The 1004MC Form

The 1004MC form has been a hot topic this late winter and early spring, as I travel around teaching. I even ended up talking about it at the RSPS (Resorts and Second Properties Specialist) Symposium in Naples, FL.

Of course, the elements on the form have been ‘hot topics’ all over the place–supply and demand, absorption rate, etc. Most MLS services seem to have quickly gotten on board with revising their search functions so that appraisers can find the data easily. My local REALTOR(R) Association has had their MLS system revised, and earlier this week, I gave a presentation, with some other appraisers and tech experts, on using MLS and filling out the form.

We are a small association (240 members) in a rural county–Lycoming County has about 130,000 residents, and is the largest sized county in Pennsylvania. We invited affiliate members, including lenders and our local chief assessor. He came, as did several lenders.

One of the things on the form appraisers find confusing is the apparent disconnect between the inventory in the neighborhood (as listed on the top of the second page of the 1004) and the ‘pool of properties’ which goes into the 1004MC. Fannie Mae’s instructions are fairly clear: the appraiser is to consider the pool of properties that the borrower ‘would consider’ as well as the subject property. In our rural area, this can mean a lot of territory. If we restrict our search, in some cases, to only a township, we come up with incredibly low numbers–2 sales for a twelve month period, in one notable case.

We asked the chief assessor, Jim Carpenter, what he considered to be a reasonable number of properties to have in a universe before, statistically speaking, the numbers would make sense. His reply was “Fifty”. We have many instances where we simply will not have that much data. In one market in which I do appraisals, the ‘market that borrowers would consider’ includes three townships. Research for a twelve month period will reveal sales, literally from $65,000 to $650,000+! That is a special part of the county (lots of second homes, cabins and camps), but it illustrates how ‘one size does not fit all’ with any form—including this one. One lender indicated that he thought that the form was ‘a waste of time’ and he doesn’t anticipate asking appraisers to complete it—his bank does almost exclusively in-house loans.

Some take-aways I have from conversations with students, and my own research:

 Use a disclaimer about your MLS data. You are relying on it, because (per USPAP) you consider it to be a reliable source, but you are unable to confirm all of the data in the MLS. CYA.

 Remember if your data is expressed as an average, you can use it but you must explain it.

 Don’t use ‘N/A’—explain your efforts to obtain the information.

 If you throw out the outliers in your statistical analysis because they don’t make sense, and furthermore, they skew the data, comment on it and explain it.

 If your pool of comparables encompasses more than the neighborhood, explain.

 As usual, more words are usually better than fewer words—providing the user of the report is literate and will actually read them.

I’m doing a webinar on the 17th about the use of this form. If you are interested, click on this link and join me.

Melanie McLane

Melanie McLane, ABR, CRB, RAA, is owner of McLane Solutions, a real estate education and training company in Jersey Shore, Pa. She is also a certified residential appraiser and an associate broker with Jackson Real Estate in Jersey Shore. In addition to the ABR, CRB, and RAA, McLane holds a number of other designations and certifications from the NATIONAL ASSOCIATION OF REALTORS® and other organizations, and she is a nationally recognized speaker.

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  1. Plenty of folks have been visiting the Appraiser Active site searching or FREE tools to help with the Fannie Mae 1004MC Form. Check to see what is available at Appraiser Active: Free Fannie Mae 1004MC Tools

  2. Doug

    COMPLETE WASTE OF TIME. That is how I characterize this form. I am a rural appraiser in NW Wisconsin; lots of non-conformity. Our market is highly seasonal, and filling this form out makes no sense. COMPLETE WASTE OF TIME. THE ONLY REASON WE ARE DOING THIS IS BECAUSE APPRAISERS WERE MARKING STABLE IN DECLINING MARKETS. THANKS TO ALL YOU IRRESPONSIBLE APPRAISERS THAT WERE MISLEADING THE LENDERS!

  3. Karen Besanceney

    I am also rural PA and this form makes no point for our market that has never sold during the winter so what is the point of 90 days, next 90, and then 6 months. What was the weather and If there is a Real Estae agent which there usually isn’t let alone a MLS they aren’t listing during the winter,and to refer to active sales are a joke because there are only a couple of small real estate companies. I useSales in the lenders time and market value perimiters. This year and last year. of all sales in the area . and Days on market when available. This tells if the values have changed, you can see if there are an unusal amont of under $100 which would not be typical of an arms lenth transaction. and if the market is picking up stable or slowing down and it is already part of my research and is not more paper work to correct the already bad paperwork requires hence page 1 market activities, page two active sales and now 1004 MC, asorption. how does the 6 sales in 12 month for the school district be asbsorbrd in and area where this is typical for the stable market where people move to live a life time. A novel idea. Thanks Karen

  4. Bill

    The example in 08-30 starts with 60 sales in the first 6 months. I live in a large metropolitan area and still rarely have more that 10 – 12 truly comparable sales in the past full year. In an urban market with definite neighborhood boundaries it doesn’t make sense to expand the search area. I put in a disclaimer that due to the small number of available sales, the result is not statistically reliable.
    In a recent example, there were 6 sales in the first 6 month period (1 per mo), 4 in the 3rd quarter (1.3 per mo) and 2 in the final quarter (.66 per mo). If 1 sale in q3 were delayed 1 day to q4, the “statistical” rate changes from decreasing by 50% to stable. Garbage in, garbage out.

  5. Evan

    Even in a larger metropolitan area, it is still hard to use the form with any sort of reliability. The lack of competing sales is a problems, especially in the past year. As others, I state that due to the limited amount of competing sales, no weight was given to the above data. I also state that an additional regression analysis was conducted to include all homes in market area to help identify market trends. We will see how it goes

  6. Ron Matthews

    I also do appraisal work in the rural area( Indiana ) The 1004 MC works some what OK, in some city s with a high population like 50,000 or more if the market is selling. In the small citys of 20,000 or less and in the country side where we still have gravel roads , this is miss leading information. I feel forms are like shoes one size fits all is wishfull thinking.

  7. Anonymous


  8. Carol Wolfe, SRA

    Even in my metro area, there are insuffient sales of “comparable” properties to use in the appraisal without considering a statistical analysis of “comparable sales.” And, the results from this form with or without adequate numbers will not be consistent with the neighborhood stats on Page 1 … unbelievably stupid form in a stymied market!
    Tells nothing and is misleading….

  9. Michael E. Laird

    While the intent of form 1004MC is to provide solid information on market activity, realistically there are so many variables in the market and in the
    MLS it is of limited value.
    Which market, owner occupied, reo, tenant occupied or the entire bunch.
    Just consider trying to find the true/accurate information from the mls. The information is entered by X number of agents who each have their own way of entering listings. A recent search of just 1 twp. produced 9 entries that were actually not in the twp. searched, 1 was even out of county. Yesterday a search for a town resulted in only 2 hits. Further searching using different criteria found several entries for the town with the towns name being spelled incorrectly. Another example is searching for a twp. and finding several entries that have incorrect (city, twp, school corp.), the dead giveaway is the street name and address that roughly places the R/E 10+ miles N and 8 or so miles W in a town other than the one indicated in the entry.
    Last example, a 50+ acre tract of farm land stating that the home is NOT include and it’s entered in the RESIDENTIAL breakdown in the MLS. Entries such as that will change the average, median and totals.
    This makes finding proper comps difficult for anyone who desires to do quality work. Bad information wastes time and produces inaccurate numbers.
    For some time poor entries have been pointed out to the staff responsible for the MLS but I haven’t seen or heard anything about trying to encourage or demanding that entries be made as correct as possible.
    My opinion is that every time info in the MLS is entered incorrectly, it’s misrepresentation by the agent & principal broker.
    Combine all of this bad information from 50 states with the information that comes from good MLS systems and the result is less than a true picture of the market.

  10. Michael E. Laird

    Per the information that I have, form 1004MC is to be used on all appraisals. Can someone answer this question: Are estate appraisals required to have form 1004MC included?
    Note: A recent search using the 1004MC report from the MLS produced results outside of the date range requested.