Cost to cure adjustment on the grid?

[Zephyr999]

Not really. I've had discussions with brokers (and owned a brokerage at one time) and a general consensus is that adding about 50% to the actual cost is not unrealistic.



If your C2C includes profit, I'd agree.

Using strictly a C2C bid does not account for the profit motive for the hassle and for the unforeseen potential problems once the repairs are begun. And there's always unexpected, additional items that need covered.

The EI should not be ignored...agree 110%

 

[J Grant]

An owner occupant does not expect a profit, but they do want a greater discount than straight cost for the hassle and discomfort of being in the house ( or paying to be in hotel ) while the work is being done. Contractors and workmen trooping in and out, noise, mess, delays, cost over runs etc. This is the reason some buyers will not buy a house needing work.

In addition, consider this, when a buyer purchases a move in ready house, they might pay more, but it is borrowed money. Whereas if they buy a house needing repairs or unfinished room, that is cash out of pocket to pay for it, which some do not have or do not want to part with. Therefore, with many houses needing repair it is common for the seller to provide a concession for it .

However, as others have noted, in this crazy market all norms are out the window. I have seen some dated houses selling today for the same price an upgraded house sold for 6 months ago. So clearly many buyers today don't expect a discount because inventory is so tight. Listing a cost to cure estimate for lender use on addendum does not mean we have to adjust for it - in this market, simply explain why a C2C estimate is provided but market is not seeing a discount for it. In a slow market by contrast, buyers would expect a huge discount.

Reading the market is called being an appraiser- as opposed to putting in rote formula adjustments ,

 

[alebrewer]

In my appraisal it would be a FACT that the "estimate from contractor states cost to cure is $XX.XX". It would NOT be a FACT that MARKET REACTION to the deferred maintenance would be EQUIVALENT to that estimate.

This!

 

[J Grant]

In my appraisal it would be a FACT that the "estimate from contractor states cost to cure is $XX.XX". It would NOT be a FACT that MARKET REACTION to the deferred maintenance would be EQUIVALENT to that estimate.

Exactly. Some people mix up the concepts and applications around fact, estimates, and opinions. They cling to the idea that using a C2C is more precise , more accurate as the adjustment without realizing it is that very "precision" which is its weakness..

As you said, the costs and labor total is a fact, or approximate estimate of facts - but it can see ay different or not related to the cost market reaction, and we adjust for market reaction

Using the literal cost to cure as the adjustment exposes another issue, if the cost estimate turns out to be wrong, and the adjustment was based on the estimate, now there is a value problem - whereas if the adjustment was not based on the estimate, and it turned out to cost twice as much, or half as much, it did not affect the value opinion.

If the appraisers opinion of market reaction is the same $ amount as the estimate, then it is the appraiser's opinion entered as the adjustment, even though the numerical amounts match

 

[glenn walker]

A Cost To Cure is a Hard $ Cost to repair or replace its not a market based adjustment--Think about it like this your cars transmission goes out --not what is the price difference between selling it with out a working transmission-and a non-working transmission --Also the difference in cost or value is almost always lower than that what it would be in a resale as a buyer has to pay additional overhead and which an existing owner may not have to do and also most lenders will not even fund a purcghse loan today unless its bathrooms are operational. ** NOTE: Please Cite the source that says a C to C cannot be on a open lower grid because it can as long as the user knows its not a market based adjustment. I JUST WANT TO KNOW HOW MUCH TO FIX IT not some esoteric BS adjustment from some idiot looking for a comp with a jacked up bathroom.

 

[J Grant]

A Cost To Cure is a Hard $ Cost to repair or replace its not a market based adjustment--Think about it like this your cars transmission goes out --not what is the price difference between selling it with out a working transmission-and a non-working transmission --Also the difference in cost or value is almost always lower than that what it would be in a resale as a buyer has to pay additional overhead and which an existing owner may not have to do and also most lenders will not even fund a purcghse loan today unless its bathrooms are operational. ** NOTE: Please Cite the source that says a C to C cannot be on a open lower grid because it can as long as the user knows its not a market based adjustment. I JUST WANT TO KNOW HOW MUCH TO FIX IT not some esoteric BS adjustment from some idiot looking for a comp with a jacked up bathroom.

Well i for one never said the C to C can not be on the grid, assuming it is the same as appraisers opinion of it as a market reaction. see my post 74. Can not speak for others, though I do not recall anyone making that statement.

 

[glenn walker]

Well i for one never said the C to C can not be on the grid, assuming it is the same as appraisers opinion of it as a market reaction. see my post 74. Can not speak for others, though I do not recall anyone making that statement.

It was not you who said that as it was not you that said a grid is only for market based adjustments -
Anyway a cost to cure is not a market reaction unless it involves a sale and I can tell you one bath homes have limited marketability in my area and so a cost to cure would always be cheaper than taking a hit in a resale.

 

[glenn walker]

Not so Dear Appraiser I asked for a hard $$ cost to cure not your opinions- ** ALSO Cots to Cure $ are often held back into escrow repair accounts and thats why they didn't ask for a market reaction.

 

[Mike Ault]

Not so Dear Appraiser I asked for a hard $$ cost to cure not your opinions- ** ALSO Cots to Cure $ are often held back into escrow repair accounts and thats why they didn't ask for a market reaction.

They can have the "hard cost to cure" anywhere they want in that report except the sales comparison adjustment grid. The grid is where you apply "market-based" reactions to differences between the subjects and the comparables that you recite. Not the wishes of your client.

 

[glenn walker]

They can have the "hard cost to cure" anywhere they want in that report except the sales comparison adjustment grid. The grid is where you apply "market-based" reactions to differences between the subjects and the comparables that you recite. Not the wishes of your client.

Site Your Source we have been doing it for 40 years on a lower grid- Just state what it is also I can write Mickey Mouse in a lower grid but make no adjustment--