C1 or C2

[Dublin ohio]

Most C1 houses are bought brand new from a developer or builder and not months later on the resale market - just saying

I have seen new spec homes sit for 180 DOM for various reasons. C1 or C2

 

[J Grant]

I have seen new spec homes sit for 180 DOM for various reasons. C1 or C2

That's a tough call because if they were spec and never lived in might be closer to a C 1- but I'd have ot see it! Over 6 months it becomes closer ot a C 2 - depreciating out in the weather etc

 

[CGinMN]

I’d call is a C1 and explain the history. If you call it a C2 and you come in low you’re asking for trouble.

 

[J Grant]

I’d call is a C1 and explain the history. If you call it a C2 and you come in low you’re asking for trouble.

That makes no sense.
Call the property what it deserves per its age and condition - if you come in "low," ( I hate that word, that is RE broker speak ) then that value was your credibly supported MVO ....why is it asking for trouble if you called it a C 2 vs a C 1 ?

 

[Overimprovement]

There are 2 ways to look at this:

1. What's the DOM for a spec house before it becomes C2? Every 'depends' one lists (weather, roof type, etc) is more unnecessary subjective opinion that comes into play, whereas UAD was intended to eliminate a lot of that. If one is using their forms, go by their definition. Keep it as objective (read supportable) as possible. One can more easily support a never-lived in 9-month old house being called C1 than they can C2. What is the opposite of new? Old? Used? Pick one, and apply it to a house. If a house has not been used, it is new, and per UAD, is C1.

2. The gray area is not "lived in or not", but rather how much wear and tear pushes a never-lived-in home to C2? Houses depreciate the second they are finished. Imperceptibly, but still something. There is no such thing as NO depreciation, so the definition itself is worthless (big surprise). A spec house that has sat for 10 years, still never lived in, would probably be C3, if not maintained. Exterior facing elements depreciate whether lived in or not, so time on the market vacant can matter if it gets large enough. If a newly built house goes through a hail storm, it clearly is no longer C1, because there is (likely) noticeable depreciation from the hail. It may even be C6 if the damage is severe.

The problem, as usual, is UAD (like ANSI) is clear as mud regarding stuff. We are supposed to have distinct buckets every house fits in, with numerous gray areas comprising the rating. 80% of the houses I have appraised in my career have been C3 or C4. That is MOST houses, with 2 ratings to choose from. No granularity at all. 95% have been Q3, Q4, or Q5. 3 quality ratings, from the 800sf shack to the 6000sf brick home with 10' ceilings, granite tops, and complex roofline. Wondering out loud if the new forms will include new UAD ratings with more granularity.

If you inspect a house and cannot detect any visible depreciation, and the house has never been lived, I would call it C1. Just clearly state how you arrive at that though if the house has sat vacant for awhile.

 

[alebrewer]

That makes no sense.
Call the property what it deserves per its age and condition - if you come in "low," ( I hate that word, that is RE broker speak ) then that value was your credibly supported MVO ....why is it asking for trouble if you called it a C 2 vs a C 1 ?

The age field is for age adjustments. The condition field is for condition adjustments.

 

[Terrel L. Shields]

Is a Virgin the same thing as almost a virgin ?

Well...after they get off of Only Fools, they often become a born-again virgin. They think it grows back....but that's a different subject.

I've appraised half built houses that had sit for YEARS - 2 to 3 and one about six or seven. I saw them finished by the buyer and did the final inspection. So, if having to use the codes, I would have reported them as C2 despite being immaculate.

 

[Terrel L. Shields]

All of my clients want the condition adjustment on the condition line.

The age field is for age adjustments. The condition field is for condition adjustments.

The reality is "effective age" is the combination of age and condition. They are inseparable. I mean, yes, you can separate them, but it's like doing straight line depreciation, only to adjust on the basis of condition to a 'real' age - i.e.- effective age. Reality is that it can be a tough call. I mean a house sitting in the elements for a year in a humid South is a far cry from one sitting in a high meadow in the Rockies.

 

[alebrewer]

The reality is "effective age" is the combination of age and condition. They are inseparable. I mean, yes, you can separate them, but it's like doing straight line depreciation, only to adjust on the basis of condition to a 'real' age - i.e.- effective age. Reality is that it can be a tough call. I mean a house sitting in the elements for a year in a humid South is a far cry from one sitting in a high meadow in the Rockies.

No doubt. There are several elements of comparison that overlap. Condition and age, condition and quality, quality and amenities, etc. That's why I'm a fan of a dynamic sales comparison grid (which you'd have in a narrative type environment), but for the forms. So that, if an appraiser identifies only 4 elements of comparison for a particular assignment, the grid would have only 4 fields. All other elements would be considered 'equal' or - at the very least - 'not statistically significant for adjustment'.

 

[Terrel L. Shields]

condition and quality

I would rarely say that condition has an impact upon quality. However, age might, as some very old houses have outdated 'stuff'. In the early 60s a local businessman built a very nice house and I appraised it for the estate. The buyer was a friend of the heirs and had several rent houses and his father had actually worked for the builder. One owner, etc. I noted that the electrical was just 2 prong outlets, and that the kitchen needed updated. I found a couple of houses in a nearby town that were equal in age and apparent condition and another couple that had been updated and were about the same age; and, deduced from the cost approach that there must be a significant amount of obsolescence. I allowed about 20% on a $200,000 sale (which at the time was in the top 10% of sales in that town roughly) or about $40k.

A couple years later I appraised several rent houses the buyer had inherited and went to his house to collect the payment. He had updated the electrical and kitchen. I asked what he had spent and it was $50k so I felt that $40k was not an unreasonable estimate. He said the electrical turned out to be a real problem and he ended up replacing all the wiring in the house and rewiring or replacing all the light fixtures. Under the circumstance I felt it was a reasonable adjustment. No one knows what these kinds of things can morph into when it comes to repairs. We are just guessing, just like the buyer is taking a risk on making those repairs.