Ask Henry

FNMA Form 1075 (Drive-by Condo Report)

Dear Henry:

On page one of the FNMA 1075 form is a section titled "Project Site". At the conclusion of this section, the following question is asked of the appraiser: "Are there any adverse site conditions or external factors (easements, encroachments, environmental conditions, land uses, etc.)?". Question: If the subject of the appraisal is located on the perimeter of the condo complex and fronts onto a traffic street, while a majority of the remaining units are located within the interior of the complex and are not impacted by any traffic noise, is the answer to this question "yes" or "no"? In the past, I've always looked upon this section of the report as focusing more on factors that would "impact the complex as a whole", for example, an easement for high power lines that run through a complex (EMFs), or a complex that was built upon a site that has an abnormally high water table and resultant wet basements.

Dennis J. McCarthy
CA State Certified Res. Appraiser

Dear Dennis,

In my opinion, when in doubt about anything that might be adverse to a property, you have to report it. In this case, there are some problems that affect part of the site where your subject unit is located. You should report this, and then go on to explain how the problem specifically affects the subject unit you are appraising, in terms of desirability and competition in the market.

As far as "Yes" and "No" answers go you must be very careful about checking the "No" box. It is much safer to check the "Yes" and indicate with a asterisk that in the comments section or the addenda there are comments that explain why you checked the "Yes" box. Here you can explain what effect (if any) what you are reporting has on the value of the subject property.