What is Form Appraisal?
Form appraisal is a method of real estate valuation that involves the use of standardized forms, such as Fannie Mae Form 1004, Form 2055, and the Uniform Residential Appraisal Report (URAR). These forms are utilized to ensure a systematic and consistent approach to appraising residential properties. Form appraisals help lenders, buyers, and sellers obtain a thorough and comparable analysis of a property’s value, condition, and characteristics.
Common Forms in Form Appraisal
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Fannie Mae Form 1004: Also known as the Uniform Residential Appraisal Report (URAR), this form is used for the majority of single-family home appraisals. It includes comprehensive information about the property being appraised, including a description of the property, comparable sales, market conditions, and the appraiser’s opinion of value.
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Fannie Mae Form 2055: This form is used when an interior inspection of the property is not required. It is commonly used for exterior-only inspection appraisals and includes data about the property condition based on an external observation.
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Uniform Residential Appraisal Report (URAR): This form standardizes the way appraisals are conducted and ensures consistency and reliability in the appraisal process. It includes sections such as the neighborhood analysis, mortgage history, and an evaluation of comparable properties.
Examples of Form Appraisal Usage
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Property Purchase: When buying a home, lenders require a form appraisal to ensure the property’s fair market value aligns with the loan amount requested by the borrower.
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Refinancing: Homeowners looking to refinance their mortgages might need a form appraisal to verify their home’s current market value.
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Home Equity Loans: Banks often require a form appraisal before approving a home equity loan to assess the property’s current value for determining loan eligibility.
Frequently Asked Questions
Q: What is the difference between Fannie Mae Form 1004 and Form 2055? A: The primary difference is that Form 1004 includes an interior and exterior inspection, while Form 2055 is an exterior-only appraisal form.
Q: Who requires a form appraisal? A: Lenders, such as banks and mortgage companies, typically require a form appraisal during property transactions like purchasing, refinancing, or acquiring a home equity loan.
Q: How detailed is the information provided in a form appraisal? A: A form appraisal provides a detailed analysis including property specifics, market conditions, and comparable sales, aiding in an accurate property valuation.
Related Terms
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Comparative Market Analysis (CMA): A CMA is an evaluation tool used by real estate agents to estimate a home’s value based on comparable listings and sales in the area.
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Appraisal Management Company (AMC): AMCs serve as intermediaries between lenders and independent property appraisers, ensuring unbiased and compliant property valuations.
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Market Value: The estimated amount for which a property should exchange on the valuation date between a willing buyer and a willing seller.
Online Resources
- Fannie Mae Official Website: Provides detailed forms, guidelines, and resources for lenders and appraisers.
- Appraisal Institute: Offers education, resources, and standards for real estate appraisal professionals.
- HUD.gov: Information from the U.S. Department of Housing and Urban Development related to appraisals and valuations.
References
- Fannie Mae. “Uniform Residential Appraisal Report (URAR),” Fannie Mae, Accessed [Current Year].
- Appraisal Institute. “Understanding Residential Appraisal,” Appraisal Institute, Accessed [Current Year].
Suggested Books for Further Studies
- “The Appraisal of Real Estate” by Mark R. Rattermann and Stephen F. Fanning
- “Real Estate Appraisal: From Value to Worth” by Terry V. Grissom and Michael Blackledge
- “Appraising Residential Properties” by the Appraisal Institute
