Navigating Appraisal Standards

In 2025, Freddie Mac and Fannie Mae (the GSEs), introduced a pivotal requirement for appraisers to enhance the accuracy and reliability of property valuations. This requirement states appraisers must report market analyses that substantiate both the indicated overall market trend and the market-derived adjustments for changes in market conditions (commonly referred to as “time adjustments”).

Key Requirements for Appraisers:

  • Minimum Time Frame: The overall market trend must be derived using a minimum time frame of 12 months to provide a comprehensive view of market dynamics over a significant period.
  • Dynamic Market Trends: It's essential to recognize that the overall market trend may differ from the adjustments applied to individual comparable sales, as markets are inherently dynamic.
  • Illustrative Methodology: An illustration of the methodology used to determine specific comparable sale time adjustments for changes in market conditions must be provided. This offers transparency into the rationale behind adjustments.

Challenges Facing Appraisers

Appraisers have faced some challenges as they adapt to more stringent criteria for reporting market analyses and deriving time adjustments for changing market conditions.

  • About half of the appraisal reports received include a legacy 1004 MC form. While acceptable, this can be problematic if the fixed time frames used don’t align with the date of sale of the comparable properties.

The 1004 MC is a standardized market conditions form that was designed to enhance the transparency of market trends. Created in 2008, the form is no longer required by the agencies, however is frequently used by appraisers to analyze market conditions. 

This form will not be available in the UAD 3.6 environment; appraisers will need to find alternative methods.

  • For many assignments, there is limited data to perform a thorough analysis, with some falling below the required 12-month timeframe.
  • The provided market analysis sometimes doesn’t support the indicated trend or derived adjustments for changes in market conditions.

Ways that appraisers can comply and overcome challenges

  • Using the 1004 MC Form: Appraisers can use the 1004 MC form to report and analyze market conditions to comply with the Freddie Mac Single-Family Seller/Servicer Guide (Guide) requirements. However, if the 1004 MC form is used, appraisers need to be aware that the fixed time frames structured in the static form may not align with the date of sale of the comparable properties.
  • Industry Tools: Importing data from Market Conditions Tools can streamline the analysis process.
  • Table Format: Creating tables in Excel or Word can help organize data clearly.
  • Graph Format: Graphs, readily downloadable from most Multiple Listing Services (MLSs) or creatable in Excel, can visually represent market trends.
  • Narrative Format: A clear explanation, without reliance on tables or graphs, can effectively communicate the analysis.

By embracing these strategies, appraisers can confidently navigate the new market area condition requirements, helping them comply and enhance the credibility of their reports. This collaborative effort between the GSEs underscores the importance of precision and transparency in property appraisals, fostering a more reliable and informed real estate market. 

Freddie Mac Mission 

At Freddie Mac, our mission is to provide liquidity, stability and affordability to the U.S housing market in all economic environments. An important part of executing that mission is to ensure that the company effectively oversees and manages market risks. We appreciate the collaboration with industry stakeholders to help ensure compliance with our Guide requirements and remain transparent with our valuation requirements.