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Conditional/quality Adjustments

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Barns & outbuildings can present judgment issues.
A historic cabin may provide an ambiance … click bait for agents, if you will, while providing little contributory value.
A historic barn on a residence used as an antique sales barn, and costing $60,000 to move and set up may contribute a lot of that $ but likely not as much as half, and what is the effective age?
A farm, formerly a dairy, can be blessed with too many outbuildings, again suffering a huge discount...
Just ask some buyers what they think such things are worth. That, extraction and common sense will be your own guides. I treasure these sales where I can isolate prices from people in the transaction in addition to my own analysis.

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How about a really nice 1000sf Q3 built in 2016 where the owner decided to add a 3 car detached garage, 1200sf pool house built to the same quality specs as the house less a kitchen, and a 20x40 in-ground pool. Now he is expecting to refinance it all in one bundle........and apparently he was informed by the lender that the 1200sf pool house that is 200sf bigger than the house would count in GLA for the appraisal. Yikes!

A 1200 sf pool house on a 1000 sf main house is likely an over improvement , or super adequacy ( for that market). While a 1000 sf pool house might be appropriate, though still large, for a 6000 sf main house in a luxury market .I've never heard of a lender informing a borrower about non living areas counting in main dwelling sf. But many RE agents do that and some owners themselves do that as well, then be "disappointed" in the appraisal.
 
Never been questioned for making Q3 to Q3 adjustments. I just explain why (hard wood floor upgrades, granite, commercial grade kitchen, etc) and how the adjustment was supported. Many new homes have similar quality everything except for flooring or kitchen amenities and are reflected in their sales price. The same goes for re-sales of existing homes. Many appraisers confuse condition with quality. Think of it new home terms. If they are both new, there is no condition adjustment, but there can be quality adjustments based on upgrades. You can have a ten year old home with new carpet, paint, etc and another ten year old home with new carpet, paint, etc, but it also has hard wood floors, granite, brick, stone elevation, etc and this is reflected in quality adjustments. Just a few minor upgrades does not necessarily change home from Q4 to Q3 or Q3 to Q2. It would have to be a sizeable amount of upgrades in a homogenous neighborhood to be different quality ratings. Then there is the question of being overbuilt for the neighborhood. In any case, the comparable sales should support any Q rating adjustments and typically do. It is possible there could be no adjustment in some neighborhoods.

I understand your point, however imo appraisers are still better off line item out upgrades from quality. Because on the grid itself it says "quality of construction". . and no matter how much you upgrade a Q4, low ceiling, wood frame house, you will never change it's UAD quality rating , because the Q ratings are meant to address the construction itself...upgrades on the interior make a higher quality interior but not a higher quality construction...and at some point the $ in upgrades in a Q4 (or any rating ) can become a super adequacy .

For example, an update such as a new roof adds to condition, rating . Make enough updates and replacements and you can change the C rating of a house, but you can never really change the Q rating of a house because the Q rating is tied to the intrinsic construction.

So if you put on not just a new roof, but replace a comp tile roof with an S tile roof, you've not only updated it, but upgraded it. Is it now a "higher quality" Q rating...well not enough to change the rating so why not just put the S tile roof on its own line,/upgrades or else consider it in the reconciliation. Because at the end of the day, an S tile roof did not change the Q rating because the Q rating reflects the fact that the house is a tract style home with certain specs.

At the end with enough explanation an way we handle it can arrive at a same conclusion and value, but imo line itemizing out the upgrades makes it clear what was done in upgrades or remodeling and what it contributes.
 
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And I find that most of the time one is tempted to make too large of adjustment for outbuildings. For example I am putting up a 18x36 outbuilding for my RV. I already have a 3 car garage. I know I'm not going to get the cost back in resale. I might get 50% at best. But I knew that going into it. But I want the convenience and the protection for my Airstream which is expensive. The fact is not many buyers will want my house, with my floor plan, on my lot, with an RV garage. So I'd be very careful in adjusting outbuildings. I just did a house with a 6600sf outbuilding. It was incredible. But I made no adjustment from that building to a 50x60. Who the heck needs a 6600sf outbuilding?

i could not agree more. i'm another great example like you. my house came with a 700sf 3 car garage which i promptly expanded to 1,000sf (largest allowed for my lot size) and when i replaced my 1 car driveway i expanded it as wide as the city allowed, 15', since i did not have enough room for a true 2 car drive. will the next buyer of my house be willing to spend more for an oversized driveway an supersized garage with heat, ac and a 220 line? most likely not, but i am fine with it because it suits my needs and i don't plan on moving anytime soon.
 
Because on the grid itself it says "quality of construction". . and no matter how much you upgrade a Q4, low ceiling, wood frame house, you will never change it's UAD quality rating , because the Q ratings are meant to address the construction itself...upgrades on the interior make a higher quality interior but not a higher quality construction...and at some point the $ in upgrades in a Q4 (or any rating ) can become a super adequacy .
Totally disagree with you. When you upgrade, you are changing your construction. I changed my house from a Q4 to a Q3


So if you put on not just a new roof, but replace a comp tile roof with an S tile roof, you've not only updated it, but upgraded it. Is it now a "higher quality" Q rating...well not enough to change the rating so why not just put the S tile roof on its own line,/upgrades or else consider it in the reconciliation
There is always a breaking point...a line in the sand. It may be that it had every quality trait of higher q rated home, except that it lacked the upgraded roof, which kept it on the upper end of the lower rated homes. Change the roof, you change the rating.

I've never liked the q & c ratings, which is nothing but 6 blocks of ranges. Far superior would be Superior, Inferior, Similar (to the subject) then state the differences and support your opinion of adjustment.
 
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I understand your point, however imo appraisers are still better off line item out upgrades from quality. Because on the grid itself it says "quality of construction". . and no matter how much you upgrade a Q4, low ceiling, wood frame house, you will never change it's UAD quality rating , because the Q ratings are meant to address the construction itself...upgrades on the interior make a higher quality interior but not a higher quality construction...and at some point the $ in upgrades in a Q4 (or any rating ) can become a super adequacy .

For example, an update such as a new roof adds to condition, rating . Make enough updates and replacements and you can change the C rating of a house, but you can never really change the Q rating of a house because the Q rating is tied to the intrinsic construction.

Not sure I can agree with you here. A house's bones are the wood frame and the concrete that make up the footers and foundation. The quality of those materials is pretty standard across the board from a million dollar home to a small 800' cottage built today. The differences in quality ratings tend to come from what we can SEE--the siding, roof covering, trim, flooring, kitchen, bath, etc.

While I agree one cannot easily change the roofline or fenestration of a home, or its ceiling height, those are not the only determinants of the quality rating. So long an improvement is not a super-adequacy, I believe one CAN improve the quality of a home, not only the condition.
 
This is one argument there may not be a 100% "right " answer...as long as appraiser discloses and explains their reasoning and categories of cut off points.

Imo the Q and C ratings do make sense from a user point of view and also can be useful for appraisers, but there are grey areas of overlap .
 
Not sure I can agree with you here. A house's bones are the wood frame and the concrete that make up the footers and foundation. The quality of those materials is pretty standard across the board from a million dollar home to a small 800' cottage built today. The differences in quality ratings tend to come from what we can SEE--the siding, roof covering, trim, flooring, kitchen, bath, etc.

While I agree one cannot easily change the roofline or fenestration of a home, or its ceiling height, those are not the only determinants of the quality rating. So long an improvement is not a super-adequacy, I believe one CAN improve the quality of a home, not only the condition.

It's an area one could have different viewpoints, but imo, you can add upgrades up the kazoo to any original construction rated Q home, and most of the time, it make it a highly upgraded Q4, but not a Q 3, or a highly upgraded Q 3, but not a Q 2. It's not just about piling on upgrades and replacements, its; the design and architecture and to an extent original build quality that unless you practically tore a house down and recreate it, won''t change

The houses bones start at foundation and then differ - wood frame or steel frame, CBS or just frame stucco or poured concrete/other, then many other elements in the original construction and design contribute, including ceiling height, size of windows, size of rooms and layouts, design, style, quality of materials etc, and is the house of standard tract design or more custom....those elements are in the Q ratings as differentials, along with ornamentation /fenestration.

I did an inspection today, the houses, while nice, are tract house boxes, the same predictable tract floor plan of 3 bedroom 2 bath found in many communities. Nothing wrong with that, but it's a C 4. It does have vaulted ceilings which gives it some air and a few taller arched windows, but that's it. They all have S tile roofs. My subject is CBS, the community is comprised of CBS and frame/stucco homes. Driving around hard to tell the difference from ext . But it's on the building card and on MLS. They all are still C 4 though, because of the box style floorplan - 1500-1700 sf tract homes . But the CBS vs frame stucco has about a 10k premium in the market and CBS is a better construction because more solid in a storm and the less wood near the surface for termites. I could have just adjusted on the Q line but it was more clarifying to make a line item adjustment which I called "other", and then specified Subject as CBS and each house as CBS or frame/stucco, and that has its own line item adjustment.

Some of the frame stucco houses were more upgraded than the CBS houses, such as a frame stucco has has a new kitchen-the kitchen is an upgrade, Having an new kitchen is recognized in the market and is an upgrade, but it does not change the Q rating. CBS vs frame stucco is not enough of a differential to change the Q rating either, but it is also recognized in the market and thus gets its own adjustment, apart from any additional upgrades made .

It's not just the quality of the materials ( though that is a factor ), it;s the intrinsic design and floorplan and structure of the house that contributes to a Q rating. Q3, UAD specifies above standard residential, tract quality , the UAD Q4 says standard residential . The subject today called it Q4 because overall it is a standard residential tract design.

. I appraise houses also of CBS with an S tile roof that I call C 3, because they are higher than standard residential tract...they tend to be larger even when same 3 bedroom 2 bath count, and have architectural features such as a formal dining room , often offset by columns, a large master bath with a separate tub and shower, a foyer , high ceilings that are tray ceilings or coffer ceilings etc. All that makes them above standard residential tract design.
 
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You're making a lot of "it does not change" claims that are just not supported, JG. It's an appraiser's call....and frankly, it's not a big deal because whether you change it to c3 or keep it c4 doesn't affect value. There are transition points that very from one appraiser to another.
 
You're making a lot of "it does not change" claims that are just not supported, JG. It's an appraiser's call....and frankly, it's not a big deal because whether you change it to c3 or keep it c4 doesn't affect value. There are transition points that very from one appraiser to another.

Different appraisers can call it differently, but it becomes an issue at what point are they just doing their own thing rather than calling it as the UAD specifies ? When appraisers accept an assignment condition with UAD ratings, the appraiser is supposed to view the house aka call it , according to what the UAD states for each category...and it is a holistic call because there can be variations. If there truly is a gray area, make best decision and explain. .
 
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