PLP 103: Appraisals Part Two: The Uniform Residential Appraisal Form

One of the most common things to note when doing real estate transactions is the appraisal of the property. Through this, the value of your property or deal is appropriately assessed. Continuing with the second part of the series on appraisals, Keith Baker goes over the Uniform Residential Appraisal Form, also known as Fannie Mae Form 1004 and Freddie Mac Form 70. Here, he breaks down the document and gives a page-by-page look into the sections that show the things that will help you analyze the properties or deals. If you are new to this, it helps to take a look at this essential form. This is a great tool that you can add to your toolbox when it comes to evaluating the value of a property and more.

---

Appraisals Part Two: The Uniform Residential Appraisal Form

This is the one and only show of its kind dedicated to teaching everyday people like you and me how to prosper with the most passive form of real estate investing known to humankind, private lending. While at the same time giving tips, tricks, and ideas that can help you keep your money safe. It's this simple. If you're looking for practical tips and advice on becoming a successful private lender and how to create wealth without banks or Wall Street, then you are in the right place. If you want to learn from my mistakes so you can avoid them and prosper much quicker, then pull up a chair and take some notes because this show is for you.

[bctt tweet="My money. My terms." username=""]

Early May 2020, Texas has begun to open back up from the Coronavirus shutdown and lockdown. I understand the death toll is still rising in the United States but hopefully, we can get over and around this quickly. Let's remember to keep our eyes on the prize. The present may be uncertain but the future is to be determined by us. Our topic is Part Two on Appraisals. I'm going to go over the Uniform Residential Appraisal Report or also known as Fannie Mae Form 1004 and Freddie Mac Form 70. It's a seven-page document including definitions, amendments, certifications, some language, and all that fun stuff. There are about three pages that we're going to dive into and go over in detail with the actual report. I'm going over a report from a house I sold several years ago. This appraisal report is 35 pages in length.

Let's go ahead and jump right into it and start looking at this. You can download a blank version of the Uniform Residential Appraisal Report on the website. On the first page is the invoice a lot of times. In this case, the appraiser that the borrowers' lender used put the invoice first. I see that they paid $470 for the appraisal, which several years ago is not bad. I eyeball around the $500 mark for a little bit of inflation. The second page contains appraiser certifications, the requirements, list of the subject property, who the borrower is, especially the lender's name because that is the actual customer of the appraisal report.

The third page of this particular report is a cover page. It has a photo of the house I sold, the lender-borrower address, and basic stuff. The fourth page is a letter to the lender saying, “You hired me. Here it is. Subject to all limitations and discrepancies listed herein.” That’s the formality of communicating the appraisal report to the lender, which in this case is going to be you. You want to read every page of your appraisal report very carefully. Page five is the summary of salient features, which goes on to describe the overall dwelling, the improvements, the number of beds, baths, so on and so forth. I address the legal description. The lender and borrower are both identified.

 

Page six is the actual first page of the Uniform Residential Appraisal Report as put out by the government. It's broken down into sections or paragraphs, which on the left-hand side you'll see the first being the subject property, the borrower, the lender, the type of loan, whether it's a purchase or a refi, the address, legal description and the current owner of record. The next section discusses the contract on the property. Did the appraiser look at the contract? Were there any provisions or seller concessions in the contract? In this case, the appraiser did look at the contract, and lo and behold, he didn't appraise the house for a spot on the sales price. Funny how that happens. After the contract, there's a section for the neighborhood and this is going to be the boundaries or the streets. It lets you know if it's urban, suburban, or rural. What are the growth trends? Is it a stable neighborhood? Is it a new build? Is it rapidly filling in? Is it a slow in fillers, a declining neighborhood