• Jesse Ledbetter

Explain your adjustments: USPAP and FNMA requirements

I've read a lot of FNMA appraisal reports in my time as an appraiser, and I rarely see an explanation of how adjustments were derived. If any comment is made, it's typically just a "I adjusted X for Y." Is this enough? Does this conform with FNMA requirements? The short answer is, "No," but today we'll look at why.

Fannie Mae (Selling Guide B4-1.3-09) states the following:

"The appraiser must provide appropriate comment(s) reflecting the logic and reasoning for the adjustments provided, especially for the characteristics reported on the appraisal report form between the Sales or Financing Concessions and the Condition line items. A statement only recognizing that an adjustment has been made is not acceptable."


So, for every adjustment, the appraiser must comment reflecting the logic and reasoning, and can not merely list what the adjustment was. This leaves a question: is $0 an adjustment? For example, if the site of the subject is 15,000 sf and comparable 1 is 17,500 sf and the appraiser determines that there is no difference in marketability, haven't they made a similar judgment to if they had adjusted for the difference? If so, that is an "adjustment" that needs to have the logic and reasoning explained.


"But my client doesn't want to read a paragraph that explains why no adjustment was made?!" Then your client shouldn't order a FNMA-compliant scope of work! Appraisers, this has been FNMA's standard since 2017. It's time to "adjust" your practice to reflect the change in the required scope of work.

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