1073 Appraisal Form: Who It’s For and Why It’s Used

Last updated on April 11th, 2024 at 03:17 am

The use of proper forms in real estate appraisals is important for accuracy and is required for certain lending transactions.

The various forms utilized by appraisers provide lenders with an unbiased estimate of a home’s value. This helps ensure a fair deal for all parties. 

In this article, we’ll explore the 1073 Appraisal, its purpose, key components, and how it differs from other appraisal forms. 

Whether you’re a real estate professional or a homeowner, familiarizing yourself with your completed appraisal report will help you understand the process and make informed decisions throughout your real estate journey.

A 1073 Appraisal, also known as the Individual Condominium Unit Appraisal Report, is a form used by real estate appraisers to determine the value of specific property types like condominiums, cooperatives, and planned unit developments (PUDs).

The use of 1073 appraisal form allows appraisers to tailor the information and value determination for this specific type of property. 

In addition, lenders require the use of form 1073 when underwriting loans for condominiums or similar property types.

The main purpose of a 1073 Appraisal is to provide an unbiased and professional estimate of the fair market value of a condominium, cooperative unit, or Planned Unit Development (PUD).

This information is typically used by lenders to help determine the maximum loan amount they are willing to lend on a property.

First, let’s go over what types of property the 1073 appraisal form is intended for: 

A condominium (or condo) is a property where a larger building is split into several units, each owned separately or collectively with exclusive rights. The owners jointly own and manage the common areas surrounding these units.

In a cooperative unit (or co-op), owners have shares rather than outright ownership of their unit, like a condominium.

Some co-op owners can sell their shares, subject to approval by the co-op board. Smaller co-ops may be managed by residents collectively, sharing duties like maintenance, landscaping, and rule-setting.

Larger co-ops may have a board of directors comprised of some of the residents.

Planned unit developments (PUDs) are specially zoned areas that work with the local municipality to create guidelines for common areas, private spaces, and building rules.

A homeowners association typically runs the community, providing certain amenities that aren’t typical for other neighborhoods. These may include things like walking trails, a clubhouse, pool, exercise facilities, or just common green areas.

Residents pay association dues for amenities and maintenance. Planned Unit Developments (PUDs) can include various housing types like single-family homes, condos, townhomes, and even retail or commercial spaces.

The 1073 Appraisal consists of several sections and components. Let’s take a look:

1. Property Description and Characteristics: This section provides detailed information about the unit being appraised, including its size, layout, condition, and any notable features.
2. Comparable Sales Analysis: Appraisers analyze recent sales of similar units in the same complex (when available) or nearby areas to determine the property’s market value. This approach to determining value is called the Sales Comparison Approach.
3. Market Conditions and Trends: This component examines current market conditions, such as supply and demand, interest rates, and economic factors that may impact the property’s value.
4. Valuation and Adjustments: Appraisers consider various factors, including location, amenities, and condition, to determine the property’s value. Adjustments are made to account for differences between the subject property and comparable sales.
5. Supportive Documentation: Additional documents or attachments such as surveys, maps, photographs, or documents related to the specific project (bylaws or questionnaires) may be included to support the data.
6. Final Value Determination: Based on the analysis of all the components above, the appraiser provides a final value for the property.

RELATED: COMPONENTS OF AN APPRAISAL

While the 1073 Appraisal shares some similarities with other types of appraisals, such as the 1004 Uniform Residential Appraisal Report (used for most single-family homes), there are a few key differences to note:

• Focus on Individual Unit: Unlike other appraisals that evaluate the entire property, the 1073 Appraisal focuses on the individual unit being purchased. Details required about the unit include its location within the complex, HOA fees, floor Level, number of rooms, views, living area, and other unique features.
• Description of Shared Elements: In addition to the individual unit, the 1073 Appraisal also describes shared elements within the complex, such as amenities, parking areas, shared utilities, and common areas like the lobby, laundry room, clubhouse, etc. Shared elements or amenities can also impact the value of the property. 
• How the living area is measured: In the 1073 Appraisal, the living area is measured from inside the walls of the unit. This differs from other appraisals that utilize exterior building dimensions to determine the gross living area (gla).
• The Type of Ownership: The 1073 Appraisal is used for condominiums and other types of attached properties within a larger complex. Therefore, the appraiser must consider not only the value of the individual unit but also its share of the common areas and amenities.
• Market Analysis: Because condos and attached units within the same development may have more limited market data compared to single-family homes, the sales comparison component of a 1073 Appraisal may require more in-depth research and analysis. Research may include extending the search criteria to include other condominium projects that buyers would consider as alternatives.
• Included Documentation: The 1073 Appraisal often requires additional documentation such as a Condominium Project Questionnaire or Condominium Bylaws, which provide information about the project’s characteristics, ownership restrictions, and common elements within the project.

Here’s an insider look at the 1073 Appraisal Form and the different sections included:

• The 1073 Appraisal is a form used by real estate appraisers in the mortgage lending process, tailored specifically for individual condominium units or similar type properties. 
• The form includes a property description, comparable sales analysis, market conditions assessment, valuation, adjustments, and other documents specific to this property type. 
• Differences in the 1073 Form in comparison to other appraisal forms include the type of ownership indicated, the way square footage is measured, and the form being tailored to describe the individual unit and shared elements.  

Understanding how to correctly complete the 1073 Appraisal Form is essential for real estate appraisers to provide a credible and trustworthy report.

When it comes to real estate transactions, relying on professional appraisers to determine the correct form type, such as the 1073 form, is important for a smooth transaction.

A professional appraiser should be familiar with the various form types in order to provide an accurate assessment of a property’s value.

By understanding the particular forms utilized in your mortgage transaction, you can navigate your transactions with confidence and make informed decisions.

The 1073 Appraisal Form does not include a cost approach section.

The cost approach method is more commonly used for valuing dwellings with ownership rights to the structure vs. interior unit space. With most condominiums, the structure that defines it is not individually owned.

However, site condos (which can be detached and may function as a stand alone single family dwelling) could include a relevant cost approach to value.

The cost of a 1073 appraisal is usually similar to the cost of a full single-family home appraisal, which is typically between $300-$500.

The actual cost will vary depending on the location, size, and complexity of the unit being appraised.

As with any value opinion, the accuracy of a 1073 Appraisal Form relies heavily on the expertise and knowledge of the appraiser completing it. It’s important to confirm that the appraiser completing the report is experienced in these home types and has knowledge about the local area. 

Homeowners and realtors can contribute to the overall accuracy and efficiency of the appraisal process by contributing thorough and accurate information about the subject property.