A Condition Rating Question

[timd354]

I agree with JGrant; but in the grid, I would expect to see adjustments reflecting the roof-difference only between any C2 vs. the property in question, and I would expect to see positive adjustments to C3 properties (assuming that they haven't been renovated to the same level... which likely they haven't).

This is an obvious weakness in the "C" rating system. On the face, one would expect a significant difference between C2 vs. C3. In this case, the difference is minimal (IMO).

No matter what rating system one devises, there will be properties that fall in between the defined categories. When we designed the UAD condition and quality ratings we looked at many different alternatives , including systems utilized by various property assessors. There is one assessor's office that actually has a quality rating system that utilizes more than 20 different quality ratings...talk about a bunch of ratings with little to no difference between some of the ratings...lol. While there were pluses and minuses with each alternative we looked at, I think that we picked a system that works pretty well and is actually pretty easy to utilize and understand compared to the alternatives. In any case, it sure beats the old good, avg, fair, poor condition ratings that were used by most appraisers and which had absolutely no objectively defined meaning in most cases. Fannie Mae researched this in a pretty detailed manner and discovered that appraisers expressed "average" in over 200 different ways

 

[CANative]

There is one assessor's office that actually has a quality rating system that utilizes more than 20 different quality ratings...

California? The assessor's handbook uses 10 quality class designations and half steps between them. For each category of homes (pre-1900 and post-1990)

QUALITY CLASSIFICATION Quality class ranks buildings according to their amounts of materials, grades of materials, and workmanship. If two buildings are of the same design type, construction type, shape, and size, but one has more materials or better materials, it will have a higher square foot cost. Also, if two buildings are exactly alike, except that one was built with greater care and skill, it will be of AH 531.10—Costing Information 6 January 2015
better quality and will have a higher cost.

Of the five choices that lead to the overall classification of a building, the choice of a quality class is the most difficult. The relative quality of a building is not as obvious as its design type, construction type, shape, or size. Many points of reference must be observed. Many parts of a building cannot be seen, and their presence and nature must be inferred.

The quality class designations are usually numbered from 1 to 10. A class 1 building is the least costly to build per square foot, and a class 10 is the most costly. They are assigned on the basis of a comparison to numbered descriptions (specifications) of typical buildings of various quality levels.
The specifications for each quality class make a distinction between classes. This distinction often shows in the quality of a feature and not whether the feature is present. The same feature may exist in different classes, but the quality of the feature will help to determine the classification. Conversely, some features may be included in a particular classification, while in another class, the same feature must be treated as an additive.

Each chapter of this handbook dealing with different design and construction types contains a set of applicable specifications.

The building specification charts found in the various chapters are a compilation of attributes typically found in the building class listed on the individual charts. Not all structures will include all of the typical attributes listed in a particular classification. That does not automatically mean that it is an improper classification. The appraiser must use judgment to determine if the majority of attributes listed pertain to the structure being classified.

Many times buildings have quality features that fall between those of two classes rather than being most like one or the other. For this reason, half-class gradations are used. For example, buildings can fall in the 5.5 class or the 6.5 class. The unit cost of a class 5.5 is halfway between the cost of a class 5 and the cost of a class 6. The square foot cost tables array costs for half-classes as well as for full classes.

The typical attributes listed in the specifications are the basis for the cost factors established in the square foot area cost tables. These factors recognize and include an element of cost for the typical attributes. The factors do not, however, include costs for additives.

 

[Deleted member 134708]

If I was a new comer to the planet and someone explained the UAD/FNMA appraiser, quality/risk program to me I would say it was made by humans who suffer mild mental retardation.

Currently, FNMA builds a data base of ratings that are someone else's interpretation of their vernacular. (when I say "is that girl bad?" I mean she is beyond beautiful, yet you interpret bad as not good.

When it's up for interpretation between 80,000 soldiers, you will get 80,000 diff. interpretations of the same product. Reason no army works that way.

I, fortunately do not suffer from metal retardation. If I had a company named FNMA I would have a form that had 100+ drop downs for "what flooring does the kitchen feature, a/b/c/d/e...z, "what is the outer layer of the roof made of" a/b/c/d...z --- on and on throughout whole house where my team of Ph.D programers could build a correct database concerning quality/risk/ranking etc.

This isn't an appraiser hat on. This is a business/lender hat on. I couldn't care less if it takes you 1 min or 24 hours to fill out my form. You do not make the quality/condition/view etc call. You tell me facts, send those facts to me, I make the call.

Don't have to be worried about FNMA database anytime soon, cause it will need rebuilt as it's full of junk.

 

[J Grant]

Imo The C ratings are pretty good, however they would be better if they had the option of adding a plus or minus attached when warranted, such as C2- in this case ( the minus is because of the roof age)

 

[CANative]

M&S versus UAD





Excellent Condition - All items that can normally be repaired or refinished have recently been corrected, such as new roofing, paint, furance overhaul, state of the art components, etc. With no functional inadequacies of any consequence and all major short-lived components in like-new condition, the overall effective age has been substantially reduced upon complete revitilization of the structure regardless of the actual chronological age.

Very Good Condition - All items well maintained, many having been overhauled and repaired as they've showed signs of wear, increasing the life expectancy and lowering the effective age with little deterioration or obsolesence evident with a high degree of utility.

Good Condition - No obvious maintenance required but neither is everything new. Appearance and utility are above the standard and the overall effective age will be lower than the typical property.

Average condition: Some evidence of deferred maintenance and normal obsolescence with age in that a few minor repairs are needed along with some refinishing. But with all major components still functional and contributing toward an extended life expectancy, effective age and utility is standard for like properties of its class and usage.

Fair condition (Badly worn) - Much repair needed. Many items need refinishing or overhauling, deferred maintenance obvious, inadequate building utility and services all shortening the life expectancy and increasing the effective age.


Poor Condition (Worn Out) - Repair and overall needed on painted surfaces, roofing, plumbing, heating, numerous functional inadequacies, substandard utilities etc. (found only in extraordinary circumstances). Excessive deferred maintenance and abuse, limited value-in-use, approaching abandonment or major reconstruction, reuse or change in occupancy is imminent. Effective age is near the end of the scale regardless of the actual chronological age.


C1

The improvements have been very recently constructed and have not previously been occupied. The entire structure and all components are new and the dwelling features no physical depreciation.*

*Note: Newly constructed improvements that feature recycled materials and/or components can be considered new dwellings provided that the dwelling is placed on a 100% new foundation and the recycled materials and the recycled components have been rehabilitated/re-manufactured into like-new condition. Recently constructed improvements that have not been previously occupied are not considered “new” if they have any significant physical depreciation (i.e., newly constructed dwellings that have been vacant for an extended period of time without adequate maintenance or upkeep).

C2

The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completely renovated and are similar in condition to new construction.

C3

The improvements are well maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well maintained.

C4

The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate.

C5

The improvements feature obvious deferred maintenance and are in need of some significant repairs. Some building components need repairs, rehabilitation, or updating. The functional utility and overall livability is somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.

C6

The improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements. The improvements are in need of substantial repairs and rehabilitation, including many or most major components.

 

[Tom D]

a roof adjustment on using all c2 comps would be a simple small adjustment rather than a much larger overall various condition adjustments using all the c3 comps. i think some of you would go insane deciding if a city row home that was gutted down to the original brick with the original basement would be a c2 or c3.

 

[Terrel L. Shields]

The assessor's handbook uses 10 quality class designations and half steps between them. For each category of homes (pre-1900 and post-1990)

Arkansas has 5 levels but each level can have a + or - 5%, 10%, and 15%...and they actually overlap. A B-10% may be lower than a C+15%...

 

[GeorgetownAP]

No matter what rating system one devises, there will be properties that fall in between the defined categories. When we designed the UAD condition and quality ratings we looked at many different alternatives , including systems utilized by various property assessors. There is one assessor's office that actually has a quality rating system that utilizes more than 20 different quality ratings...talk about a bunch of ratings with little to no difference between some of the ratings...lol. While there were pluses and minuses with each alternative we looked at, I think that we picked a system that works pretty well and is actually pretty easy to utilize and understand compared to the alternatives. In any case, it sure beats the old good, avg, fair, poor condition ratings that were used by most appraisers and which had absolutely no objectively defined meaning in most cases. Fannie Mae researched this in a pretty detailed manner and discovered that appraisers expressed "average" in over 200 different ways

Yes, we as appraisers do and can determine quality and condition, and yes, I do understand the need for "some" uniformity, but as JGrant pointed out, where the difficulty is that my opinion can and many times will differ from the opinion of my peers for what some may think is perfectly obvious. (and lets not get into GLA, basements and the like!) That is why we can it an opinion of value - you can disclose, addenda and explain till you are blue in the face and your fingers cross off, then a CU stip comes along that is pulled from data mining or an ROV. I am in a market that has historical homes (pre-revolutionary) next to a contemporary near the cookie cutter subdivision across from the estates overlooking the Ocean -- all in various states of renovation and rehab. Trying to determine the condition/quality of a 1742 year built prerevolutionary saltbox that has some original windows, original stone foundation and detail but has gone through a very extensive renovation to bring it into the 21st century can make your head spin. (and, in this case- it is the older details that make it more desirable/valuable and thus the rating system is moot!). It is not the bestowing of a condition/quality grade that is a problem, it is STILL an interpretive decision that can be used "against" you.

 

[ucbruin]

Imo The C ratings are pretty good, however they would be better if they had the option of adding a plus or minus attached when warranted, such as C2- in this case ( the minus is because of the roof age)

 

[J Grant]

It is not the bestowing of a condition/quality grade that is a problem, it is STILL an interpretive decision that can be used "against" you.

Yes, and the more "detail" and "proof" a client asks for and appraiser tries to provide, the more it can be used against you.

I can understand why Fannie wants numerical codes and defined C and Q ratings. But if I rate a property C2 , or C3, either way it can be challenged if CU finds other appraisal or data model rates it differently. I can add comments explaining why I rated it as I did, client hands it in, all is well...but it is early in the game. If down the road the file is challenged, the fact that CU delivered differing ratings is a start point for a negative findings about the the appraisal.

The development of appraisals as a valuation model was not designed to o withstand the kind of data and computer modeling challenges now amassed to review or challenge them.

Today's level of data, computer modeling and national banks of comparison for scrutiny did not exist when appraisal methodology was developed.

Appraisals were meant to be reviewed by a review appraiser because a review appraiser addresses issues by applying a similar method of methodology. Now we see on a regular basis not review appraisals that found issues of concern, but rather automatic run computer programs taht by rote return alternate sales and other challenges to a credible and well supported appraisal. The reason it occurs is not because of any deficiency in the appraisal, but because the automatic program is a review "tool" employed by an AMC or lender . Then this same appraisal might have to provide response to a CU feedback and then after that an ROV because a financially interested party did not like the value.

One appraisal is supposed to stand up to all that? Amazingly they do, but only by putting the appraiser into a defensive position and in the process, amassing information which can be used against the appraiser at a later date.