How-To Run a 1004MC

Wondering how to know what inventory is like in a market? Let's dive into the 1004MC

The Market Conditions Addendum (Form 1004MC) is designed to enhance the transparency of the market trends and conditions conclusions made by an appraiser. The 1004MC allows you to see how many active listings were in that year. It will give you Absorption Rate, Months of Housing Supply, and many more statistics.

Total # of Comparable Sales

The sum of all of the sales that have happened at any point in the specified period. It includes only “closed” sales transactions.

Absorption Rate

Total # of Comparable Sales divided by the time period in months.

Total # of Comparable Active Listings

The properties that were “active” listings on the last day of the period. The total number of Comparable Active Listings is based on listings that were "On Market" on the end date of the specified time periods on the PDF date range. More specifically, it includes only properties that were still available to be shown to prospective buyers. Other properties, such as expired, sold, pending sales, under contract, etc. are excluded from this calculation. It does include Active Kick Out, Active Option Contract, and Active Contingent.

Months of Housing Supply

The Total # of Comparable Active Listings divided by the Absorption Rate for the specified period. This number tells you how many months it would take for all the current homes for sale on the market to sell, given a monthly sales volume. You can calculate the months of supply by dividing the total number of homes for sale over the number of homes sold in one month. For example, if you search in a neighborhood and notice that there are 30 homes for sale but only 10 homes actually sold last month, it means that there are 3 months of supply left in the market. 

• Four to five months of supply is average (BALANCED MARKET)

• A lower number means buyers dominate the market and there are relatively few sellers (SELLER'S MARKET)

• A higher number means more sellers than buyers (BUYER'S MARKET).

Median Comparable Sale Price

The middle (aka median) sale price for all sold properties within the specified period. If there are two middle values, the median is the average of the middle values.

Median Comparable Sales Days on Market

The middle (median) Days on Market value for all sold properties for the specified period.

Median Comparable List Price (Listings Only)

The middle (median) list price of all end-of-period listings for the specified period. If there are two middle values, the median is the average of the two values.

Median Comparable Sales Days on Market (Listings Only)

If Days on Market (DOM) is available, the median Days on Market value for all sold properties for the specified period.

Median Sale-to-List Price Ratio

The middle (median) value for all properties when they are sorted on their individual sale price-to-list price ratio.

For example, if you have these three properties in your data, it will  use Property 2 below because it's the middle of 85.4, 97.5, and 100

Property 1: List Price $370,000 and Sales Price $370,000 then the SP/LP ratio is 100%
Property 2: LP $400,000 and SP $390,000 then SP/LP is 97.5%
Property 3: LP $480,000 and SP $410,000 then SP/LP is 85.4%

Median Sale Price: 390,000 (the middle of 370, 390, and 410)
Median List Price: 400,000 (the middle of 480, 400, and 370)
Median SP/LP Ratio: 97.5% (the middle of 100%, 97.5%, and 85.4%)