4150.1 REV-1

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CHAPTER 8. UNIFORM RESIDENTIAL APPRAISAL REPORT

8-1. GENERAL. All appraisals must be completed on the Uniform
Residential

Appraisal Report (URAR) which is a common form required by the

Department of Housing and Urban Development, the Department of

Veterans Affairs, the Federal National Mortgage Association, the

Federal Home Loan Mortgage Corporation and others.

A. The URAR is formatted and sized to accommodate computer generated

appraisal reporting. The format (10 characters to the inch

horizontal spacing) compliments the use of word processors,

dot matrix, letter quality and laser jet printers as well as

traditional typewriters. It may also be obtained with 12

characters per inch. The form must be completed with ball point

pen, typewritten or computer generated.

B. HUD does not furnish the URAR to lenders. Lenders must purchase

the URAR from private sources and furnish it at no cost to the

appraiser, when the lender requests an appraisal.

C. There are parts of the URAR which HUD does not require, such as

cost and depreciation for an older existing home or the income

approach for a one or two unit owner-occupied home. However,

there may be some lenders, including Direct Endorsement (D.E.)

mortgagees, who may require completion of these parts for

possible conventional loan purposes. In such cases, the URAR

should be completed in its entirety, but mortgagees must make

such arrangements directly with the appraiser and pay any

required additional amount. When the lender requests that the

entire URAR be completed, the additional expense involved cannot

be charged to the buyer. The additional expense must be borne by

some other party (i.e., the seller, mortgagee, etc.).

D. In addition to the URAR, the appraiser must prepare the Valuation

Condition Sheet when necessary for correction of any obvious

deficiencies which could have an adverse effect on the health or

safety of the occupants or the continued marketability of the

property. This form is prepared and distributed by each HUD

Field Office.

The Condition Sheet shall contain space for the property address,

the case number and the site of the appraisal. The valuation

conditions shall be coded using a VC sequence (i.e., VC-1, VC-2,

VC-3, etc.). The valuation condition sheet shall be completed in

triplicate with the original and a copy being attached to the

URAR and sent to the mortgagee and a copy remaining with the case

binder.

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8-1

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4150.1 REV-1

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8-2. INSPECTION OF PROPERTY.

A. Appraisers must present their HUD I.D. card and conduct

themselves in a courteous and professional manner. The estimate

of value must not be discussed with the owner, real estate agent

or anyone other than HUD or a Direct Endorsement mortgagee\'s

underwriter.

B. The Appraiser is required to make a complete personal visual

inspection of the subject property and all comparables used in

the appraisal report. The inspection of the subject property

must include the exterior and interior of the building.

C. The basement must be examined for dampness or wetness, any

obvious structural problems and the condition of the furnace,

hot water heater or other components located there. The

Appraiser must turn on the furnace and air conditioner, if one

exists, to assure it is working and check the hot water heater.

The appraiser must be especially careful in checking the

operation of equipment where a property shows evidence of

neglect or vandalism. If the appraiser cannot determine whether

all mechanical equipment is in operating condition, the

appraiser should make a commitment requirement for reinspection

or that the mortgagee furnish evidence satisfactory that certain

mechanical equipment is in operating condition at the time of

loan closing.

D. A crawl space must be examined for dampness or trash, vapor

barrier, distance from floor joists to ground, adequate

ventilation and any obvious structural problems. The appraiser

should note in the appraisal report when the distance from the

floor joists to the ground is less than 18 inches. The local

HUD Office may require a minimum distance from the ground to the

floor joists for the property to be acceptable.

E. The attic must be inspected whether access is by pull-down

stairway or scuttle, for signs of deficient roof covering,

possible structural problems, insulation, and adequate

ventilation. Although insulation is not a requirement, in many

sections of the country the lack of insulation would seriously

affect the marketability of the property.

F. The Appraiser must also walk around the site to assure that

there is proper drainage away from the house, that there is no

obvious wood-boring insect infestation or potential for such and

that there is sufficient distance from an adjoining property for

the maintenance of the sides of the subject property. If the

subject property has a septic system the Appraiser must inspect

for any signs of failure such as odor or surface puddling. If

municipal sewage service is available, connection to such

service must be made, if feasible.

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8-2

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4150.1 REV-1

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(8-2) G. Deficiencies must he given proper consideration in establishing

the estimated market value of the property. An estimate of the

cost of the required repairs, alterations or additions is made

by the Appraiser, or by the Architectural or Cost Section when

requested. If conditions prevent complete inspection of the

property at the time of appraisal (for example, snow covering

the roof) so that the Appraiser cannot determine the condition,

either a reinspection prior to closing or satisfactory evidence

must be furnished concerning the condition of those items cited

in the requirement.

H. The Appraiser is required to take a picture of the front and

rear of the subject property from oblique angles so as to

include the sides as well as the front and rear of the property

and all buildings on the subject property having contributory

value. The appraiser must also take a frontal picture of each

comparable used in the report; having someone else take the

pictures is not acceptable. In addition, the appraiser is

required to provide a copy of a local street map showing the

subject and each comparable.

Exception: There may be a case in a rural area in which an

Appraiser wishes to use a comparable that had been used in a

previous case, but the picture was taken with a Polaroid camera

and there is no negative from which to reproduce the picture.

In such cases, if the comparable is a great distance away, the

Field Office may waive the requirement for a picture of that

comparable, provided that the Appraiser cites the previous case

number in which that comparable had been used and a picture

provided. This authority is to be used only in rural areas

where it is a great distance to the comparable.

I. The Appraiser who performed the appraisal and made the

inspection must personally sign the appraisal report.

J. For newly constructed properties, see HUD Handbook 4145.1.

8-3. INSTRUCTIONS FOR COMPLETING THE UNIFORM RESIDENTIAL APPRAISAL
REPORT

(URAR). All appraisal reports must be prepared with ball point pen,

typed or computer generated.

A. FHA Case Number: To be inserted at top right after \"File No.\"

B. Subject: To be filled in by the appraiser except for the box at

right \"Lender Discretionary Use\" which is to be completed by the

Field Office or Direct Endorsement lender\'s underwriter after

the purchaser has been approved and the case is ready for

closing.

C. Neighborhood: Location: In addition to checking boxes

in\"predominant occupancy,\" show percentage occupied. When boxes

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8-3

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4150.1 REV-1

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(8-3) \"urban\" and \"declining\" are both checked, the appraiser should

consider making a recommendation that the mortgage encumbering

the property be insured pursuant to Section 223(e).

D. Neighborhood Analysis: Mark the most appropriate rating for

each item.

1\) G - GOOD: The item or characteristic in the subject

neighborhood is superior to the same

characteristic found in a competing

neighborhood.

2\) A - AVERAGE: The item or characteristic is equal to the

same characteristic found in a competing

neighborhood.

3\) F - FAIR: The item or characteristic is inferior to the

same characteristic found in a competing

neighborhood.

4\) P - POOR: The item or characteristic is in small supply

or does not exist in the subject neighborhood

but is found in a competing neighborhood.

E. Site.

1\) Dimensions: List all dimensions of the site. If irregular,

the appraiser should show boundary dimensions, such as: 85\'

x 150\' x 195\' x 250\'.

2\) Site Area: Enter area in square feet or acres.

3\) Corner Lot: Enter \"Yes\" or \"No.\"

4\) Zoning Classification: Enter the zoning type used by the

local municipality to describe the type of use permitted.

Do not use abbreviations such as \"R1\" or \"A1\" by themselves.

The abbreviated descriptions can vary among communities.

For example: \"residential - single family,\" \"residential

\- 1-4 family.\"

a\. Can use \"Historic,\" if applicable.

b\. If a nonconforming use exists, enter \"nonconforming\"

and state whether it is a legal use which has been

approved by the local zoning authority. Be sure to

determine if current use is in compliance. If not, the

property should be rejected.

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8-4

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4150.1 REV-1

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(8-3) 5) Zoning Compliance: Enter \"Yes\" or \"No/legal nonconforming

use.\" A nonconforming use could require an Addendum for

further explanation. But if the use is not legal, it is not

eligible for HUD mortgage insurance.

6\) Highest and Best Use: This entry represents the highest and

best use of the site in relation to the neighborhood. If

present use represents the highest and best use, enter

\"Yes.\" If it does not, enter \"No\" and explain in the

\"Comments\" section.

7\) Other Use: If the present use is not the highest and best

use of the site, enter the use that should exist and explain

in the \"Comments\" section.

8\) Utilities: Either check a box or explain under \"Other.\"

Public utilities are provided by a government. \"Other\" can

reflect individual and/or community systems. Show if

electricity is underground.

9\) Site Improvements: Describe by entering a brief description

under \"Type\" and checking whether Public or Private. For

example: \"Street - Asphalt; Public.\" It is important to

identify if year-round maintenance exists. \"Public\" refers

to a government which can regulate use. It does not include

a homeowners association.

10\) Topography: Enter whether level, sloped, etc.

11\) Size: Enter descriptions such as \"typical,\" \"small,\" or

\"large.\"

12\) Shape: Enter site configuration, such as \"triangular,\"

\"square,\" or \"rectangular.\"

13\) Drainage: Enter whether adequate or inadequate. If

inadequate, be sure to explain and make requirements for

correction, if feasible.

14\) View: Describe briefly the view from the property.

Identify a view having a significant positive or negative

influence on the value, for example:

\"mountains\" - (and enter \"average,\"

\"superior\" or \"inferior\" as contrasted

with other local sites)

\"ocean\"

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8-5

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4150.1 REV-1

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(8-3) \"expressway\"

15\) Landscaping: Enter whether adequate or inadequate

relative to neighborhood.

16\) Driveway: Enter type such as concrete, asphalt or gravel.

17\) Apparent Easement: If there appears to be an easement,

check to make sure.

18\) FEMA Flood Hazard: FEMA is the Federal Emergency Management

Agency, which is responsible for mapping flood hazard areas.

If any part of the property is inside a Special Flood Hazard

area, check \"Yes.\" Otherwise check \"No.\"

19\) FEMA Map/Zone: Regardless of your previous answer, enter

map number and zone. If it is not shown on any map, enter

\"not on FEMA maps.\" Only those properties within zones \"A\"

and \"V\" require flood insurance. Zones \"B\" and \"C\" do not

require flood insurance because FEMA designates only \"A\"

and \"V\" zones as \"Special Flood Hazard Areas.\"

F. Improvements.

1\) General Description.

a\. Units: Enter number of units being valued. The URAR

is designed for 1-4 units.

b\. Stories: Enter the number of stories above grade not

including the basement.

c\. Type: Enter \"Det.\" (Detached), \"S/D\" (Semi-detached)

or R\" (Row).

d\. Design (Style): Enter brief description using local

custom terminology. For example: Cape Cod, bi-level,

split level, split foyer, town-house, etc. Do not use

builder\'s model name.

e\. Existing: Enter \"Yes\" or \"No.\"

f\. Proposed: Enter \"Yes\" or \"No.\"

g\. Under Construction: Enter \"Yes\" or \"No.\" A \"Yes\"

requires plans and specs for the appraiser to review.

If REHAB enter \"REHAB\" instead of \"Yes\" or \"No.\"

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8-6

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4150.1 REV-1

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(8-3) h. Age (Yrs.): Enter actual age. Construction records

may be helpful if available. Insert both the month and

year completed where the property is less than two

years old. If it is over two years old, insert the

year completed only.

i\. Effective Age (Yrs.): Enter effective age, if

appropriate. This is judgmental. May want to report a

range.

A difference between actual and effective age typically

is caused by a level of maintenance or remodeling which

may be below or above average. Significant differences

between the actual and effective ages should be noted.

2\) Exterior Description.

a\. Foundation: Enter type of construction such as poured

concrete, concrete block or wood.

b\. Exterior Walls: Enter type of construction material

such as aluminum, wood siding, brick veneer, porcelain,

log or stucco. If combination show predominant portion

first.

c\. Roof Surface: Enter type such as composition, wood,

slate, tile.

d\. Gutters and Downspouts: Enter type such as galvanized,

aluminum, wood, plastic. If partial, state location.

e\. Window Type. Describe type such as double-hung,

casement, sliding. Identify the construction type such

as aluminum, wood, or vinyl.

f\. Storm Sash: Describe combination or style.

g\. Screens: Enter\"Yes\" or \"No.\" If partial, state

location.

h\. Manufactured Housing: Enter either manufactured home

(MH) or modular (MOD), or answer \"no\" if not

manufactured or modular home.

3\) Foundation.

a\. Slab \_\_\_\_\_ Enter \"Yes\" or \"No.\"

b\. Crawl Space \_\_\_\_\_ Enter \"Yes\" or \"No.\" If partial,

include percentage of floor area.

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8-7

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4150.1 REV-1

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(8-3) c. Basement \_\_\_\_\_Enter \"Full,\" \"Partial,\" or \"None.\"

d\. Sump Pump \_\_\_\_\_Enter \"Yes\" or \"No.\"

e\. Dampness \_\_\_\_\_Enter \"Yes\" or \"No.\"

f\. Settlement \_\_\_\_\_Enter \"Yes\" or \"No.\" (Check for

cracks.)

g\. Infestation \_\_\_\_\_Enter \"Yes\" or \"None Apparent.\" Look

for all types of insects and damage. If there is any

question, require termite inspection.

4\) Basement.

a\. Area Sq. Ft. \_\_\_\_\_ Enter square feet.

b\. % Finished \_\_\_\_\_ Enter percentage of basement square

footage (figure above) that is

finished.

c\. Ceiling \_\_\_\_\_ Enter material type such as d/w for

drywall, or lath and plaster, or

celotex ceiling panels.

d\. Walls \_\_\_\_\_ Enter material type such as d/w for

drywall or wood panel or cinder

block.

e\. Floor \_\_\_\_\_ Enter floor type, such as asph.

tile or concrete. Comment if any

part is dirt.

f\. Outside Entry \_\_\_\_ Enter \"Yes\" or \"No.\" If \"Yes,\"

enter type.

5\) Insulation.

a\. Roof Make every effort to determine the

type.

b\. Ceiling Enter R-Factor or show depth and

location. If the existence of

insulation cannot be determined,

c\. Walls enter \"Unknown.\" Do not guess.

d\. Floor

e\. None

f\. Adequacy Enter in each blank line one of the

following:

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8-8

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4150.1 REV-1

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(8-3) G = Good

A = Average

F = Fair

P = Poor

U = Undetermined

(8-3) Enter a x or leave box blank to

denote the existence of insulation

if the feature was verified. For

example:

\"Walls A x .\" which means

that wall insulation was verified

and judged to be average.

g\. Energy Efficient Identify any special

Items: energy-efficient items such as extra

insulation, design of home, solar,

earth sheltered, attic vents, heat

pump.

G. Room List.

1\) Questions concerning room design and count should reflect

local custom.

2\) Typically, a room totally underground is not as valuable as

one above ground.

3\) Typically, the foyer, bath, and laundry room are not counted

as rooms. A room is a livable area with a specific use.

4\) A dining area built as an L-shape off the kitchen may or may

not be a room depending upon the size. A simple test which

may be used to determine whether one or two rooms should be

counted is to hypothetically insert a wall to separate the

two areas which have been built as one. If the residents

can utilize the resulting two rooms with the same or more

utility and without increased inconvenience, the room count

should be two. If the existence of the hypothetical wall

would result in a lack of utility and increased

inconvenience, the room count should be one.

5\) The room count typically includes a living room (LR), dining

room (DR), kitchen (KT), den (DN), recreation room (REC),

and bedroom (BR).

6\) The following definitions and terms may be useful as a

guide:

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8-9

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4150.1 REV-1

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(8-3) a. Basement: Generally completely below the grade. This

is NOT counted in the finished gross living area at the

grade level.

b\. Level 1: Includes all finished living area at grade

level.

c\. Level 2: Includes all finished areas above the first

level.

d\. Foyer: Entrance hall of a house.

7\) In completing this section, enter the number of each room

type on each level. DO NOT enter the dimensions.

a\. Area Sq. Ft.: Calculate the overall square footage of

each level from the exterior dimensions.

b\. Square Foot of Gross Enter total square

Living Area: footage above grade.

H. Interior:

1\) Surfaces Materials/ Make every effort to

Conditions describe accurately.

a\. Floors \_\_\_\_\_ Enter type such as tile,

hardwood or carpet.

b\. Walls \_\_\_\_\_ Enter type such as plaster,

drywall or paneled.

c\. Trim/Finish \_\_\_\_\_ Enter type of molding such as

wood, metal or vinyl.

Bath Floor \_\_\_\_\_ Enter ceramic, vinyl tile, or

carpet.

d\. Bath Wainscot \_\_\_\_\_ Enter type that protects

walls from moisture, such as

ceramic tile or fiberglass.

e\. Doors \_\_\_\_\_ Enter wood or steel.

f\. Fireplace(s) \_\_\_\_\_ Enter type such as

#\_\_\_\_\_ brick or steel free standing.

Enter the number of

fireplaces.

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8-10

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4150.1 REV-1

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(8-3) 2) Heating.

a\. Type \_\_\_\_\_ Enter type: hot water, steam,

forced warm air, gravity warm air, radiant.

b\. Fuel \_\_\_\_\_ Enter fuel: Coal, gas, oil,

electric.

c\. Condition \_\_\_\_\_ Enter condition: \"Good,\"

\"Average,\" \"Fair,\" or \"Poor.\" Be sure to explain

\"Fair\" or \"Poor\" rating.

d\. Adequacy \_\_\_\_\_ Describe adequacy: Does

system heat the house well?

Use \"Good,\" \"Average,\"

\"Fair,\" or \"Poor.\" Explain a

\"Fair\" or \"Poor\" rating.

3\) Cooling.

a\. Central \_\_\_\_\_ Enter \"Yes\" or \"No.\"

b\. Other \_\_\_\_\_ Describe.

c\. Condition \_\_\_\_\_ Describe as with Heating.

d\. Adequacy \_\_\_\_\_ Describe as with Heating.

4\) Kitchen Equipment. Make an entry in the boxes to indicate

that these items exist. An entry in a box means that these

items were seen and they are fixtures. An item that was

seen but is personal property should have a \"P\" in the box

and not be included in value.

5\) Attic. Additional space such as an attic or room above the

garage should be described in the manner in which it can be

actually used. The essential question is whether it can he

included in the above-grade living area.

I. Improvement Analysis.

1\) Quality of Construction. Look for quality and durability.

2\) Condition of Improvements. Look for physical deterioration.

If the value is subject to completion of repairs and

alterations, rate the property after completion. An example

could be a property which is observed to be \"fair\" but the

appraisal is subject to repairs being completed which could

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8-11

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4150.1 REV-1

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(8-3) warrant a \"good\" rating. The rating \"good\" is then

appropriate. Also, an appraisal on property being

constructed would be rated as though finished.

3\) Room Sizes/Layout. While a property might be \"average\" it

still may suffer from functional obsolescence. The

particular feature in question may exist in all of the

comparables selected, in which case all would be classified

as \"average.\"

4\) Energy Efficient. Relative to local standards.

5\) Plumbing- Adequacy and Condition. Look for style and

condition of fixtures. Include comments concerning

condition of septic system if applicable.

6\) Electrical - Adequacy and Condition. Relative to local

standards.

7\) Estimated Remaining Economic Life. Enter the number of

years the property is expected to remain competitive in the

market. You should use 40 years unless an obvious and

verifiable pressure exists which can be conclusively shown

to render the remaining economic life to be less than 40

years.

\(8\) Estimated Remaining Physical Life. To be used only in cases

where the property is located in a 223(e) area in which the

economic life is waived and physical life is used instead.

J. Autos.

1\) Car Storage: Complete this entire block if the property has

a garage or carport. If it has neither a garage nor a

carport, check None under Car Storage and leave the rest of

this block blank.

a\. No. Cars: Provide the number of cars that may

reasonably be parked in the property\'s garage or

carport.

b\. Condition: Rate as either \"good\" \"average\", \"fair\", or

\"Poor\". If you rate the condition of the garage or

carport as \"fair\" or poor\", you should explain your

reasons in the Comments block or in a separate

addendum.

c\. Garage: Check this box if the property has a garage.

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2/90

8-12

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4150.1 REV-1

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(8-3) d. Carport: Check this box if the property has a carport.

e\. Attached: Check this box if the garage or carport is

attached (one or two common walls) to the house.

f\. Detached: Check this box if the garage or carport is

not attached to the house.

g\. Built-In: Check this box if the garage or carport is

built into the house (one or two common walls and the

garage ceiling is the floor of another part of the

house).

h\. Adequate: Check this box if the garage or carport is

adequate. Again, this is a judgment call by the

appraiser, and an \"adequate\" rating in one neighborhood

may differ from an \"adequate\" rating in another

neighborhood.

i\. Inadequate: Check this box if the garage or carport is

inadequate and describe its shortcomings in the

Comments block.

j\. Electric Door: Check this box if the garage has an

electric door opener and test. If it does not operate

properly, the box marked \"inadequate\" should be checked

and a requirement made to repair it in the

\"depreciation\" section of the \"comments\" box.

k\. House Entry: Check this box if the house can be

entered directly from the garage or carport without

having to go outside or through the basement.

Otherwise, leave this box blank.

l\. Outside Entry: Check this box if a person must leave

the shelter of the carport or garage to enter the

house. Otherwise, leave this box blank.

m\. Basement Entry: Check this box if the basement may be

entered from the garage or carport. Leave this box

blank if there is no entry to the basement from the

garage or carport.

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2/90

8-13

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4150.1 REV-1

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K. Comments.

1\) Additional Features. Enter here any additional features

such as a pool, special fireplace features or other features

not shown above or any comments you may wish to make.

2\) Depreciation Comments. Enter repairs needed, maintenance,

etc.

3\) General Market Conditions. Financing concessions for the

subject and the market area should be explained. Be sure to

explain whether the subject is consistent with the market

area or different.

BACK PAGE OF URAR

L. Building Sketch (Show Gross Living Area Above Grade). Sketch

should include all exterior dimensions of house as well as

patios, porches, garages, breezeways and other offsets. State

\"covered\" or \"uncovered\" to indicate a roof or no roof such as

over a patio.

M. Cost Approach. The estimated reproduction cost of improvements,

need not be completed for existing construction; however, the

estimated value of the site must be entered. If the subject

property is proposed construction or existing construction under

one year of age, the Marshall and Swift Form 1007 is to be

completed and attached and the box is to be completed using the

figures from Marshall and Swift calculations. (See Chapter 6

for required attachments.)

N. Does Property Conform to Applicable Minimum HUD/VA Standards?

1\) This question refers not only to minimum property standards

as set forth in Handbook 4905.1, but also to HUD Handbook

4910.1, appendix K (24CFR 200.926d) for new construction and

to hazards of lead based paint. If the property was built

prior to 1978 and there is no evidence of cracking,

chipping, peeling or loose paint, then, the question may be

answered \"Yes.\" However, if such a deficiency exists, the

question must be answered \"No\" and under explanation state

\"property built prior to 1978. Lead based paint abatement

required.\" In addition, the appraiser must check the lead

based paint abatement requirement on the VC sheet.

2\) Construction Warranty. Determine if property will be

covered by a construction warranty such as HOW, HBW, or

other HUD-approved ten year warranty and enter information.

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2/90

8-14

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4150.1 REV-1

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(8-3) Check \"Yes\" box only if warranty plan is HUD-approved. A

list of HUD-approved warranty plans may be found in HUD

Handbook 4145.1.

O. Sales Comparison Analyis.

1\) Selection of Comparables. In selecting comparables, the

bracketing method must be used. Ideally, one of the

comparables should be a little larger (200 sq. ft. to

300 sq. ft.), another a little smaller, and the third should

be approximately the same size (within a hundred square feet

of the subject). DO NOT SELECT COMPARABLES BY SALES PRICE.

All adjustments must be extracted from the market. No

adjustment should be made unless it has a material effect on

value. When an adjustment is made for location, site/view

or Design and Appeal, the appraiser must explain the reason

to the reviewer. Avoid using three builder sales from the

same subdivision if possible.

2\) Address. Enter address that can be used to locate each

property. Enter community, if needed to identify property.

For rural properties, list location by road name, nearest

intersection, and side road.

3\) Proximity to Subject. Enter proximity in straight line

distance, like \"3 houses or one tenth of a mile W subject.\"

If comparable is more than 1 mile from subject, be sure to

explain in the \"Comments\" section.

4\) Sales Price. Enter total paid by buyer, including extras.

5\) Price/Gross Living Area. Enter price per square foot for

living-area above grade.

6\) Data Source. Enter source name, or others such as tax

stamps, MLS, etc. This is the data source for the price and

property information. Also show type of financing such as

Conv., FHA or VA.

7\) Sales or Financing Concessions. Enter adjustment for sales

concessions, if needed. Be sure to explain in \"Comments

section and use Addendum if appropriate.

a\. In some areas of the country it is customary for the

builder or seller to pay closing costs for the buyer

and include them in the sales price of the property.

In other areas it may occur occasionally or not at all.

In those rare instances in which there is a market area

where closing costs are the responsibility of the

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2/90

8-15

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4150.1 REV-1

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(8-3) seller and are always paid by the seller and included

in the sales price, the appraiser must note under

\"Comments and Conditions of Appraisal,\" on the back of

the URAR, that the reconciled value represents a market

value which includes closing costs. The review

appraiser or Direct Endorsement Underwriter noting this

comment, must then show on the form HUD 92800.5b,

Conditional Commitment/Statement of Appraised Value, a

zero figure for closing costs and calculate the maximum

mortgage amount on only the reconciled value arrived at

by the appraiser.

b\. Sales that are not verified and adjusted to reflect the

terms and conditions of sale should not be used as

market data.

c\. Always select the comparables with the fewest

dissimilarities. Use older sales only if more recent

ones are not available and be sure to explain in the

\"Comments\" section. Any comparable over six months old

is not considered current.

d\. Section 235 and property disposition sales are not

considered typical transactions as they do not reflect

market value under normal buyer-seller relationships.

Therefore, they are not to be used as comparables in

finding value.

The value factor of Location, Site/View, Design and

Appeal, Quality of Construction, Age, Condition, and

Functional Utility are all subjective factors that

require subjective adjustments. Be careful that your

adjustments are reasonable\--not excessive. If a

property is ever overvalued, a high probability exists

that the reason can be traced to an excessive

adjustment somewhere in this section. Adjustments

should be made only in cases where the dissimilarity

has a noticeable effect on value. Small differences do

not usually require adjustments.

8\) Date of Sale/Time. Enter month and year. This date refers

to a date of sale. A specific day is not necessary unless

it is meaningful, such as in a rapidly changing market.

9\) Location. Enter \"Good,\" \"Average,\" or \"Fair,\" when compared

to the subject and using the same standard as the subject.

An adjustment for location in the same neighborhood is

seldom justified.

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2/90

8-16

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4150.1 REV-1

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(8-3) 10) Site/View. Enter size of lot and explain view if

appropriate. Adjustments come from a view which has been

rated as \"Superior\" or \"Inferior\" to the subject as well as

size of lot. Small differences in lot sizes do not usually

call for an adjustment if the size is typical.

11\) Design and Appeal. Enter the style according to a

description used by local custom and show appeal as G-A-F-P.

12\) Quality of Construction. Enter \"Good,\" \"Average,\" or \"Fair\"

and the construction type such as aluminum siding, wood

siding, brick, etc.

13\) Age. If both actual and effective age are used, enter both

such as \"A-25, E-20.\" A difference typically is caused by

modernization or significant maintenance, or the lack of

either. A difference is the basis for a (+) or (-)

adjustment. If the property is less than two years old, the

appraiser must show the month and year of construction

completion.

14\) Condition. Enter \"Good,\" \"Average,\" \"Fair,\" or \"Poor\" when

compared to the subject. Be consistent with Side 1.

15\) Above Grade Room Count Gross Living Area. Enter room

count, which should be consistent with Side 1. Commonly,

three adjustments may be entered. For example, the first

may be an adjustment for \"expendable space\" such as a bath.

A deficiency in the number of baths should be adjusted

first. The second is a separate adjustment for a difference

in square feet. The third is an adjustment for room count.

These can be individual or separate adjustments which have

been combined. All should be extracted from the market.

But room count and bath adjustments should be on one line

and square foot adjustment for size on another line.

a\. Typically, an appraiser will not make an adjustment for

square feet difference and a difference in the room

count. An example where it could occur is a very large

home with a small room count. Any property that has an

adjustment in square feet and room count should be

explained.

16\) Basement and Finished Rooms Below Grade. Enter the type of

improvements in the basement such as bedroom, rec. room,

laundry, etc. Explain any special features. Show number of

square feet of finished area.

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2/90

8-17

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4150.1 REV-1

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17\) Functional Utility. Enter \"Equal,\" \"Superior,\" or

\"Inferior,\" as a total of the items rated in the Improvement

Analysis compared to the subject. Be consistent with the

factors reported there. Use \"Comments\" section frequently

and explain special features.

a\. The category of functional utility typically is the

place to deduct for functional obsolescence which has

been observed in the subject and recorded on Side 1 and

which is not found in the comparables. Dollar

adjustments should be extracted from the market. For

example, a poor floor design that includes two bedrooms

which are located so that entrance to one is gained by

passing through the other typically requires a negative

adjustment for functional obsolescence. In such a

case, the second bedroom would not be counted as a

bedroom.

18\) Heating/Cooling. Enter an adjustment for heating and

cooling systems, if appropriate. Any adjustments should be

based upon local market expectations.

19\) Garage/Carport. Enter an adjustment for car storage.

Adjustments should be calculated in accordance with market

acceptance of carport value versus garage and size.

20\) Porches, Patio, Pools, etc. Enter an adjustment for these

features. Any adjustments should be based upon local market

expectations. For example, a pool located in an area that

expects pools might bring a dollar premium in comparison to

a comparable without a pool. However, a pool located in a

low-income area might bring a negative adjustment resulting

from an increase in maintenance.

21\) Special Energy Efficient Items. Enter an adjustment for any

energy efficient items such as storm windows and doors,

solar installations, etc.

22\) Fireplace(s). Enter any adjustment for the presence (or

absence) of fireplace.

23\) Other (e.g., Kitchen Equipment, Remodeling). Enter

adjustments for any features not covered elsewhere.

24\) Net. Adj. (Total). Check either + or - box to indicate

if the total net adjustments will increase or decrease the

sales price. If any adjustment is excessive, the

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2/90

8-18

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4150.1 REV-1

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(8-3) comparables should be reviewed to determine if the best ones

were selected. Any adjustment which appears to be excessive

should be explained.

25\) Indicated Value of Subject. Total all of the adjustments

and add or subtract them to the sales price of each

comparable. Generally, adjustments should not exceed 10

percent for line items, 15 percent net adjustments and 25

percent on gross adjustments.

26\) Income Approach. The Income Approach need be completed only

for three- and four-unit properties. When used, the

appraiser is to show the gross rent from each of the

comparables at the bottom of the form under \"Final

Reconciliation\" as: Comp. #1 Gross Rent = \$1,000.00 (GRM

110); Comp. #2 Gross Rent = \$1,200.00 (GRM 108) . . . etc.

The determination of the appropriate gross rent multiplier

to use should follow the same procedure as in the market

approach by selecting the comparable which is most similar

to the subject property and utilizing the GRM found for that

comparable; or if slightly higher or lower, explain.

a\. If the Income Approach is not used, the appraiser

should draw a line through the words \"Indicated

Value by Income Approach (if applicable)\" and enter

the estimated market rent. The rest of the line

items should be marked \"N/A.\"

b\. Check the box marked \"as is\" or \"subject to repairs

. . .\"

27\) Comments and Conditions of Appraisal. In addition to any

comments which the appraiser wishes to make, the appraiser

should enter the monthly expenses estimated for closing

costs and condominium or PUD common expense as appropriate.

The appraiser must also enter VC requirement codes.

28\) Final Reconciliation. This entry should contain the

appraiser\'s reasoning for arriving at the final value. The

appraiser must sign his/her name, print name under signature

with assigned Chums identification number and date report as

of the day inspected. The reviewer also signs, dates and

writes CHUMS identification number at the bottom of the

report as of date of review.

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2/90

8-19

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4150.1 REV-1

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8-4. RECONSIDERATION OF APPRAISED VALUE. A request for reconsideration

of value is not an automatic step for a mortgagee to take when the

appraised value is less than the sales price of the property.

Unless the mortgagee has sufficient evidence to support a higher

value, it should not be returned to the appraiser for

reconsideration. This decision must be made by the HUD staff review

appraiser or the Direct Endorsement mortgagee underwriter. The

following procedure will be used:

A. Before any request for reconsideration of value may be accepted,

the appraisal report and evidence to support a higher value must

be reviewed by a HUD staff review appraiser or a Direct

Endorsement mortgagee underwriter.

B. Only after receipt of the official Conditional

Commitment/Statement of Appraised Value may a request for

reconsideration of value be submitted, and such submission must

be made back to the reviewer accompanied by a photo (xeroxed

copies of multiple listing cards are not acceptable) of each

comparable used to support the higher value. In this way the

reviewer/underwriter will be able to obtain a visual sense of

the similarity of the comparables to the subject property. For

reconsiderations submitted to the local HUD Field Office, photos

will also be submitted.

C. If the comparables submitted are not sufficiently similar or

acceptable to support the increase, the reviewer is to reject

the request for reconsideration. If the reviewer does not

reject the request, and the appraiser performs a review of the

new comparables but finds that incorrect information was

provided about them such as size, design, sales price, location

or closing date, the appraiser will be entitled to one half of

the original fee. In such cases, the appraiser must comment on

the reason for rejecting each comparable.

D. If the reviewer/underwriter believes that the reconsideration is

valid, it must be sent to the appraiser. The appraiser will

then process the reconsideration and send the completed

appraisal report directly to the underwriter for review. The

underwriter must review the appraisal report without delay and

promptly issue the statement of appraised value to the buyer.

Statements of appraised value may not be held for delivery until

closing.

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2/90

8-20

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4150.1 REV-1

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UNIFORM RESIDENTIAL APPRAISAL REPORT

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8-20-A 2/90

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4150.1 REV-1

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UNIFORM RESIDENTIAL APPRAISAL REPORT

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2/90 8-20-B