Average versus Fair condition

[ZZGAMAZZ]

Need advice (1004 form report): Not sure why but about 1 month ago I started using labels "below average," "above average," etc., rather than poor/fair/average/good/excell.

IMO the degreees of difference in condition aren't always neat enough to fit into the standard categories.

Is it appropriate for me to do this if I explain my rationale in the SC narrative?

 

[Mike Garrett RAA]

Fair is acceptable to Fannie Mae. It is what it is...Fair Condition. A picture is worth a thousand words!

I have added two condition classifications to the standard Good, Average, Fair, and Poor in order to fine tune my reports. I use...Above Average and Below Average. Not had anyone complain about that...yet. Not a fan of using Average + or Average -...to touchy feel for me but that is a personal opinion.

 

[Richard Carlsen]

On the Condition line, my entry may look like this: Avg/ E 16.

The average answers the question, "Is the property in a market acceptable condition for the physical age of the property?" The E 16 (effective age = 16 years) stands for my estimate of the effective age of the comp based on the information I have available. Any difference in the effective age of the comp and the subject calls for an adjustment for the difference as my "condition" adjustment. An average property can have a fairly large range of effective ages, all of which are market acceptable for consideration. I make no age adjustments!

If the property is "Below Avg", that is, it is below what the market will expect or will consider for property of that age, then I explain that in the space provided for comments on condition. If the property has been extensively remodeled and upgraded, I may call it "Above Avg" and comment on that.

Just the way I do it.

 

[Webbed Feet]

Need advice (1004 form report): Not sure why but about 1 month ago I started using labels "below average," "above average," etc., rather than poor/fair/average/good/excell.

IMO the degreees of difference in condition aren't always neat enough to fit into the standard categories.

Is it appropriate for me to do this if I explain my rationale in the SC narrative?

ZZGAMAZZ,

This is all such a stupid issue. Facts are the client is attempting, all the clients keep attempting, to force appraisers to sanitize appraisal reports of words that might trigger discounting of the loan and cost them some commission dollars. That is what this is all about and nothing more! It is demanded fraud for profit.

Fact: Below average IS fair and “Fair” = below average!

The whole thing is not any new problem. It goes back in time as far as real estate appraising goes back in time. People that do not want things described in factual terms if doing so means anything negative needing to be disclosed.

I vote we all toss them a curve ball since they just can't stand a pig being called a pig. We should create an exhibit page with say a one through six numbering system. Each number represents a defined and described level of condition that is created to be relative to “new” and remaining physical life as related to depreciation acceptable to the general market place. Level “1” would be non-habitable, or what we used to call “poor.” Then, on page one and two of all the forms we now use only the one through six numbers, and not words, for relative conditions indicators. Result, we will be in compliance with all things needed and the idiots will be too stupid for a year or two to understand what we just did.

Eventually, however, expect to start receiving orders prohibiting any rating less than 3, and stips requesting changes anytime 1 or 2 is used. Then, of course, we will have copious numbers of appraisers using 2.5 instead of 2. And the beat will go on to the same ol tune. Condition description will remain a liars contest.

Webbed.

 

[Mztk1]

Well to me condition is relative to the market. So the idea that most houses are in average to good condition doesn't make sense. Most houses are always in average condition relative to a market. Evidently, your market's average is better than what you are used to seeing. That being the case, relative to this market, your subject must be in "fair" condition.

I see no reason to mince words. A house is what it is and you just call it by that name. Ratings of 1 to 6, or Average+, Average-, below average, etc., is just trying to hide the real issue and protect the lender from the forbidden nomenclature. My ratings are Poor, Fair, Average, Good. When I need degrees between these categories I use the same words: "Fair/Poor", "Average/Fair", "Average/Good" and "Very Good". Making up new words, or not using a specific word because your client might drop you bowing to appraiser pressure and is bordering on playing the fraud game. If I am going to go down I'd rather it be because I was honest...at least I'd be able to live with myself.

 

[hglenbetts]

I rated this home in fair condition. I have had the mortgage originator, the buyer and even the lender trying to pressure me into changing this to average condition. They are trying to tell me the home should be rated as average. The subject neighborhood is a nice area with most homes in average to good condition.

The interior of this home is one of the worst I have seen. I'm I out of touch with reality - should a home is this condition be rated as average!

Thanks for your input

Had the same thing about 3 weeks ago. The lender justified his request by saying it's in average condition for a forclosure.
Nice Try!!m2:

 

[Webbed Feet]

Well to me condition is not(?) relative to the market.

<snip>

Mr. Klos,

I am in complete disagreement. Condition is never relative to a market area. Under that logic, the flooded houses full of mold would all have been in "Average" condition in New Orleans after Katrina in some market areas in that location.

Webbed.

P.S. Hold on a moment... I reread your post.. Did you leave "not" out of your first sentence? ...

 

[Sid Pachter]

Average condition is what the market considers as the minimal acceptable standard for a given neighborhood. I know of no area where the condition of your subject represents a minimal standard. Tell your client no and report them to the state agency that regulates their business entity.

 

[Webbed Feet]

Average condition is what the market considers as the minimal acceptable standard for a given neighborhood. <snip>

Mr. Pachter,

Caveman says "What???"

Webbed.

P.S. So the "condition" of a brand new subdivision, that constitutes an entire neighborhood, is all "Average" because that is the minimal acceptable standard for the neighborhood?

 

[ZZGAMAZZ]

Webbed:

1) IMO there is a difference between "below average" and "fair."

2) My comments in Post 21 pertain as much to comparables as to the subject so it's a question of market reaction rather than hiding negative issues about the subject. Often times C1 has a few upgrades and C2 has numerous upgrades. C1 would be "above average" and C2 would be "good."