C2 or C3 and Q3 or Q4

[J Grant]

The adjustments between condition ratings, assuming the market shows them, are up to the appraiser. Fannie is silent about the adjustments, the condition ratings reflect the property, the way the market reacts to them is up to the appraiser to find out.

C1 new may not have much if any difference deprecation than a 4 month old C2 house, but the C1 has that all important never previously occupied, which can command a value in the market.

 

[Restrain]

Lord, working in DFW for decades, I found two factors with new homes. One was the basic age differential, the other the 10-15% differential of a new vs used home. A new home in a development is just like a new car. Upside down as soon as you sign the papers so long as the builder is active in the development or next door development. Lots of explanations about the dichotomy in the market.

In the day of New, Excellent, Good ratings, easier to explain. Now, the UW just looks at C, Q ratings, knee-jerk reactions to adjustments, ratings levels. And they NEVER read the commentary in the report.

 

[J Grant]

The adjustments between condition ratings, assuming the market shows them, are up to the appraiser. Fannie is silent about the adjustments

And thus we see an example of the differences in opinion on what, in Fannie's mind, is a straight forward rating process. An appraisal is an opinion. It is not a scientific formula, a 'set in stone' value. It is an opinion, as is the "Q" and "C" ratings. We have guidelines, but it always comes back to an opinion of the appraiser.

The opinion of the appraiser has to make sense and be based on facts or observable condition or market trends present, it can't just be an opinion because I said so. That's why review appraisals exist, because if an opinion is found to be incorrect when compared against reality, it is not a reliable nor credibly supported opinion. An appraiser who believes a house taken down to the studs a year ago with significant remodeling is a C4 because it was built in 1931 delivered an unsupported opinion because his opinion does not match the realty of the property's condition nor is it a correct application of the C ratings .

Some opinions can be gray area/more subjective but this was example was not one of them..

 

[J Grant]

Lord, working in DFW for decades, I found two factors with new homes. One was the basic age differential, the other the 10-15% differential of a new vs used home. A new home in a development is just like a new car. Upside down as soon as you sign the papers so long as the builder is active in the development or next door development. Lots of explanations about the dichotomy in the market.

In the day of New, Excellent, Good ratings, easier to explain. Now, the UW just looks at C, Q ratings, knee-jerk reactions to adjustments, ratings levels. And they NEVER read the commentary in the report.

C1 states never previously occupied, which typically means sold by a builder , and is very easy to explain. i assume somebody will read the commentary at some point. I agree builder prices are often over priced because of C1, appraisers need to consider per the MV definition references a well informed/well advised buyer, are buyers who over pay for new informed or well advised?

 

[Restrain]

J Grant, what I found was a demand differential. Some buyers want a new home, will not consider an existing home. Others will be quite happy with a 2-3 year old home, happy to keep the money in the pocket. So it can be argued that the differential reflects both a physical loss and as well as an obsolescence differential, although it is easiest to show it as a physical depreciation.

 

[Bearcat Bri]

I haven't seen the property and I don't think any amount of description that you supply could give any other appraiser enough to corroborate your rating decision unless they have actual inspected the property. Call it like you see it.

It all depends on your market and your explanation. The adjustment is the important part, not the semantics. Did the market display notable differential due to the condition? Sometimes houses are like new cars and others times not. We have a few neighborhoods in our area that new c1 and slightly used c2 reflect equivalent values due to a market rush to get into the neighborhood. Buyers don't want to wait and sometimes there is value in the immediacy of ownership. Get the adjustment right and worry about the semantics later, but make sure that you explain adjustments for ratings.

Also, did the original appraiser make an age adjustment? If they are stating that the age determines the condition, WRONG. We've all seen 100 year old homes in better condition than 20 year old homes.

Bottom line…two appraisers can call something tomato or potato and still should come to relatively the same conclusion.

 

[J Grant]

There should be enough information in an origination appraisal for a reviewer to get an idea about condition...age of property, if it was ever occupied, list of repairs needed or updates made, and then ext and int photos.