FHA Appraisal for Other Property Types

FHA Appraisal for Other Property Types

Chapter 6

Today's FHA and VA 9/20/13

Chapter 6: FHA Appraisal for Other Property Types

Introduction

• The protocol for appraising other property types is similar to that discussed for appraising a single-unit property. But, there are areas specific to each of the other property types that must be reviewed here.

• This overview of the appraisal guidelines for each of the other property types will include only key differences in development and reporting for that specific property type.

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Key Terms

• Gross Building Area (GBA) The total finished area (including common areas—hallways, interior stairways, etc.) of the improvements, above and below grade, based on exterior measurements.

• Gross Living Area (GLA) A measurement of living area obtained by drawing an imaginary line on the outside perimeter walls of each unit.

• HUD Data Plate (Manufacturer’s Data Plate) Provides information on the manufacturer, serial number, model, and date manufactured as well as a compliance statement regarding the construction.

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Key Terms

• Manufactured Home A structure that is transportable in one or more sections, built on a permanent chassis, designed to be used as a dwelling when connected to the required utilities, and constructed to the Federal Manufactured Home Construction and Safety Standards.

• Marketing Time The typical length of time a property similar to the subject property would have to stay on the market before being sold at a price near its market value.

• N.A.D.A. Guide The N.A.D.A. (National Automobile Dealers Association) publishes this valuation guide for numerous motor vehicle types, including manufactured dwellings. The publication is available by subscription, either online or as a hard copy.

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Manufactured Home

• The Manufactured Home Appraisal Report Form 1004C. – The 1004C form does not require compliance with UAD reporting

standards.– This report form is designed to report an appraisal of a one-unit

manufactured home, including a unit in a planned unit development (PUD), based on an interior and exterior inspection of the subject property.

• A manufactured home is defined as a structure that is transportable in one or more sections.– In traveling mode, the home is eight feet or more in width, forty feet

or more in length, built on a permanent chassis, and designed to be used as a dwelling when connected to the required utilities, which include plumbing, heating, air-conditioning, and electrical systems.

Today's FHA and VA 9/20/13 5

Manufactured Home (cont.)• To be eligible for FHA insurance, when erected on site, the

manufactured home must:– Be built on or after June 15, 1976.– Be at least 400 square feet in gross living area.– Be built and remain upon a permanent chassis.– Be used as a dwelling with a permanent foundation designed and

constructed to HUD/FHA criteria.– Display a HUD Certification Label/Seal affixed to the home’s

exterior.

• Appraisers must pay attention to the Appraiser’s Certification, integrated in the Manufactured Home Appraisal Report, which contains prohibitions regarding the practice of combining the land sales and contract purchase price of a manufactured home.



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Manufactured Home Appraisal Report Form 1004C Section 1: Subject

• Real Estate Taxes $– Enter the dollar amount of the annual real estate

taxes, including all relevant taxes. Manufactured homes must be taxed as real estate to be eligible for Title II FHA insurance.

• Neighborhood Name– Enter the name of the subdivision, if applicable,

or the commonly known local neighborhood designation or provide the name of the development.



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Manufactured Home Appraisal Report Form 1004C Section 2: Contract

• Contract Price $– Enter the final agreed upon contract price for purchase transaction.– If the manufactured home is new construction, note whether the

contract price includes all delivery, installation, and set up costs.

• Manufacturer’s Invoice– Applies only to new construction. Mark the appropriate box and

explain the results of the analysis of the manufacturer’s invoice or why the analysis was not performed.

– If the invoice is not available, it should be noted.

• Retailer’s Name– Applies only to new construction. Provide the name of the retailer or

distributor who sold the unit.



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Manufactured Home Appraisal Report Form 1004C Section 3: Neighborhood

• Property Values– Mark the box describing the current trend in

property values for manufactured housing in the community.

– Appraisers who use this method should make sure to factor in any improvements or changes made to the property between sales.



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Manufactured Home Appraisal Report Form 1004C Section 4: Site

• FEMA Special Flood Hazard Area– FEMA is responsible for mapping flood hazard

areas. If the property is within a special flood hazard area, mark “Yes;” otherwise, mark “No.”

– Attach a copy of the flood map panel for properties located within identified flood hazard areas.

– If the site supporting a manufactured home is within a FEMA-designated flood hazard area, the lender should order a FEMA Elevation Certificate to determine whether the manufactured home qualifies for FHA insurance.



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Manufactured Home Appraisal Report Form 1004C Section 5: HUD Data Plate/Certification Label

• Federal Manufactured Home Construction and Safety Standards – Require that “each manufactured home shall bear a Data Plate

affixed in a permanent manner near the main electrical panel or other readily accessible or visible location.”

• Typically, the HUD Data Plate, a data plate that provides information on the manufacturer, serial number, model, and date manufactured with a compliance statement regarding construction, is adjacent to the electric service panel, the utility room, or within a cabinet in the kitchen.

• It is common for the Data Plate to be missing from a manufactured home.– If the Data Plate is missing, locating a replacement or the specific

Data Plate information from the manufacturer may be impractical or expensive.



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Manufactured Home Appraisal Report Form 1004C Section 5: HUD Data Plate/Certification Label (cont.)

• The HUD Data Plate provides information on:1. Name and address of the manufacturing plant

where the home was constructed

2. Serial number, model designation, and date of manufacture

3. Compliance statement

4. List of certification label(s) number(s)

5. List of major factory-installed equipment

6. Roof zone and wind zone maps designating the zones for which the home has been constructed



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• The heating/cooling certification and insulation maps may be on the Data Plate or in separate documentation provided with the home. The Data Plate is not required to include the heating and cooling certification.

• The Certification Label is a two-inch by four-inch aluminum plate, permanently attached to the home. – Etched on the Certification Label is the Certification Label Number,

also referred to as the HUD Label Number. Label numbers are not required to be sequential on multi-section homes.

• Verifications of the Certification Label Numbers are available from the manufacturer, the in-plant inspection agency, and HUD—sometimes at a cost.



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• HUD Data Plate– Mark the appropriate box indicating if the Data Plate is attached. If

the Data Plate is missing and/or the appraiser is unable to locate it, the appraiser must report this fact.

• Certification Label– To be eligible for FHA-insured financing, the manufactured home

must have a HUD Certification Label affixed to the taillight end of each transportable section.

– If the appraiser is unable to locate the HUD Certification Label, the lender must be notified.

• Manufacturer’s Serial Number or VIN– Enter the manufacturer’s serial number or VIN. If the Data Plate is

missing, the serial number is stamped on the foremost cross-member of the supporting frame of the hitch end of the manufactured home.



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• HUD Certification Label Number(s)– Enter the label number(s) for each section.

• Manufacturer’s Name Trade/Model, and Date of Manufacture – Provide the manufacturer’s name, model name of the subject unit,

and date of manufacture.

• Wind, Roof Load, and Thermal Zones– The HUD Data Plate contains wind, roof load, and thermal zone

maps that designate the zone for which the home was constructed. – Indicate if the subject meets zone requirements for its location. Mark

“No” if the zone map indicates the manufactured home was built for a geographic area different from where the home is located.

– If the Data Plate is missing, the appraiser should note: “Data Plate missing, unable to determine compliance with wind, roof load, and thermal zones requirements.”



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Manufactured Home Appraisal Report Form 1004C Section 6: Improvements

General Description• Units/Additions

– The Manufactured Home Appraisal Report is designed solely for the valuation of a one-unit manufactured home. The appraiser must indicate if the original manufactured home has been altered by marking the box for additions.

• Design (Style)– Enter a brief description of the house design style using historical or

contemporary fashion (e.g., Cape Cod, bi-level, town house). Do not use the builder’s model name. Avoid generic descriptions.

• Year Built– If the manufactured home is less than one year old, include the

month and year completed. If it is more than one year old, provide the year built.



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Manufactured Home Appraisal Report Form 1004C Section 6: Improvements (cont.)

Foundation• Poured Concrete

– Mark if any part of the foundation system has a concrete slab.• Concrete Runners

– Mark if the foundation system has concrete runners on which the manufactured home rests.

• Block and Pier– Mark if the manufactured home is supported by concrete/masonry

blocks constructed on freestanding piers or by a continuous perimeter enclosure.

• Other: Attach Description– Mark if the foundation supporting the manufactured home is not any

of the above types. Describe the foundation supporting the home.• Full Basement

– Mark if there is a full basement.



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Manufactured Home Appraisal Report Form 1004C Section 6: Improvements (cont.)

Exterior Description Materials/Conditions• Skirting

– If the manufactured home features skirting indicate the material type. The FHA requires a properly enclosed crawl space with a continuous perimeter enclosure of a permanent foundation-type construction. Rate the observed condition.

– If the manufactured home has a crawl space and lacks a continuous perimeter enclosure of a permanent nature, note and highlight this absence. Note if the enclosed crawl area has adequate access and ventilation.

– It is only acceptable for a manufactured home to have vinyl skirting attached to framework if there is a perimeter enclosure constructed of concrete, masonry, or treated wood. Light weight, non-load bearing skirting may be attached over the perimeter enclosure but is not an acceptable substitute.

[Source: FHA FAQ, Revised 1/24/13]



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Manufactured Home Appraisal Report Form 1004C Narrative Comments Section

• Additions or Modifications– Describe any modifications made to the manufactured home since its

initial site placement. Any subsequent additions or modifications should not take the home out of compliance with the Manufactured Home Construction and Safety Standards (MHCSS).

– If the appraiser suspects that an addition or modification to the home poses a risk to the home’s structural integrity, notify the lender.

• Installer’s Name, Date Installed, Model Year– Indicate the name of the person/company that installed the

manufactured home, the date of installation, and the model year of the manufactured home. Note if the information is not available.

• Permanent Foundation System– To be eligible for FHA-insured financing, the design of the permanent

foundation must be in compliance with FHA criteria as evidenced by an engineer’s certification verifying such compliance.

– Indicate if a copy of the required engineer’s certification of compliance of the design of the permanent foundation was provided.



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Manufactured Home Appraisal Report Form 1004C Narrative Comments Section (cont.)

• Removal of Towing Hitch Wheels and Axels– The appraiser must inspect the underside of the manufactured home

and determine if the towing hitch running gear has been removed. If not removed, the manufactured home is not eligible for FHA-insured financing and the lender must be notified.

• Engineer’s Report– An engineer’s report of the foundation’s compliance with HUD/FHA

criteria is required for manufactured homes to become eligible for Title II insurance.

– If the manufactured home is proposed, an engineer must design a site-specific foundation complying with the Permanent Foundations Guide for Manufactured Housing (PFGMH).

– For existing manufactured homes already on a permanent foundation and where the plans used to construct the foundation are not available, an engineer must inspect the site and foundation to confirm compliance with the PFGMH.

[Source: FHA FAQ Valuation Protocol, Revised 1/24/13]



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Manufactured Home Appraisal Report Form 1004C Narrative Comments Section (cont.)

• Utility Connections– Indicate if the manufactured home is permanently connected to

public water and sewer, or well and septic and other utilities. If “No,” the manufactured home is not eligible for FHA-insured financing.*

• Gross Living Area Acceptable to Market– Mark the appropriate box indicating whether the living area of the

manufactured home is in concert with market expectations for overall living size, room size, and layout.

– If “No” is marked, the analysis should reveal that the living size and dimensions do not meet with market expectations and factor this deficiency in the opinion of value. If the gross living area of the manufactured home is less than 400 sf., the home is not eligible for FHA-insured financing.*

• Rate Quality of Construction– Rate the quality of construction of the manufactured home by and

identify the cost service used.– Report the source of the rating determination.

*If the home is not eligible, the appraiser must notify the lender. Today's FHA and VA 9/20/13


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Manufactured Home Appraisal Report Form 1004C Section 7: Cost Approach

• The appraiser is required to complete the cost approach only if the manufactured home is new construction.

• If the manufactured home is new construction less than one year old but title has been re-conveyed after the initial sale, or if the home is more than a year old, the cost approach is not required by the FHA.

• For cost estimates, the appraiser must rely on a nationally-published cost service.

• If the manufactured home is new construction and the retail purchase price of the home is available, the appraiser may rely on the retail purchase price and omit reliance upon a cost service. – An opinion of value of the supporting site is still required.

• State the remaining economic life as a single number or a range. This line must be completed for every FHA appraisal regardless of if the cost approach is completed. – An explanation is required if the remaining economic life is less than

30 years.



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Manufactured Home Appraisal Report Form 1004C Section 7: Cost Approach (cont.)

Cost Approach using Marshall & Swift• Section (Width)

– Determine number of sections that make up the manufactured home.

– Based on the quality rating of the manufactured home, choose the corresponding page of square foot costs for that quality rating. Compute the GLA (gross living area) for the home (width multiplied by length) and multiply by the rate per square foot from the square foot costs table.

• Indicated Value by the Cost Approach– Add any additional delivery, installation, and set up costs

together with the depreciated value of site improvements and the market value of the supporting site for a final indication of value by the cost approach.



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Cost Approach using N.A.D.A. Appraisal Guide• Exterior Dimensions

– Determine the length and width of the subject manufactured home.• N.A.D.A. Data Identification

– Enter the edition month(s) and year of the N.A.D.A Manufactured Housing Appraisal Guide.

• Manufactured Home State– Enter the state in which the manufactured home is located.

• Region– Based on the state the manufactured home is located, use the regional

code map of the N.A.D.A Guide, enter the appropriate region.• Size

– Enter the exterior length and width of the manufactured home.• Gray Pages

– Using the region code in the Gray Pages section of the N.A.D.A. Guide, find the trade name of the home.



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Cost Approach using N.A.D.A. Appraisal Guide (cont.)• White Pages Section

– Using the page number in the Gray Pages section, go to that page number in the White Pages section, Part 1, of the N.A.D.A. Guide. Locate the trade name and find the page number listed for the manufacturer’s name/model name for the listed width and region code.

• Yellow Pages– Using the page number in the White Pages section, go to that page number

in the Value Chart found in the Yellow Pages section of the N.A.D.A. Guide and determine the base retail book value.

• Black Supplemental Value Section (SVS) Page – When a home is not listed in the Gray or White Pages section, use the Black

Pages SVS of the N.A.D.A. Guide.• Green Section

– For older homes add for components and accessories not addressed in the Yellow Pages section, use the Green Pages section of the N.A.D.A. Guide.

• Indicated Value by the Cost Approach– Add the value of the supporting site to the final, modified value of the

manufactured home for the final indication of value.



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Manufactured Home Appraisal Report Form 1004C Section 8: Sales Comparison Approach

• The only significant difference in using the sales comparison approach for a manufactured home as opposed to a single-unit property follows:

• Manufactured Home– Indicate whether the comparable sale is a

manufactured home. At least two of the comparable sale properties must be manufactured homes.



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Individual Condominium Unit

• This report form is designed to report an appraisal of a unit in a condominium project or a condominium unit in a planned unit development (PUD) based on an interior and exterior inspection of the subject property.

• A unit in a non-approved project does not qualify for FHA financing.



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Individual Condominium Unit Appraisal Report Form 1073 Section 1: Subject

• Project Name– Enter the legal name of the project for the subject

property and each comparable property.• Unit #

– Enter the address unit number/designator.• Phase Number

– Enter the phase number of the subject, if applicable. Refer to condominium documents, public records, or confirm through the management company.

• Homeowners Association (HOA) $– This field is completed similar to the single-family 1004

form, though for condominium units, the amount of any applicable condominium association fees must be included in the HOA fees section.



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Individual Condominium Unit Appraisal Report Form 1073 Section 3: Neighborhood

Condominium Unit Housing Trends• Property Values

– Indicate if property values for condominium unit housing in the subject’s neighborhood are increasing, stable, or declining.

– Comparing individual condominium units that have sold and resold in recent years is an effective way to determine market trends.

• Demand/Supply– Indicate whether the demand/supply of condominium unit housing in

the subject property’s neighborhood is in shortage, balance, or oversupply.

– To determine the equilibrium status of supply and demand in the neighborhood, compare the number of condominium units sold to the number of condominium units listed for sale in a recent time period.

• Marketing Time– Indicate whether the marketing time for condominium unit housing is

under three months, three to six months, or over six months.



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Individual Condominium Unit Appraisal Report Form 1073 Section 4: Project Site and Section 5: Project Information

Section 4: Project Site• View

– This field is similar to the single-family 1004 form.– Photographs are recommended for any negative or positive view

influences affecting value or marketability.

Section 5: Project Information• Data Source (s) for Project Information

– Enter the data source (s) for the project information (e.g., condo documents, public records, etc.).

• Project Description– If the project includes more than one building, the appraiser should

enter the type of building in which the subject unit is located.



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Individual Condominium Unit Appraisal Report Form 1073 Section 5: Project Information (cont.)

General Description• Number of Stories and Elevators

– If the project includes more than one building, enter data for the building in which the subject unit is located.

• Total Number of Parking Spaces– Enter a total number of parking spaces for the condominium project.

• Ratio (spaces/units)– Enter the ratio—total number of parking spaces divided by the total

number of units.

• Type– Enter the type of parking in the condominium project.

• Guest Parking – Enter the number of guest, visitor, or non-assigned parking spaces

in the condominium project.Today's FHA and VA 9/20/13


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Subject Phase

• Enter the total number of units for each specific field. – Number of Total Units– Number of Units Completed– Number of Units for Sale– Number of Units Sold– Number of Units Rented– Number of Owner-Occupied Units



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If the Project is Completed

• Enter the total number of phases/units for each specific field if the project is completed– Number of Phases– Number of Units– Number of Units for Sale– Number of Units Sold– Number of Units Rented– Number of Owner-Occupied Units



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If the Project is Incomplete

• Enter the total number of phases/units for each specific field if the project is incomplete– Number of Planned Phases– Number of Planned Units– Number of Units for Sale– Number of Units Sold– Number of Units Rented– Number of Owner-Occupied Units



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• Project Primary Occupancy– Indicate the occupancy type for the project (e.g., Principal

Residence, Tenant, etc.).• Is the Developer/Builder in Control of the HOA

– Indicate whether the developer/builder is in control of the HOA.• Management Group

– Identify the type of management group. If “Management Agent” is marked, enter the management company name and phone number.

• Does Any Single Entity Own More than 10% of the Total Units in the Project?– Indicate whether a single entity owns more than 10% of the total

units in the project. If “Yes,” provide entity name and the number of units owned.

• Was the Project Created by Conversion?– Indicate whether the project was created by a conversion. If “Yes,”

describe the original use and the date of conversion.



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• Are the Units, Common Elements, and Recreation Facilities Complete?– Indicate if common elements and recreational facilities are complete.– If “No,” provide describe what remains to be completed.

• Is There Any Commercial Space in the Project?– Indicate if there is commercial space in the project.– If “Yes,” describe the commercial space and provide the overall

percentage of commercial space.• Describe the Condition of the Project and Quality of

Construction– Describe the overall condition and maintenance of the project.– Note any evidence of physical deterioration.– Rate the project’s condition (“Good,” “Average,” “Fair,” “Poor”).– Rate the quality of construction giving consideration to the durability

and quality of the materials and finish.



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• Describe the Common Elements and Recreational Facilities– Describe the common elements and recreational areas (e.g., pools,

courts, club houses). • Are any Common Elements Leased to or by the HOA?

– Indicate whether any common elements are leased to the HOA.– If “Yes,” describe the rental terms and options and comment on any

effect on the marketability or value of the project.• Is the Project Subject to Ground Rent?

– Indicate whether the project is subject to ground rent.– If “Yes,” enter the dollar amount of the annual ground rent and

describe the terms, restrictions, and conditions of the lease agreement and the effect on the marketability/value of the project.

• Are Parking Facilities Adequate for the Project Size and Type– Indicate if the parking facilities are adequate for the project size/type.– If “No,” describe and comment on the effect on value and

marketability.



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Individual Condominium Unit Appraisal Report Form 1073 Section 6: Project Analysis

• Analyze the Condominium Project Budget– Explain the results of analysis (including adequacy of the fees and reserves

to meet operating expenses) of the condominium project budget.

• Are There Any Other Fees for the Use of the Project Facilities?– Indicate whether there are any fees other than the regular HOA fee for use

of the project facilities. If “Yes,” report the charges.

• Compared to Other Competitive Projects– Indicate the subject project’s unit charge comparability to competitive

projects of similar quality and design. If either the “High” or “Low” box is marked, an explanation is required.

• Are There Any Special or Unusual Characteristics of the Project Known to Appraiser?– Indicate if there are any unusual characteristics of the project. If “Yes,”

describe and explain the effect on value and marketability (e.g., condo fee increasing by 30% to cover repair due to lack of adequate reserves for building maintenance).



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Individual Condominium Unit Appraisal Report Form 1073 Section 7: Unit Description

• Unit Charge – Enter the monthly condo/HOA fee, multiply by 12, and enter the

result per year.

• Annual Assessment per Sq. Ft. of GLA– Divide the annual assessment charge per year by the GLA to

determine the assessment per square foot.

• Utilities Included in Monthly Assessment– Identify which utilities are included in the unit monthly assessment.

General Description• Floor Number

– Enter the floor level location of the unit.

• Number of Levels– Enter the number of levels contained in the subject unit.



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Individual Condominium Unit Appraisal Report Form 1073 Section 9: Sales Comparison Approach & Section 10: Income Approach

• There is no difference in development or reporting of the sales comparison or income approach for a condominium unit. The cost approach is not applicable in the appraisal of a single condominium unit.

• Unlike the neighborhood price data, which includes all sales, the selection of comparable properties focuses only on those properties that are comparable to the subject, not the universe of sales.

• If there were difficulty in locating comparable properties, then all such properties in the subject’s neighborhood are to be treated as comparable and counted.



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Small Residential Income Property

• The 1025 form does not require compliance with UAD reporting standards.

• This report form is designed to report an appraisal of a two- to four-unit property, including a two- to four-unit property in a planned unit development (PUD), based on an interior and exterior inspection of the subject property.– A two- to four-unit property in a condominium project requires the

appraiser to inspect the project and complete the project information section of the Individual Condominium Unit Appraisal Report.

– This form is not designed to report an appraisal of a manufactured home.

– Where one or more of the units is a manufactured home, the appraiser is required to complete the HUD Data Plate and Improvements sections of the Manufactured Home Appraisal Report.



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Small Residential Income Property Appraisal Report Form 1025 Section 3: Neighborhood

• Property Values– Describe the current trend in property values for two- to four-unit single-

family homes in the community. Indicate if the subject property type is scarce in the neighborhood or marketplace and identify the predominant neighborhood housing type. Address trends for that identified type.

• Demand/Supply– Mark the demand/supply trend as was addressed in the Property Values

Section.

– To determine the equilibrium status of supply and demand in the neighborhood, compare the number of two- to four-unit properties sold to the number of two- to four-unit properties listed for sale in a recent time period.

• Marketing Time– Mark the appropriate marketing time—the typical length of time a property

similar to the subject property would have to stay on the market before being sold at a price near its market value.



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Small Residential Income Property Appraisal Report Form 1025 Section 5: Improvements

General Description

• Units– Mark the appropriate box indicating the number

of units.

• Accessory Unit– A two- to four-unit dwelling with an accessory

unit is ineligible for FHA financing.

• Number of Buildings– Enter the number of buildings.



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Small Residential Income Property Appraisal Report Form 1025 Section 5: Improvements (cont.)

• Enter the number of appliances in the specific fields, or enter “0” if there are none– Refrigerator– Range/Oven– Dishwasher– Disposal– Microwave– Washer/Dryer– Other

• Enter “X” for any other appliances not listed above and describe. Do not include Personalty.



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Small Residential Income Property Appraisal Report Form 1025: Room Count and Square Feet of Gross Living Area

• Gross Living Area (GLA)– The gross living area is obtained by drawing an imaginary line on the

outside perimeter walls of each unit. Do not include attic or basement areas that may be assigned to a unit.

• Gross Building Area (GBA)– The gross building area is the total finished area of the improvements,

above and below grade, based on exterior measurements.

• To Complete This Section– For each unit, enter the total number of rooms, the total number of

bedrooms, and the total number of bathrooms.– Enter the total square footage of the gross living area for each unit.

• Subject to Rent Control– Indicate whether the property is subject to rent control. If “Yes,” indicate

ceilings on rent and any other pertinent controls.



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Small Residential Income Property Appraisal Report 1025 Section 6: Comparable Rental Data

• The appraiser is required to report information on the subject and three comparable rental properties.

• Ideally, the properties used for comparable rentals will not be the same as those used in the sales comparison analysis.



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Small Residential Income Property Appraisal Report 1025 Section 7: Subject Rent Schedule

• Rent Schedule– The appraiser must reconcile the applicable indicated monthly

market rents to provide an opinion of the market rent for each unit in the subject property.

• Leases– Provide the starting and termination dates of the leases for each unit

of the subject and comments on the lease data.

• Actual Rent (Total Actual Rent, Other Income, Total Actual Income)– Enter the rent for each unit, unfurnished or furnished, and then the

total rent.– Enter the total actual monthly rent for all units.– Enter any other monthly income. – Enter the total actual monthly income.



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Small Residential Income Property Appraisal Report 1025 Section 7: Subject Rent Schedule (cont.)

• Opinion of Market (Gross Monthly Rent, Other Income, Total Estimated Income)– Enter an opinion of market rent for each unit, unfurnished or

furnished, and then the total rent.– Enter the total estimated market rent for all units.– Enter any other monthly income. – Enter the total estimated monthly income.

• Utilities Included in Estimated Rents– Indicate the applicable utility items included in the rent.

• Comments on Actual or Estimated Rents– Provide comments on actual or estimated rents and other

monthly income such as itemizing other monthly income; differences, or lack there of, between actual rent and market rent.



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Small Residential Income Property Appraisal Report 1025 Section 9: Sales Comparison Approach

The only variation in the developing and reporting of the sales comparison approach from one-unit appraisal is in the comparison for value adjustments.

•Gross Monthly Rent– Enter the gross monthly rent for the subject property and each

comparable sale.

•Gross Rent Multiplier– Enter the gross rent multiplier for the subject property and each

comparable sale.– A manual check on calculations is recommend to test for accuracy.

Appraisers are responsible for data contained in the report (Sale Price ÷ Gross Monthly Rent).

•Price per Unit– Enter price per unit for the subject property and each comparable.



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Small Residential Income Property Appraisal Report 1025 Section 9: Sales Comparison Approach (cont.)

• Price per Room– Enter price per room for the subject property and each comparable.

• Price per Bedroom– Enter price per bedroom for the subject property and each

comparable.• Rent Control

– Indicate whether there is rent control.• Unit Breakdown

– Enter room count per unit, consistent with the description of improvements on the front of the form.

– Enter room count for the units in each of the comparable sales and make adjustments where warranted.

– Explain adjustments in the Summary of Sales Comparison.• Adjusted Price per Unit

– Enter adjusted price per unit for each comparable sale (Adjusted Sale Price ÷ Number of Units).



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Small Residential Income Property Appraisal Report 1025 Section 9: Sales Comparison Approach (cont.)

• Adjusted Price per Room– Enter adjusted price per room for each comparable sale (Adjusted Sale

Price ÷ Number of Rooms).• Adjusted Price per Bedroom

– Enter adjusted price per bedroom for each comparable sale (Adjusted Sale Price ÷ Number of Bedrooms).

• Value per Unit– Enter adjusted price per unit and multiply by number of units =

Estimated Value.• Value per GBA

– Enter price per gross square foot of building area and multiply by gross square feet of building = Estimated Value.

• Value per Room– Enter adjusted price per room and multiply by number of rooms =

Estimated Value.• Value per Bedroom

– Enter adjusted price per bedroom and multiply by number of bedrooms = Estimated Value.



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Small Residential Income Property Appraisal Report 1025 Section 10: Income Approach and Section 13 Cost Approach

Section 10: Income Approach

Sale Price ÷ Gross Monthly Rent = Gross Rent Multiplier

• Gross Monthly Rent– Enter the gross monthly rent developed in the opinion of market rent.

– Multiply the gross monthly rent by the gross rent multiplier to arrive at the indicated value by the income approach.

• Comments on Income Approach– Provide comments on the income approach including reconciliation of the

GRM.

– Reconcile the multipliers developed in the sales comparison analysis.

– Judge comparability and applicability of each.

– Do not average; account for differences.

Section 13: Cost Approach• There are no significant differences in the development of the cost

approach from that discussed in appraising a one-unit property.Today's FHA and VA 9/20/13


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Summary

1. Modular housing is built to the local/state codes and is not to be considered manufactured housing for FHA purposes.

2. Appraisers must pay particular attention to the Appraiser’s Certifications of the Manufactured Home Appraisal Report and the USPAP Competency Rule that addresses an appraiser’s familiarity with a specific property type.

3. For FHA insurance eligibility, the finished grade level beneath a manufactured home must be at or above the 100-year flood plain.

4. For reporting the appraisal of a condominium on the 1073 reporting form, compliance with UAD reporting standards is required. The Manufactured Home Appraisal Report form and the Small Residential Income Property Report form do not require UAD compliance.



Summary (cont.)

5. For appraising a condominium unit, the appraiser must accurately report the conditions observed including the overall condition of the project and quality of construction.

6. The appraiser must explain the results of any analysis of the condominium project budget. If the budget was not analyzed, the appraiser should explain why the analysis was not performed.

7. A two- to four-unit dwelling with an accessory unit is ineligible for FHA financing.



Summary (cont.)8. The gross living area of a two- to four-unit property is

obtained by drawing an imaginary line on the outside perimeter walls of each unit.

9. The gross building area of a two- to four-unit property is the total finished area (including common areas—hallways, interior stairways, etc.) of the improvements, above and below grade, based on exterior measurements.

10.When appraising a two- to four-unit property, the appraiser is required to report information on the subject and three comparable rental properties. Ideally, the properties used for comparable rentals will not be the same as those used in the sales comparison analysis.


Chapter 6 Quiz

1. The HUD Data Plate could be found in any of these areas EXCEPT thea. electric service panel.

b. kitchen.

c. outside rear section of the unit.

d. utility room.



Chapter 6 Quiz

2. If a small residential income property has both a conventional dwelling and a manufactured home on the site, the appraiser would need to complete thea. 1004C form only.

b. 1025 form only.

c. 1025 form and the 1004C form.

d. 1025 form and portions of the 1004C form.



Chapter 6 Quiz

3. In selecting comparables for a condominium unit, the appraiser has found no sales of two-bedroom townhouse units within the past 12 months similar to the subject. The appraiser shoulda. consider all such properties in the subject project as comparable.

b. select larger three-bedroom townhouse comparables in the subject development.

c. select one-story, two-bedroom comparables in the subject development.

d. select superior two-bedroom townhouse units in the subject development.



Chapter 6 Quiz

4. To be eligible for FHA financing, the manufactured home must have a HUD Certification Label affixed toa. the foremost axle.

b. the foremost cross-member of the frame.

c. an interior location, such as the electrical panel or a kitchen cabinet.

d. the taillight end side of each transportable section.



Chapter 6 Quiz

5. When an appraiser’s site area is 1,120 What would NOT be an acceptable method of describing the style of a manufactured home?a. Cape Cod

b. Iron Trojan model

c. one-floor

d. Ranch



Chapter 6 Quiz

6. If an appraiser is reporting the actual age The cost approach is required for a manufactured home only if it isa. less than one year old, but being re-conveyed.

b. more than one year old but has never been considered as real property.

c. new construction conveyed from the manufacturer.

d. none of the above



Chapter 6 Quiz

7. For a two- to four-unit property, which would NOT be required to satisfy reporting protocol?a. number of dishwashers

b. number of refrigerators

c. number of television cable connections

d. number of washer/dryers



Chapter 6 Quiz

8. A two-unit dwelling in which one unit has a mother-in-law suite (accessory unit) would bea. considered only a two-unit dwelling.

b. considered two units, with the suite having contributory value.

c. considered three units.

d. ineligible for FHA financing.



Chapter 6 Quiz

9. Which statement best describes the cost approach in a condominium unit appraisal?a. The appraiser could calculate the cost of the

entire building and divide by the number of units.

b. It is applicable if less than one year old.

c. It is not applicable.

d. It is not required if more than one year old.



Chapter 6 Quiz

10. If an appraiser is appraising a property that includes one small bedroom, one master The income approach uses the formulaa. Sale Price (added to utilities) x Gross Monthly Rent =

Gross Rent Multiplier.

b. Sale Price (added to utilities) ÷ Gross Monthly Rent = Gross Rent Multiplier.

c. Sale Price x Gross Monthly Rent = Gross Rent Multiplier.

d. Sale Price ÷ Gross Monthly Rent = Gross Rent Multiplier.



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