.
 When all of the repair amounts have been entered, most
forms automatically populate the total repair costs.
 Keep in mind that the repair costs will depend on the
area, since the cost of supplies and labor are not
standard.
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Residential Reporting: Hitting All of The Bases
BPO Repair Worksheet Section
(cont.)
 The repair section of the form has a list of
property exterior items with a column to add in a
dollar amount estimation of what the repair
would cost.
 If the form is not set up this manner, the repair
section may have a write-in area to type in the
repairs needed and the estimated repair
amount.
 A similar practice is followed for an interior BPO.
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Residential Reporting: Hitting All of The Bases
BPO Repair Worksheet Section
(cont.)
 It is important to note that the repair amount will
need to be added into the value conclusion for
the “as repaired” value.
 Some lenders are now making repairs to make
the properties more marketable.
 This will vary, depending on the quality, price
range, location, and standard practice of the
lender.
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Residential Reporting: Hitting All of The Bases
BPO Repair Worksheet Section
(cont.)
 Sometimes just a few low cost repairs or
improvements can result in a higher sale price.
 However, many REO lenders offer properties
“as is, where is.”
 As well, many will not turn on the utilities;
instead, if a buyer wishes to have the utilities on
for an inspection, he must pay to have them
turned on.
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Residential Reporting: Hitting All of The Bases
BPO Repair Worksheet Section
(cont.)
 There may also be a section asking for an
opinion on what inspections should be
completed on the property, such as plumbing or
heating, well and septic, environmental, or
termite inspection.
 Some counties require point of sale inspections
before a property can transfer ownership.
 If this is not the case in the particular area, any
potential issues should be further inspected by a
professional.
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Residential Reporting: Hitting All of The Bases
Reporting Adjustments
 Depending on the client and the details
requested, some BPOs will request monetary
adjustments for differences when the comps are
inferior or superior to the subject.
 This adjustment process will vary by client
requirements.
 Some forms will have a box out to the right of an
item, for example square footage.
 In the box, the following initials will be
requested: I=inferior, S=superior or E=equal.
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Residential Reporting: Hitting All of The Bases
Reporting Adjustments (cont.)
 This method is called coded adjustments.
 At the bottom of the comp, there may be a line for a
monetary adjustment to bring the comp in line with the
value for the subject or there will simply be an
explanation box as to the rationale that the comp is
superior, inferior, or equal to the subject.
 The second type of adjustment form will require a
monetary amount to address the difference in the item.
 This process is similar to that in traditional sales
comparison reporting in an appraisal.
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Residential Reporting: Hitting All of The Bases
Reporting Conclusions in a BPO
 Most often, entities receiving a BPO are requesting the
conclusion to reflect “the most probable price at which a
property would sell for, taking into consideration listing
time and price.”
 Understand that limiting the listing time means that the
value indicated may be less than market value when
exposed for a typical marketing period.
 In other words, if typical marketing time is 120 days, but
a 30-day opinion is specified, the price will have to be
discounted in order for the property to sell quickly.
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Residential Reporting: Hitting All of The Bases
Reporting Conclusions in a BPO
(cont.)
 In addition to a “Suggested List Price,” most
BPO reports specify an “As Is” and “As
Repaired” value for the following marketing
times:




0-30 Days
0-90 Days
90-120 Days
120+ Days
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Residential Reporting: Hitting All of The Bases
Reporting Conclusions in a BPO
(cont.)
 “Suggested List Price” is a value that would be
low enough to attract buyers, yet high enough to
leave room for negotiations.
 “As Is” is the value of the property without
completing repairs or updates. This value is
determined by deducting the repair costs that
would have made the subject and comp values
equal.
 “As Repaired” is a value determined by adding
in the repair costs to bring the subject to similar
condition as a comp in good condition.
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Residential Reporting: Hitting All of The Bases
Reporting Conclusions in a BPO
(cont.)
 The client will use the value opinions and list
price suggestions within these marketing times
to determine what they will ultimately list the
property for.
 Each company will vary depending on how
quickly the property needs to be sold.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
1. The Exterior-Only Inspection Appraisal Report
is referenced by both Fannie Mae and Freddie
Mac as Form 2055. The report form is
designed for reporting an exterior-only
appraisal of a single-family dwelling, including
planned unit developments (PUDs), but not
manufactured homes. The form may not be
used for condominiums or cooperative units.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
2. The Individual Condominium Unit Appraisal
Report form is used for the appraisal of an
individual unit in a condominium project,
including a condominium that is part of a PUD.
This form is not designed for valuing
cooperative units or for manufactured homes
that are part of a project or complex. Fannie
Mae labels this form as Form 1073 and Freddie
Mac designates the report form as Form 465.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
3. The Manufactured Home Appraisal Report
Form is also known as Fannie Mae Form
1004C or for Freddie Mac, Form 70B. The
appraisal reporting form is designed for the
appraisal of a one-unit manufactured home.
This would include a unit located in a planned
unit development (PUD).
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
4. The Small Residential Income Property
Appraisal Report (Fannie Mae Form
1025/Freddie Mac Form 72) is the most
common reporting form used for reporting the
appraisal of a two- to four-family property for
use by a lender client. While the 1025/72 form
was developed for use by Fannie Mae and
Freddie Mac, it has been adopted for use by
other lending entities such as the FHA and VA
and other lenders.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
5. The Operating Income Statement (Fannie Mae
Form 216/Freddie Mac Form 998) is a required
exhibit to accompany the 1025/72 Small
Residential Income Property Appraisal Report
for a two- to four-unit income property.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
6. In an appraisal review, the review appraiser is
developing an opinion of the quality of another
appraiser’s work. The One-Unit Residential
Appraisal Field Review Report is referred to as
Fannie Mae Form 2000. Freddie Mac calls this
Form 1032.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
7. For most residential appraisal updates, the
Appraisal Update and/or Completion Report is
utilized. Fannie Mae refers to the form as Form
1004D; Freddie Mac refers to it as Form 442.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Summary
8. BPO report forms may be set up in various
formats, specific for each BPO company. While
many of the forms share fundamental
similarities, there is no particular uniform
industry form.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
1. Which would be an example of a property for which the
Exterior-Only Inspection Appraisal Report, Form 2055
could be used?
a.
b.
c.
d.
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condominium unit
cooperative unit
manufactured home
single-family home in a PUD
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
1. Which would be an example of a property for which the
Exterior-Only Inspection Appraisal Report, Form 2055
could be used?
a.
b.
c.
d.
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condominium unit
cooperative unit
manufactured home
single-family home in a PUD
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
2. All are required to accompany the Exterior-Only
Inspection Appraisal Report, Form 2055, EXCEPT for
a(n)
a. exhibit of other additional data to support the value
conclusion.
b. exterior sketch of the subject improvement.
c. front view picture of the subject.
d. street map showing the subject and comparable
used.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
2. All are required to accompany the Exterior-Only
Inspection Appraisal Report, Form 2055, EXCEPT for
a(n)
a. exhibit of other additional data to support the value
conclusion.
b. exterior sketch of the subject improvement.
c. front view picture of the subject.
d. street map showing the subject and comparable
used.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
3. Regarding two- to four-family properties in which one of
the units is owner-occupied, which statement is TRUE?
a. Income and expenses for owner-occupied units are
not included.
b. Operating expenses for the unit are included but
income is not.
c. The Operating Income Statement is not included in
such case with the 1025/72 report.
d. Potential income from the unit is estimated and used
in determining effective gross income.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
3. Regarding two- to four-family properties in which one of
the units is owner-occupied, which statement is TRUE?
a. Income and expenses for owner-occupied units are
not included.
b. Operating expenses for the unit are included but
income is not.
c. The Operating Income Statement is not included in
such case with the 1025/72 report.
d. Potential income from the unit is estimated and used
in determining effective gross income.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
4. A mother-in-law unit created by converting the
detached garage of a primary dwelling
a.
b.
c.
d.
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could not be reported on the 1025/72 reporting form.
is an example of an accessory unit.
is never permitted by Fannie Mae.
is not considered a separate living unit.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
4. A mother-in-law unit created by converting the
detached garage of a primary dwelling
a.
b.
c.
d.
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could not be reported on the 1025/72 reporting form.
is an example of an accessory unit.
is never permitted by Fannie Mae.
is not considered a separate living unit.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
5. Within an appraisal review, changes to the report
content by the reviewer to support a different value
conclusion must match, at a minimum, the reporting
requirements for a(n)
a.
b.
c.
d.
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Appraisal Report.
Appraisal Update Report.
Restricted Appraisal Report.
Two-stage Appraisal Report.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
5. Within an appraisal review, changes to the report
content by the reviewer to support a different value
conclusion must match, at a minimum, the reporting
requirements for a(n)
a.
b.
c.
d.
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Appraisal Report.
Appraisal Update Report.
Restricted Appraisal Report.
Two-stage Appraisal Report.
201
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
6. A recertification of value is a(n)
a. component of an appraisal review.
b. confirmation that prior appraisal conditions have
been satisfied.
c. form of an appraisal update.
d. specific type of value opinion.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
6. A recertification of value is a(n)
a. component of an appraisal review.
b. confirmation that prior appraisal conditions have
been satisfied.
c. form of an appraisal update.
d. specific type of value opinion.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
7. An appraiser’s conclusion that the value is the same or
different within a real property appraisal review must be
developed in accordance with STANDARD
a.
b.
c.
d.
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1
2
3
4
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
7. An appraiser’s conclusion that the value is the same or
different within a real property appraisal review must be
developed in accordance with STANDARD
a.
b.
c.
d.
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1
2
3
4
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
8. Which is NOT commonly a permitted use of a BPO?
a.
b.
c.
d.
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determining marketability
loan modifications
loan origination
PMI removal
206
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
8. Which is NOT commonly a permitted use of a BPO?
a.
b.
c.
d.
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determining marketability
loan modifications
loan origination
PMI removal
207
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
9. Which is emphasized and discussed in BPO reports
more so than is typically elaborated upon in many
appraisal reports?
a.
b.
c.
d.
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comparable sales
competing listings
legal characteristics of the property
subject property features
208
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
9. Which is emphasized and discussed in BPO reports
more so than is typically elaborated upon in many
appraisal reports?
a.
b.
c.
d.
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comparable sales
competing listings
legal characteristics of the property
subject property features
209
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
10. Which appraisal reporting form must comply with UAD
requirements?
a.
b.
c.
d.
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Appraisal Update and/or Completion Report
Individual Condominium Unit Appraisal Report
Manufactured Home Appraisal Report
Small Residential Income Property Appraisal Report
210
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
10. Which appraisal reporting form must comply with UAD
requirements?
a.
b.
c.
d.
Hondros Learning, ©2011
Appraisal Update and/or Completion Report
Individual Condominium Unit Appraisal Report
Manufactured Home Appraisal Report
Small Residential Income Property Appraisal Report
211
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
11. Which must be attached to the Small Residential
Income Property Appraisal Report?
a.
b.
c.
d.
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current lease agreements for the property
Operating Income Statement
plot plan showing the site and the improvements
three-month’s receipts for all expenses
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
11. Which must be attached to the Small Residential
Income Property Appraisal Report?
a.
b.
c.
d.
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current lease agreements for the property
Operating Income Statement
plot plan showing the site and the improvements
three-month’s receipts for all expenses
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
12. When performing an assignment using only an exterior
inspection, conclusions regarding property
characteristics not personally observed by an appraiser
would typically require the use and disclosure of a(n)
a.
b.
c.
d.
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extraordinary assumption.
jurisdictional exception.
statutory guideline.
unsupported conclusion.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
12. When performing an assignment using only an exterior
inspection, conclusions regarding property
characteristics not personally observed by an appraiser
would typically require the use and disclosure of a(n)
a.
b.
c.
d.
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extraordinary assumption.
jurisdictional exception.
statutory guideline.
unsupported conclusion.
215
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
13. Which is NOT a reporting field common to only the
Manufactured Home Appraisal Report?
a.
b.
c.
d.
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Are utilities permanently connected to the home?
Have the hitch, wheels, and axles been removed?
Is the home on a permanent foundation?
Were any adverse site conditions observed?
216
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
13. Which is NOT a reporting field common to only the
Manufactured Home Appraisal Report?
a.
b.
c.
d.
Hondros Learning, ©2011
Are utilities permanently connected to the home?
Have the hitch, wheels, and axles been removed?
Is the home on a permanent foundation?
Were any adverse site conditions observed?
217
Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
14. In what case would an individual who is both a real
estate broker and an appraiser NOT be obligated to
comply with USPAP when performing a BPO?
a. BPO was performed, and the report was signed, by the
individual who is acting as a real estate broker.
b. Client was not aware the individual was an appraiser, but BPO
was signed by the individual as an appraiser.
c. Expectation of the client for the individual to perform the BPO
as an appraiser.
d. Individual was hired due to his real estate expertise and signed
the BPO report as an appraiser.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
14. In what case would an individual who is both a real
estate broker and an appraiser NOT be obligated to
comply with USPAP when performing a BPO?
a. BPO was performed, and the report was signed, by the
individual who is acting as a real estate broker.
b. Client was not aware the individual was an appraiser, but BPO
was signed by the individual as an appraiser.
c. Expectation of the client for the individual to perform the BPO
as an appraiser.
d. Individual was hired due to his real estate expertise and signed
the BPO report as an appraiser.
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
15. If the subject property has an annual effective gross
income of $26,040 and annual expenses of $10,416,
what is the monthly cash flow reported on the
Operating Income Statement if monthly housing
expense is $937?
a.
b.
c.
d.
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$234
$365
$401
$552
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Residential Reporting: Hitting All of The Bases
Chapter 3: Quiz
15. If the subject property has an annual effective gross
income of $26,040 and annual expenses of $10,416,
what is the monthly cash flow reported on the
Operating Income Statement if monthly housing
expense is $937?
a.
b.
c.
d.
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$234
$365
$401
$552
221