Appraisals have already earned a repuation for being highly volatile, and now new guidelines went into effect on September 1. The new rule, called the Uniform Appraisal Dataset (UAD) requires appraisals to be done in a specific way when the loan is sold to Fannie Mae or Freddie Mac. FHA will begin following these guidelines early next year. Slow response times on appraisals are expected as appraisers get familiar with the new requirements.
We've taken this 37 page memo and condensed it into a very brief summary of what the new changes entail.
1. Standardized descriptions of property: The UAD requires standard descriptions for a property's condition, quality, view and location.
- Condition and quality will be scored on a scale of 1 to 6 (C1-C6 and Q1-Q6) with 1 being the best.
- Property views/location will use standard codes of A, N or B - adverse, neutral or beneficial. A further list of codes provides more information, such as Mtn = Mountain or BsyRd = Busy Road.
2. New information: Additional data must be included by the appraiser, including:
- Days on market for the subject propery and comparables
- Bathroom and kitchen improvements, including type of work and when it was done
3. Numeric data inputs: Dates, dollar amounts, number of rooms, lot size (to name a few) must be entered in specific ways.
- Appraisers that describe a bath and a half as 1 1/2 must now input it as 1.1. Two full and two half baths will now be 2.2.
- Lot sizes below one acre must be converted to square feet.
So what will all this mean for the sellers and buyers? Our biggest concern with the new standards, particularly in relation to the buyer's market we are currently in is in regards to market time, as our sources have told us that homes with higher market times will be docked in value accordingly. We'll keep you informed on how the new appraisal standards impact the market, if they indeed do at all.
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