C3 or C4

[factsandtruth]

I would think they're looking for the outliers, e.g., the appraiser who calls its a C2 when everyone else calls its a C3 or C4.

I totally agree with you...common sense. Read and understand the definitions.

 

[KenAZ]

Like I said before, the CU will violate the UAD definitions. A C1 is a home up to 1 year old. C2 is a home from 1 to 5 years old, or has an effective age from 1 to 5 years. A C3 is a home that has an effective age of 25 years or less. C4 is a home over effective age of 25 years. C5 and C6 are for homes that are in need of extensive repairs or unlivable.

These are the new standards that CU will judge us on. FNMA will not tell us these new definitions in public (Lack of Transparency is running rampant), but that is part of the programming of CU. If your home is 10 years old and needs repairs, you should call it a C4 under UAD definitions, but you will probably get flagged under CU. Of course if you have a good explanation you will be OK.

 

[Peter LeQuire]

It might be helpful if FNMA would provide an overlay of the Marshall and Swift Life Cycle Chart showing where the C ratings fall in their opinion. I've been playing with it a little just in case I need to justify a particular C rating.

I much prefer the M&S terms for condition to the GSE labels: they are more descriptive and less ambiguous.

 

[form1025]

When determining a condition rating, should the rating should be based on the effective age of the property. Definition below:

Real Estate Definition - effective age - an appraisal concept meaning the apparent age of improvements to real property based on wear and tear rather than the chronological age of the property. Poorly maintained properties will have a greater effective age (and a lower value) than actual age would indicate.

A property with an effective age of 0, or new construction, should be be rated C1

A property with an effective age of 1-5 +/- should/could be rated C2

A property with an effective age of 6-15 should/could be C3

- See comments below regarding a home that is not maintained as this is not always going to be accurate.

A property with an effective age of 16-30 should/could be C4.

- I know some of you will say, I have a home that is 100 years old and updated throughout. The effective age is 20, and should be C3 not C4. Again, not disagreeing with this as it will not apply to every property the same. This is where the appraiser professional needs to address with commentary that explains their conclusions to the reader. It is also possible that the effective age of that home may be lower than what you typically note.

C5 and C6 properties are not typically completed with that rating so I will not provide any discussion points.

Properties rated C3 and C4 require some thought from the appraiser. A property that is 15 years old and has undergone NO updated should have an effective age equivalent to the age of the home, assuming the home has been maintained. This home may be considered a C4 vs a C3 depending on the information you have collected at the time of your inspection. If improvements are done to the home, the effective age of the home would decrease accordingly. If the home has been excessively lived in with worn flooring, damaged walls, etc… the effective age could / would exceed the age of the home. This requires the appraiser to think about the effective age vs. just entering a number that is half the actual age.

These are not absolute and are up for discussion.

 

[KenAZ]

When determining a condition rating, should the rating should be based on the effective age of the property. Definition below:

Real Estate Definition - effective age - an appraisal concept meaning the apparent age of improvements to real property based on wear and tear rather than the chronological age of the property. Poorly maintained properties will have a greater effective age (and a lower value) than actual age would indicate.

A property with an effective age of 0, or new construction, should be be rated C1

A property with an effective age of 1-5 +/- should/could be rated C2

A property with an effective age of 6-15 should/could be C3

- See comments below regarding a home that is not maintained as this is not always going to be accurate.

A property with an effective age of 16-30 should/could be C4.

These are not absolute and are up for discussion.

This is the huge problem with UAD. Condition and age should be relative to the age and be separate adjustments, yet in almost every definition, someone introduces age, when in fact age is not the same as condition. If you are comparing two homes, on 50 and the other 80, you should adjust for age. If both are in average condition for their age, then no further adjustments are needed. If the 80 year old has been remodeled and the 50 has not, then you can adjustment for condition. I know that makes too much sense and computers cannot understand such common sense. I find myself having to double dip adjustments when comparing a 3 year old home to an 8 year old home. I adjust for age and then C2 vs C3 just to make the powers that be happy . . . . ridiculous. Not only that, these definitions contradict what CU thinks the C rating should be (Again based on effective age)

 

[Pilgrum]

Like I said before, the CU will violate the UAD definitions. A C1 is a home up to 1 year old. C2 is a home from 1 to 5 years old, or has an effective age from 1 to 5 years. A C3 is a home that has an effective age of 25 years or less. C4 is a home over effective age of 25 years. C5 and C6 are for homes that are in need of extensive repairs or unlivable.
.

Gosh I must have missed that. I haven't seen that breakdown. Please tell me where it says that.

 

[Rich Heyn]

Like I said before, the CU will violate the UAD definitions. A C1 is a home up to 1 year old. C2 is a home from 1 to 5 years old, or has an effective age from 1 to 5 years. A C3 is a home that has an effective age of 25 years or less. C4 is a home over effective age of 25 years. C5 and C6 are for homes that are in need of extensive repairs or unlivable.

These are the new standards that CU will judge us on. FNMA will not tell us these new definitions in public (Lack of Transparency is running rampant), but that is part of the programming of CU. If your home is 10 years old and needs repairs, you should call it a C4 under UAD definitions, but you will probably get flagged under CU. Of course if you have a good explanation you will be OK.

From the definitions published by Fannie Mae, I thought a home changed from C1 to C2 upon occupancy. And I don't recall anything in the published definitions that linked condition to actual or effective age. Please advise.

 

[TxArmadillo]

Gosh I must have missed that. I haven't seen that breakdown. Please tell me where it says that.

Heck, yeah. I'm standing by for that. We just called a home C2 because the home owners moved into it before the mortgage processing (we did the appraisal!) was completed.

By our understanding, it could NOT be called C1 as it was occupied.

 

[VolcanoLvr]

RH is exactly correct. UAD definitions for Condition or Quality don't mention "age" of a dwelling at all.

Secondly, Effective Age for a comparable is such a crap shoot anyway, with way too much subjectivity. It's ridiculous to keep using EA as a reliable way to make an adjustment. I quit doing that when UAD was jammed down our throats.

Age and Condition generally relate together, and an adjustment for one can cover both - because they relate to depreciation.

Someone else mentioned overlaying an M&S table for this process in the UAD. It can't and won't be done, because M&S is a copyrighted publication. That's why the definitions in UAD were written the way they were..........which actually are easier to understand than the somewhat ambiguous definitions in M&S.

 

[chad hampton]

I don't know if I've ever used a C2. Guess I'll start saying homes from 1 day to 5 years are C2. I'd hate to get in trouble from big brother

Although, IMO, a home that is lived in for 5 years should be a C3 at best.

Until I see something in writing, it must be 100% new and not yet been lived in to get a C1.

If I were king, I'd go back to using good, average, fair, or poor. Next time appraisers demand for the gov't to make changes, we should think twice.