If you are First-Time Home Buyer looking to take advantage of some of the great Las Vegas real estate deals with the help of FHA mortgage financing, there are a few new FHA appraisal guidelines that you should be aware of.
Not to be confused with the recent Home Valuation Code of Conduct (HVCC) agreement that went into effect on May 1, 2009, these FHA appraisal guidelines relate more specifically to the listing price and appraisal valuation reporting required by the appraiser.
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There are basically 10 major points of interest that sellers, buyers, and agents need to pay attention to with regards to the new FHA Appraisal Guidelines:
- The Market Conditions Addendum (Fannie Form 1004MC/Freddie Form 71) needs to be completed. This basically has to do with creating more transparency for appraisals conducted in declining markets.
- At least two comparable sales within 90 days of appraisal date.
- A minimum of two active listings or pending sales, in addition to three closed comparables.
- Bracketed listings using both dwelling size and sales price when possible.
- Adjust active listings to reflect the List To Sales Price Ratio.
- Adjust pending sales to reflect contract sales price when possible.
- Include original list price and any revised list prices.
- Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales.
- Absorption Rate Analysis.
- Known or reported sales concessions on active pending sales.
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How will this impact Las Vegas home buyers?
FHA defines that a declining market is any “neighborhood, market area, or region that demonstrates a decline in prices or deterioration in other market conditions as evidenced by an oversupply of existing inventory or extended marketing times.”
The 1004MC form will identify a declining trend in the market. FHA reminds Direct Endorsed lenders that both the lender and the appraiser are equally responsible for the integrity, accuracy, and thoroughness of an appraisal submitted to FHA.
Obviously, the lower priced homes is a direct result in the overwhelming amount of inventory, which includes Short Sales and bank owned properties.
How should real estate agents and sellers respond to the new FHA Appraisal Guidelines?
You can read how some real estate agents feel about this here and here.
Basically, agents need to be prepared to give a value of a property based on the most recent 90 days (three months) neighborhood comps to avoid complications on a new purchase transaction.
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Online Resources
- What everyone ought to know about home appraisals
- Appraisal Scoop – 1004MC – April Fools?
- Revised Fannie Mae Guidelines
- Appraiser Forum
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Top 6 Las Vegas Mortgage Links / Articles / Questions
- Las Vegas First-Time Home Buyer Frequently Asked Questions
- Las Vegas Mortgage – How Much Can I Borrow?
- What Are The Current Mortgage Interest Rates?
- Applying For A Las Vegas Mortgage – What Documentation Do I Need?
- How Does The Mortgage Approval and Funding Process Work?
- $8000 First-Time Home Buyer Tax Credit
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