Actual Age/effective Age Vs. Condition

[Chris Colston]

If you can not determine effective age of the comparables without having been inside, how do you determine "condition"?? If you can determine "condition" you should also be able to determine effective age, since most properties, in a certain market should be somewhat to adequately maintained over its life time.

Are you determining the CONDITION because the exterior has a fresh coat of paint to dress it up for sale? What about the house that has been totally renovated SINCE the purchase? Do you know THAT from the street when you do your data collecting? Could be it sold in AVERAGE condiiton (for the neighborhood) and is now in GOOD condition?

 

[CANative]

This old goat is always looking for thicker armor for my conclusions. But while trying to teach me, think of a 'Ray Miller' type market day in and day out, not tract housing that most textbooks are based on.

Every day is like that for me. In fact, Ray and I have a competition going and a crown will be awarded at the end of the year for best (worst) entry.

Around here, for me to call a comp good condition, agent comments and/or MLS interior pictures should indicate a newer roof, newer floor coverings, new paint inside and out, newer appliances. Some Realtors think adding a $2,000 slab of granite in the kitchen will double the value.

So if someone does the above work in a 30 year old house, is it a reduced effective age or just good condition? What about a 60 year old house with new heating system, plumbing and electrical, but old carpets, 70's linoleum and formica counters and avacado green stove and dishwasher. Do buyers say "it's ugly but the heater works and water comes out of the sink." Do buyersthink "ah, the effective age of this house is superior to that house we just saw," or do they say "Ah, this house is in much better condition that that last house."

Or do they say both of the above and just write a bigger check (each month when the mortgage payment is due?)

 

[CANative]

Chris,

I'm talking about the practice of putting a precise number of years and then assigning a dollar amount to that figure. It is implying a precision that is not possible.

 

[Jo Ann Meyer Stratton]

I do not place an effective age for the subject and all comparables in the sales grid. For age of the subject and all comparables I type the actual original year of construction and the age at the time of sale. For example two homes built in 1930, the one that sold in Nov 2004 would be written 1930 / 74 Years. The one that sold in Feb 2005 would be written 1930 / 75 Years. Then on the condition line it could be anything descriptive--for example Average and my comments would be that the subject has been well maintained. Or if I type Remodeled, my comments would describe the updated plumbing, electrical, cabinets, etc. If I type in Above Average or Good, I type in the new roof, new flooring, recent exterior and interior paint, etc. Then my adjustments for condition would fall in line and be readily understandable by the reader because of my comments. Occasionally I might make an adjustment for the actual age difference. Due to limited sales in my area I might have to compare a 1935 bungalow to a 1980 ranch style home. In that situation the words bungalow and ranch go on the design line--maybe with an adjustment and full explanation in my comments of why an adjustment was made for design. I attempt to describe and adjust for just the facts--and not get into my personal preferences and my opinions--effective age is a personal opinion and not a fact--so that is why I don't state effective age.

 

[Pamela Crowley (Florida)]

Ditto Jo Ann and others on the side of leaving the effective age of the comps as an unknown.

Chris and I have gone round and round about this and I doubt either one of us is going to change our minds.

I consider a house built in 1955 almost always has certain features and floorplan of other houses built around that same time. I believe locating the sales of house as close as possible to the same age is a VERY important part of comp selection!!! They all should have 40-60 yr old basic structure and that's what the age of the structure is all about for me. If force into using a 20 yr old structure for a 50 yr old subject, I will do everything I can to prove my age adjustment and use one. There IS a difference in the way houses were built, in their 'bones', according to WHEN they were built.

Condition, IMO, is all about how well it's been maintained and any updating it's had.

 

[Robert Anderson]

I show actual age in the sales comparison grid for the subject and comps; I do not show effective age. The only exception is a house that has been taken down to the studs and rebuilt. In that case, I show both actual age and effective age and include lots of explanation in the comment addendum. I like Jo Ann's practice of showing both year built and actual age. I will give that a try.

BTW, if I remember correctly, the first draft of the new forms showed actual and effective ages in the sales comparison grid. This was changed and it now shows only "actual age." This was a good change...IMO.

 

[Dan Leggett]

Great comments from both Greg & Jo Ann but still just a matter of wording.

"Implying a precision that is not possible" is my opinion of condition adjustments. What dollar amounts are your Condition adjustments based on? Cost? More accurate market extractions based on Realtor comments? (I'm smiling as I'm typing that last question!)

"Effective age is a personal opinion and not a fact" can be said of a condition rating. I'm sure Jo Ann is detailed enough in the development of her data to be able to prove her adjustments 100%. One day I hope to be 1/2 as thorough as you are Jo Ann. The majority of my work week is centered around developing my data, looking at the subject and writing the report is a breeze.

Hopefully we're all starting at the same point and winding up real close at the other end, we're just taking different routes to get there.

It ain't you, it ain't me, it must be them.

 

[Tina]

I guess I'm going save the debate with Pam on this one...seems if Chris C. couldn't "convert" you, I have NO chance in well (sp).

Suppose we'll have to agree to disagree

TB

 

[Chris Colston]

Originally posted by Tina Brumwell@Jul 17 2005, 10:09 PM
...seems if Chris C. couldn't "convert" you, I have NO chance in well (sp).

Suppose we'll have to agree to disagree

That's basically how I've handled it.

Pam said:

I consider a house built in 1955 almost always has certain features and floor plan of other houses built around that same time. I believe locating the sales of house as close as possible to the same age is a VERY important part of comp selection!!! They all should have 40-60 yr old basic structure and that's what the age of the structure is all about for me. If force into using a 20 yr old structure for a 50 yr old subject, I will do everything I can to prove my age adjustment and use one. There IS a difference in the way houses were built, in their 'bones', according to WHEN they were built.

So how do you consider the example I gave? All houses built in 1977....one was practically destroyed by Hurricane Frances except for the block walls and slab, totally renovated. Next house needed only a new roof, some windows, new drywall in the living room and some new flooring. Third house, just received some patch work. All sold on the same street, within a few weeks of each other? Good comps, the only difference is CONDITION and/or EFFECTIVE AGE.

Dan asked:

What dollar amounts are your Condition adjustments based on? Cost?

I use the depreciation figure in the cost approach calculated as per year figure. It has been accepted when explained in court and peer review.

 

[CANative]

"Implying a precision that is not possible" is my opinion of condition adjustments

The reason I said that is because, IMS(tupid)O, placing a mathematical number on a subjective idea may lead the reader of the report to believe some sort of science is involved. That is also why I disagree with Austin and Bert Craytor about citing the use of regression analysis as a method used to estimate market reaction adjustments. It's not that it does or doesn't work (it wouldn't in my area) it's because it saying it implies science where there is none (or not enough.)

I'm kind of a newbie, so maybe my opinions will change as I gain experience.