Whether it’s acronyms, numbers, or terms, there is a lot to keep straight when it comes to appraisals. As you know, different types of properties require different types of appraisals. However, what you might not know is that different types of loans might require different types of appraisals. Today, we’re tackling the 1004 appraisal form also known as a Uniform Residential Appraisal Report.
What is a 1004 appraisal report?
A 1004 appraisal form is considered to be one of the most commonly used forms in residential real estate appraisals. In accordance with USPAP a 1004, or URAR, is completed when estimating the market value of a single-family dwelling complete with an exterior and interior inspection. It includes information about the property, the neighborhood, market statistics, comps, property photos, floor plans, and other pertinent details.
How do you read a 1004 appraisal?
A 1004 appraisal is straightforward. Along the left side of the document, you’ll find categories outlining different aspects of the appraisal and the property. You might also find different acronyms or industry shorthand that are used to describe property details. For example on the Uniform Residential Appraisal Report (URAR), you might see information about the “actual age” of the property. The letter “A” refers to the actual age of the home while “E” refers to the effective age. A home’s effective age takes into account renovations and updates that bring it closer to today’s market standards.
What is an FHA appraisal?
A 1004 appraisal is not to be confused with a 1004 FHA appraisal. The difference is that 1004 FHA appraisal will be only required in the event that someone is purchasing a home using an FHA loan. As you can expect, a 1004 FHA appraisal is slightly more detailed as it includes a list of required FHA repairs. An FHA appraisal is completed on an FNMA 1004 form.
What do potential buyers need to understand about FHA appraisals?
In the early 2000s, there were many FHA appraisals completed that inflated a home’s value which in turn allowed FHA lenders to easily close a loan. Since then Housing and Urban Development (HUD) has prevented this problem by making revisions to the original FHA guidelines. Today, there are many FHA requirements for FHA appraisers that outline minimum property standards which include, but are not limited to, appliance operations, water heater functionality, and roof durability. FHA loans make it easier for homebuyers to purchase houses because a smaller downpayment is required. It is, however, important for purchasers to understand that an FHA appraisal does not take the place of an inspection. Potential buyers should still have the property inspected prior to closing to ensure the home is in sound order.
If you have other questions about 1004 appraisals or FHA appraisals, don’t hesitate to let us know. We’re always here to answer all of your appraisal questions.