One of the most common things to note when doing real estate transactions is the appraisal of the property. Through this, the value of your property or deal is appropriately assessed. Continuing with the second part of the series on appraisals, Keith Baker goes over the Uniform Residential Appraisal Form, also known as Fannie Mae Form 1004 and Freddie Mac Form 70. Here, he breaks down the document and gives a page-by-page look into the sections that show the things that will help you analyze the properties or deals. If you are new to this, it helps to take a look at this essential form. This is a great tool that you can add to your toolbox when it comes to evaluating the value of a property and more.
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Early May 2020, Texas has begun to open back up from the Coronavirus shutdown and lockdown. I understand the death toll is still rising in the United States but hopefully, we can get over and around this quickly. Let's remember to keep our eyes on the prize. The present may be uncertain but the future is to be determined by us. Our topic is Part Two on Appraisals. I'm going to go over the Uniform Residential Appraisal Report or also known as Fannie Mae Form 1004 and Freddie Mac Form 70. It's a seven-page document including definitions, amendments, certifications, some language, and all that fun stuff. There are about three pages that we're going to dive into and go over in detail with the actual report. I'm going over a report from a house I sold several years ago. This appraisal report is 35 pages in length.
Let's go ahead and jump right into it and start looking at this. You can download a blank version of the Uniform Residential Appraisal Report on the website. On the first page is the invoice a lot of times. In this case, the appraiser that the borrowers' lender used put the invoice first. I see that they paid $470 for the appraisal, which several years ago is not bad. I eyeball around the $500 mark for a little bit of inflation. The second page contains appraiser certifications, the requirements, list of the subject property, who the borrower is, especially the lender's name because that is the actual customer of the appraisal report.
The third page of this particular report is a cover page. It has a photo of the house I sold, the lender-borrower address, and basic stuff. The fourth page is a letter to the lender saying, “You hired me. Here it is. Subject to all limitations and discrepancies listed herein.” That’s the formality of communicating the appraisal report to the lender, which in this case is going to be you. You want to read every page of your appraisal report very carefully. Page five is the summary of salient features, which goes on to describe the overall dwelling, the improvements, the number of beds, baths, so on and so forth. I address the legal description. The lender and borrower are both identified.
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