Most homebuyers simply hear the words, “The appraisal has been ordered.” In reality, there are several different appraisal report types used throughout the mortgage process. Depending on the property, loan program, and transaction, your lender may require a specialized appraisal or follow-up inspection.
Understanding the different appraisal products can help make the mortgage process much less confusing.
Who Oversees Residential Appraisals?
Today’s residential appraisals are highly regulated.
Most lenders order appraisals through an Appraisal Management Company (AMC), an independent third party responsible for assigning appraisers, managing quality control, and maintaining appraisal independence between the lender and appraiser.
In California, appraisers are licensed and regulated by the Office of Real Estate Appraisers (OREA). OREA establishes licensing requirements, investigates complaints, and helps ensure appraisers comply with the Uniform Standards of Professional Appraisal Practice (USPAP).
Standard Residential Appraisal
The most common appraisal is the appraisal of a detached single-family residence.
The appraiser inspects the home, researches recent comparable sales, analyzes market trends, and develops an opinion of market value using the Sales Comparison Approach. Most owner-occupied homes throughout Temecula Valley fall into this category.
Condominium Appraisal
Condominium appraisals evaluate both the individual unit and the overall condominium project.
The appraiser considers recent comparable condominium sales, unit location, amenities, homeowners association influences, and project characteristics. Depending on the loan program, the lender may also review the project’s eligibility separately from the appraisal. Most of the time, the appraiser will need the condo certification metrics to complete the appraisal.
Manufactured Home Appraisal
Manufactured homes require additional analysis beyond a traditional appraisal.
The appraiser confirms the home is permanently affixed to an approved foundation, verifies HUD certification labels when applicable, and selects comparable manufactured home sales whenever possible. The home’s age, condition, land ownership, and foundation all play important roles in the valuation.
What Is a 1007 Form?
A Form 1007, also called the Single-Family Comparable Rent Schedule, is commonly used for investment properties.
Instead of estimating market value, the appraiser estimates the property’s fair market rental income by comparing it to similar rental properties in the area. Lenders frequently require a 1007 for investment property financing. They use this for long-term rentals and STR — short term rentals, AIRBNB, and VRBO.
What Is a Recertification of Value?
A Recertification of Value confirms that the property’s value remains unchanged after specific conditions have been satisfied.
This report is commonly used for newly constructed homes or transactions where repairs required by the original appraisal have been completed. It does not establish a new value—it simply certifies that the original value opinion remains valid after the required work is finished. This is also performed on an appraisal that is getting too old or aging-out.
What Is a 1004D?
A Form 1004D, also known as an Appraisal Update and/or Completion Report, serves two primary purposes.
It may confirm that construction or required repairs have been completed according to the original appraisal, or it may provide an appraisal update to help determine whether the original appraisal remains valid within investor guidelines. This could be as simple as needing to reinspect for missing smoke alarms or carbon monoxide alarms.
Unlike a new appraisal, a 1004D relies on the original appraisal and verifies changes rather than developing an entirely new opinion of value.
Final Thoughts
Residential appraisals involve much more than assigning a value to a home, including calling out health and safety issues. From standard single-family reports to condominium, manufactured home, rental analysis, and completion certifications, each appraisal product serves a unique purpose in the mortgage process.
An experienced mortgage professional will help determine which appraisal type is required based on your property and loan program, ensuring your financing moves forward as smoothly as possible.
