A 1025 appraisal (Small Residential Income Property Appraisal Report) evaluates 2–4 unit residential properties, including condos, co-ops, or planned unit developments.
What is a 1025 appraisal form used for?
A 1025 appraisal form appraises two- to four-unit residential income properties for lenders like Fannie Mae and Freddie Mac.
Banks require this standardized form to assess value consistently. It combines a sales comparison approach, rental income analysis, and property details. The 1025 determines if rental income supports the loan—like a duplex bringing in $4,000/month qualifying for a larger mortgage than a single-family home with no rental income.
What is the form 1025?
Form 1025 is the Small Residential Income Property Appraisal Report used by Fannie Mae and Freddie Mac to evaluate 2–4 unit properties.
It examines both physical condition and income potential of multi-unit buildings. Required details include property age, construction materials, zoning, utility access, and an operating income statement (Form 216). Lenders use this to underwrite mortgages for duplexes, triplexes, and fourplexes.
What is a 1025 with 216 appraisal?
A 1025 with 216 appraisal pairs Form 216’s income analysis—rental comparables, cost approach, and sales comparison—with the property report.
Form 216 is the Operating Income Statement, breaking down projected rent, vacancy rates, and operating expenses. For a triplex with $60,000 annual rent and $20,000 in expenses, the net operating income is $40,000. Lenders usually apply a 1.25x rent-to-income ratio to approve loans.
What are the 3 types of appraisal reports?
The three types are self-contained, summary, and restricted-use reports.
Self-contained reports dive deep with full data and analysis. Summary reports condense findings while keeping key details intact. Restricted-use reports are the most bare-bones, meant for private or internal use. Mortgage lenders typically request summary reports for consistency and efficiency.
What is included in a 1025 appraisal?
A 1025 appraisal includes property address, legal description, owner/borrower names, contract details, size, zoning, utility access, and FEMA flood zone information.
It also covers neighborhood analysis, site plans, building sketches, condition assessments, rental income data, and comparable sales. Sometimes, a cost approach estimates replacement cost minus depreciation. This data helps lenders and appraisers assess risk and value accurately.
What is a 1004MC appraisal form?
The 1004MC is the Market Conditions Addendum analyzing local real estate trends in appraisals.
Fannie Mae and Freddie Mac have required this addendum on all 1–4 unit appraisals since April 1, 2009. It tracks price changes, supply/demand, and marketing times. For example, if comparable homes in the area sold for 8% more than last year, appraisers must explain this trend to support their market value conclusions.
Is appraisal Form 70 the same as 1004?
Yes, Form 70 (Freddie Mac) and Form 1004 (Fannie Mae) are identical—the Uniform Residential Appraisal Report.
This form is the go-to for single-family mortgage lending. It includes property details, comparable sales, and a condition assessment. Both forms follow the same format and are interchangeable in most lending transactions. Lenders need this form to approve conventional mortgages.
What is Form 216 on an appraisal?
Form 216 is the Operating Income Statement reporting income and expenses for investment properties.
It projects rental income, vacancy loss, and operating expenses like taxes, insurance, and maintenance. For a 4-unit building with $80,000 in rent and $30,000 in expenses, the net operating income is $50,000. Lenders use this to calculate debt service coverage ratios for loan approvals.
What is a 1075 appraisal?
A 1075 appraisal evaluates individual condominium units using exterior-only inspections.
This form is common when interior access is limited. The appraiser reviews the condo project’s financial health, market trends, and comparable sales. For instance, a $300,000 unit in a well-maintained building with low HOA fees may secure better loan terms. The 1075 helps lenders assess risk when interior inspections aren’t feasible.
What is the difference between 1007 and 216?
Form 1007 estimates rent for single-family homes, while Form 216 reports operating income for multi-unit or investment properties.
Form 1007 compares the subject property to similar rentals to estimate potential income. Form 216, used with 1025 appraisals, goes further by listing projected rent, vacancy, and expenses for 2–4 unit buildings. For example, a $2,500/month rent estimate from Form 1007 might support a single-family refinance, while a 4-plex’s $8,000/month rent with $3,000 in expenses would go on Form 216.
What is Form 216 used for?
Form 216 estimates operating income and expenses for 1–4 unit investment properties and 2–4 unit owner-occupied properties.
It helps appraisers and lenders calculate net operating income and debt service coverage. Take a duplex with $50,000 in rent and $25,000 in expenses—it shows a solid $25,000 NOI. Lenders typically require Form 216 for income-producing properties to confirm rental income supports mortgage payments.
What is a 1007 appraisal form?
Form 1007 is the Single-Family Comparable Rent Schedule estimating market rent for single-unit properties.
Appraisers use it to compare the subject home to nearby rentals. For a 3-bedroom home, they might look at three comparables rented for $2,200, $2,400, and $2,300. Adjusting for differences like garages or condition, they’d estimate a market rent around $2,350. This form is standard for refinancing or investment property evaluations.
What are the 2 types of appraisals?
The two primary appraisal types are full interior inspections and exterior-only inspections.
Full appraisals involve a thorough interior and exterior inspection. Exterior-only (drive-by) appraisals assess value from outside the property. A lender might demand a full appraisal for a new purchase but accept a drive-by for a low-risk refinance. The type depends on loan type, property risk, and lender guidelines.
Which type of appraisal report is the most formal?
The narrative appraisal report is the most formal format, offering detailed analysis and step-by-step valuation explanations.
These reports run 10–20 pages and include extensive data, methodologies, and supporting evidence. They’re reserved for complex properties like large apartment buildings or commercial real estate. Summary reports (like the 1004 or 1025) are shorter and less detailed. Narrative reports are mandatory for high-value or high-risk transactions.
What is the first step in the appraisal process?
The first step is defining the appraisal problem, including the property’s use, value type, and effective date.
This step clarifies the appraisal’s purpose—whether it’s for a purchase, refinance, or estate planning. It also specifies the type of value needed: market, insurance, or liquidation. Without this, the appraisal could lack focus. For example, appraising a duplex for a $400,000 refinance requires different data than appraising it for estate tax purposes.
