URAR 1004s are for Sissies

I remember the first time I ever saw a real appraisal report.  No, I am not talking about a 1004, 2055, or even a 1025.  I am not referring to a Fannie or Freddie form at all.  I mean a real, living, breathing, monster of a report; the narrative!!! (insert collective gasp here)  Early in my career, one of my insightful instructors brought one of his narrative reports to class.  As I perused that 76 page beast full of words (not boxes), descriptions (not canned comments), graphs (not pre-filled MC Addendums), and pictures (oh, how there were pictures), I remember thinking, “wow, 1004s are for sissies.”

1004URARMy next thought was something along the lines of “glad I will never have to write one of those.”  I guess I figured, mistakenly of course, that if you are not a commercial appraiser, you would never need to know how to write such a monstrosity.

I was working on a case for litigation this past week.  As part of the process of discovery, the other side sent over their appraisal report.  Though I disagreed with the findings, I was impressed by the detailed, narrative report the appraiser had prepared.  Rather than checking boxes and regurgitating phrases such as “The subject is in a limited market and therefore…” or “done in conjunction with local builders…” blah blah, blah, he had gone into detail providing graphs, regression analysis, and specifics as to why he made the conclusions he did.  My own report ended up being over 70 pages when all was said and done, but his was truly impressive.  Though I thought his assumptions were unrealistic, his supporting data was strong, and I concluded that this appraiser was no sissy.

Most of us residential guys spend a majority of our careers appraising real estate and putting our conclusions on a Fannie or Freddie, pre-made form.  Highest and Best Use?  Check.  FEMA Zone?  The computer filled it out for me.  Subject description?  Scuttle: check.  Slab: check.  Crpt/Tile/Gd: got it.  Neighborhood description?  Well, the north boundary is probably Main St.  The South is likely the river, and so on and so forth.  How often do we stop to consider what it is we are actually doing?  Though the new version of USPAP has called heresy on the phrase ‘Summary Report,’ isn’t that still what it actually is?  Remember an appraisal and an appraisal report are not the same thing.  Frankly, they are about as closely related as Kentucky marriage bloodlines (wait… that is probably not a good analogy).  An appraisal is what you do and an appraisal report is how you decide to explain what you did.  Unfortunately, many appraisers get so used to checking boxes and filling out forms that they forget to consider what it is they were actually hired to do.  We all do it on occasion.

Do not misunderstand; I do not think there is anything wrong with the 1004, 2055, or 1025 . . .well, truth be told, there is plenty I would change . . .but we ought to be familiar with some other ways of reporting our findings.  Lately, there has been a lot of disgust on display over some lenders’ decision to move away from 1004s and use other reports more specific to their purpose.  Personally, I have no issue with lenders, AMCs, attorneys, or Grandma Matilda asking whatever form they want of the appraiser.  We just need to make sure we remember that the form does not equal the report and USPAP still needs to be complied with.

Now, go create some value!

Dustin Harris is a super-successful, self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and consultant. He also owns and operates The Appraiser Coach where he personally advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth.   He and his wife reside in Idaho with their four children.

17 thoughts on “URAR 1004s are for Sissies”

  1. The reference to marriage bloodlines is about as smart as living in Idaho; in other words, it’s not. If you can’t write an article without insulting someone, don’t write the article.

  2. I have not written a narrative report in over 20 years but the conclusion here is correct. We do forget what we are doing. It is funny the writer brings up staying in compliance with USPAP because it seems to me that the UAD nonsense is taking us further and further from USPAP and of course because the rule makers are all hand in hand with these issues very soon USPAP will start to change to be in compliance with the UAD requirements.

  3. I’ve been writing narrative appraisals for over a decade now and have essentially given up on the residential side of the business. I personally find form filling to be too restrictive as Dustin clearly indicates. True, one can write a massive narrative addendum to clarify the summary data presented in the form, but by the time you’ve done that you’ve typically burned through all the profit from your form-based appraisal fee and the result is unlikely to be anywhere near as good as a well crafted narrative report. Moreover, as has been extensively discussed in many appraisal forums, URAR’s and other stock forms often have elements that are not fully USPAP compliant, and thus, arguably, the appraiser suffers needless exposure imposed upon him/her by the form’s structure.

    1. I agree with Kalle. I am a commercial appraiser at heart and dislike the form filling on the residential side. I have convinced many of my local lenders to allow me to complete a narrative report for multi-family properties instead of filling out the ridiculous form that was developed. Since we are required to comply with uspap, the forms that we are also required to use should automatically be required to comply with uspap as well. Additionally, I find that many times in my addenda I have written half a page on an issue with the property but failed to click the appropriate box on the first page of the report….frustrating.

  4. Thanks Dustin,

    My impression is that you spend most of your teaching time talking to secondary residential mortgage market appraisers. Please re-tell your thoughts over and again in your classes.

    Fannie’s guidelines and emphasis on report format has confused many appraisers into believing the reporting is primary and even that USPAP has been replaced.

    I refuse clients who do want my best efforts at gathering, verifying and analysis of fact, which, for the sake of simplicity, I have decided pretty much eliminates all AMCs, their usual clients and corresponding banks. No secondary residential mortgage work done here.

  5. Dustin, Glad to see that you’ve mastered that whole “How not to write a blog article” thing. It is really working out for you. You are so “super successful” at it that it looks like you’ll need to add a 7th item to your Jan. 29 article.
    #7. Make insulting comments about the population of an entire state where you are trying to market your services.
    Great strategy!

  6. The Appraiser Coach

    So, normally I do not respond to comments (1. don’t have the time and 2. usually the back and forth gets us nowhere), but I have to clarify one thing (based on the comments that are coming in regarding my headline). Folks, it’s called sensationalism. I am not insulting the general population of appraisers. Sometimes I wonder if we have a sense of humor anymore. Read the article in its entirety and you will get that. Heck, if I were calling all appraisers who do 1004s “sissies,” don’t you think I ought to start with myself? I do 80% AMC work.

    Blogging 101: The purpose of a headline is to get your recipients to read the article. The purpose of the article is to get them to think. The purpose of getting them to think is to get them to look at their life differently. The purpose of looking at their life differently is to… and the pattern continues. It is progressive. I guess writing the word “sissies” in the header got you to move to the next step, but if you read it, you will read WHY I put that word in. It was a thought I had when in the early part of my career. I do not believe appraisers who do 1004s are sissies. Again, I do AMC work (which means I do 1004s). I do not think I am a Sissy, but I guess I will ask my wife that question tonight. Then again, my daddy taught me to never ask a question I did not want o know the answer to.

    1. The following post is a fictional account with an element of sensationalism.

      An appraiser from Kentucky met the Appraiser Coach and his two assistants at a conference. The appraiser from Kentucky asked them, “Wanna hear an Idaho joke?”

      The Appraiser Coach responds “Before you tell that joke, you should know something.”
      ” I’m a super-busy appraiser from Idaho and I always travel with two assistants who handle my light work for me. My first assistant is on your right. He is 6’2″, weighs 225, and he played linebacker at the University of Idaho. My other assistant is the guy to your left. He is 6’5″ and weighs 300. For fun, he wrestles bulls at the Idaho State Fair. Each one of us is was born and raised in Idaho. Think about it, Mister. Do you still wanna tell that joke?”

      The appraiser from Kentucky says, “Nah, not if I’m gonna have to explain it three times.”

  7. The 1004 started as the “Green Hornet” in the 1950’s or 60’s, when the US Savings League wanted a consistent format. It went through several modifications and changes and at some point became the Residential Appraisal Report form, used by Fannie & Freddie. In 1986, as I was transitioning from agent to appraiser, it became the UNIFORM Residential Appraisal Report, and was used by Fannie, Freddie and HUD-FHA and VA. Those old versions were created by and the changes up through 2005 were made primarily by appraisers. In 2009, we lost control.
    The 1004 UAD was created by a committee. (Remember, God so loved the world that He did NOT send a Committee!) There were two appraisers on the committee, the other 10-12 members were computer specialists and mortgage specialists. Most of the revisions were approved on a vote of 10-2 or 12-2.

    1. I had the same transition and time frame. The URAR actually came about after’86, though not by much. It was a horrible form, but the hoped for trade offs, justified its retention rather than reversion. The idea that sfrs, condos, puds, and 2-4s would all be done on the same form had tingles running up and down lenders legs. It only took them a couple years before they reverted to individual forms all over again, but still left us with the lousy URAR for SFRs!

      The FNMA UAD/UMDP/mismo path is bar none, the worst thing that has ever happened to us. Appraisers are not designed to provide investors with standardized, meaningful data. Contrary to the claims, the systems is geared more to allow sellers of bundled securities to deliver only selected portions of appraisals to decision makers. Even when properly completed, the UAD format causes far more confusion than it purported to correct. It also encourages BAD APPRAISAL practices.

  8. Really? You had to go to the inbred Kentuckian jokes to get your point across? Screw you, and, by the way take me off your distribution list. BTW, I DARE you to try and complete a “Sissy” 1004 in MY home territory… In Kentucky. Jerk.

  9. Excellent observations and reminders Coach. I don’t often agree with you, but you are spot on with this. One exception; I DO have a problem with the plethora of special use, lender-specific forms and more universal FNMA “less than” type forms. The old 704 fell out of favor for a reason. The 2055 is worse though, since it pretends to be much more than a mere drive-by. Investors used to require meaningful appraisal reports. Lenders used to provide them, but have always looked for either a cheaper alternative, or one in which the negative property conditions could either be concealed or minimized. Newer appraisers tend to be ‘form-filler guided’. If the form does not have a box for an item, they don’t deal with it. If they were provided with boilerplate by their mentors, they keep using it for years without ever understanding the issues that the BP is ostensibly covering.


    1. You know the Kentucky-thing is true, or it wouldn’t bother you so much. And, true, Idaho people really don’t have a state they can make fun of. Maybe a third world country?
    2. More importantly, we are all total geeks for reading A BLOG ABOUT APPRAISAL FORMS!!!! If anyone wants to borrow my Revenge of the Nerds DVD, you’ll see some appraisers at their best.
    3. Stop fighting lending and Wall Street securitization. Appraisers exist to service people like this, not in some valuation museum. The American Socialist Lending System needs AMCs.

    GET A LIFE!!!!

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