C2 vs C3

[uwarizona]

I am an underwriter. I have recently received several appraisals that are marked C2. The properties are over 10 years old and the comment made is "No updates in the past 15 years". One of the homes was 20 years old!
I feel that C2 is reserved for "dwellings that are almost new or recently completely renovated and are like new"
I don't like to ask appraisers to change anything but in this case am I justified in asking that these properties be changed to C3?

I realize condition is still somewhat subjective but I would have a hard time considering any home over 5 years old with no updates as C2.

Appraisers - can you give me some guidance please?

Thanks!!

 

[RSW]

I am in agreement with you. Look at the definition of a C2 and a C3 provided by Fannie Mae:

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 All outdated components and finishes have been updated and/or replaced with components that meet current standards.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.

I have to admit that I have seen some older homes that would qualify for a C2 rating due to the amount of updating. I just looked at one today that was built in 1965 and was completely gutted, refinished, has a newer roof, windows, and hardwood floors. That, in my opinion would be a C2.

 

[CANative]

The C ratings include, without specifically mentioning, "effective age." This is a somewhat subjective opinion on how the subject compares to other properties of it's class. 10 yrs, 20 yrs, ? You're shaving this one pretty close if you think the appraiser should change the condition rating. The appraiser had "boots on the ground" in a market he or she is familiar with.

 

[residentialguy]

I agree with you, too. C2 is a like new condition. C3 is Very Good condition. C4 is average. C5 is below average. C6 is toast.

UW...I'm sure you know this already, (but some don't): An adjustment in Quality or Condition (or any other field) does not mean that you must change that rating or description.

And vice versa, you can have different descriptives in some instances and not adjust. A C2 does not necessary mean that you have to adjust if the subject is C1.

 

[residentialguy]

The C ratings include, without specifically mentioning, "effective age." This is a somewhat subjective opinion on how the subject compares to other properties of it's class. 10 yrs, 20 yrs, ? You're shaving this one pretty close if you think the appraiser should change the condition rating. The appraiser had "boots on the ground" in a market he or she is familiar with.

Can, while what you say is true, there should be some indication of updating that would be necessary for a 20 year old house to have the same effective age as a home that is like new. It's a matter of supporting your adjustments (or lack of). The UW should request support or change the rating if it is not supported.

 

[uwarizona]

Thank you all for the responses.
I usually - unlike most underwriters - just make a note of something like this on a review sheet of the appraisal. I dont make the appraiser change something.
And what is kind of dumb is that ALL the comps need to be changed - I dont believe it was given a C2 to make it better for adjustment purposes. So in my heart I hate to make someone make a meaningless change.
Maybe I will just email the apppraisers and ask them so maybe they will reconsider how they are classifying the properties in the future.

 

[Michigan CG]

I would question the credibility of an appraiser using C2 for a 20-year old home.

 

[CANative]

I did a purchase appraisal for a home in downtown Ukiah. It was built by the owner and his wife (being sold by their estate) in 1955 (same year I was born.)

It's like it had spent the previous 50 years in a time capsule. Everything was original but was still shining like the day it was built. I could find absolutely nothing wrong with the house. It was like new. It was in a neighborhood of homes of similar age with some much older and some slightly newer.

I probably would have given this property a C2 rating if they had those ratings in '08. I gave it a "Good Condition" rating.

 

[Terrel L. Shields]

Appraisers - can you give me some guidance please?

I don't know about the grades much except this.

I was in a house last week that I appraised 6 years ago. The person there was not the original owner. There was not a hair out of place, it looked great and the house was 22 years old. They said they had not touched it...was unaware of any updates.

So I went back and found the electronic file I created 6 years ago and looked at the pictures. There is absolutely nothing in it that looks different...nothing. I have no way of proving it needs "updated"....or ever was "updated" previously.

Comparing to my own house, same age...I know my house needs updated and it would be obvious to any appraiser. Other than a new dishwasher and hot water tank, its original...and looks it.

The difference is the housekeeping and how quick and what kind of "updates" are done and when. It is darn hard to tell when you have a home where the carpet was updated when they pick a very near match to the original one. And in the all tile and hardwood floored homes I see, it isn't going to show in those if they are properly maintained.

I have also been in a home where I had gone when a teen to a wedding reception. The house was designed by a name architect, very nice modern style home on a steephillside. The house is super. And while it looks like a modern contemporary from 1960, it also looks like it did when I was there in 1960s....again, condition is a function of good housekeeping and not letting anything get shabby before replacing it.

 

[William Rightsell]

Thank you all for the responses.
I usually - unlike most underwriters - just make a note of something like this on a review sheet of the appraisal. I dont make the appraiser change something.
And what is kind of dumb is that ALL the comps need to be changed - I dont believe it was given a C2 to make it better for adjustment purposes. So in my heart I hate to make someone make a meaningless change.
Maybe I will just email the apppraisers and ask them so maybe they will reconsider how they are classifying the properties in the future.

A "cloning" error perhaps...from the last report??

I agree...20 yrs old and no updates is no C2!!!


todd