Chicago Appraisal Blog

THE 1004MC DOESN'T WORK FOR CHICAGO!!

Yes, I said it!  Those boxes on the form are virtually meaningless. 

They do allow us to tell the intended user when there are no sales of comparables within 90 days, which is sometimes the case in the greater Chicago Metro area, but Chicago has a cyclical sales cycle. 

Of course housing numbers are picking up!!  It's Summer!  Of course they were depressed from December - February.  It was Winter!  This happens every year, even in times of market stability!  Geeeeezzzzz!

My solution:

Because Chicago is a Cyclical market, and because sales fluctuate seasonally, even in times of market stability, it is necessary and appropriate to annualize the value trends for the purposes of the 1004MC.  The appraiser considers comparable sales for the 24-12 months prior to the date of the appraisal, and compares these to comparable sales in the period 12 months prior to the date of the appraisal.  Based on the median sales prices the market......

Feel free to use this, I find it is very accurate.  BE CAREFUL!! COMPARABLE IS THE OPERATIVE WORD!    Do not generate median sales prices from the neighborhood alone!  You  must consider the property type!  A 2-bedroom condominium buyer will not buy a 1-bedroom condominium!  Do not analyze properties that are not real, viable buyer alternatives.  Neighborhoods are dynamic.  Sometimes the demand for single families is great, and thus values are stable or increasing, while inventory of 1-bedrooms has become very high.  The same neighborhood could have very different rates of increase, stability, or decline based on property type.  The 1004MC asks for comparable sales.  The total number of sales of 12 months should match the total number of sales above the comparable grid. 

The predominant sales price for the neighborhood for that property type (detached or attached)will usually be different than the median sales over the 12 month period you indicate in the 1004MC.  This is where you get to tell your intended user how your property type relates to the composition of the neighborhood.  If you 1004MC for detached homes indicates the median comparable price over the last 12 months is 500K, but the predominant price for the neighborhood is 350K, tell your user that your neighborhood is mostly 50 year old homes and the subject is a new construction.  Hopefully they read it. :)