Cost to cure adjustment on the grid?

[The Scholar]

I have a lender who wants me to put a cost to cure adjustment on the grid because of a bathroom which is presently under renovation. I'm trying to figure out what the best way is to do this. Would I keep the bathroom in the room count and make the adjustment on the room count line or is there a better way? The appraisal is being done "as-is".

 

[TerryRohrer]

From your description, I would leave the room count as is, including the bath in question (with contributory value as if complete, then make an adjustment at the bottom of the grid, referenced and explained in the comments. Seems easier to ensure the reader understands what you are doing.

 

[alebrewer]

Remember: Cost to cure does not necessarily correlate to value, and the SCA grid is to reflect the market's reaction - not the cost to cure, which may be higher, less than, or equal to, the market's reaction...

 

[Bob Ipock]

Put it on a line at the bottom of the grid as an unfinished bath and then make the appropriate adjustment to the comps.

 

[CGinMN]

Leave your bathroom counts and corresponding adjustments as if it was completed. Add a cost to cure line at the bottom of the grid, then make an across-the-board downward adjustment.

 

[Terrel L. Shields]

Would I keep the bathroom in the room count

Yes

a cost to cure adjustment

A C2C adjustment is just what it says... a COST to cure. I don't buy into the notion that we need to make some additional discount for imaginary actions of a buyer discounting it further...that's for major issues - usually incurable functional obsolescence. Anyone who says we need to discount something further will has to show me actual case studies where that happens for minor repairs aside the flimsiest of evidence. OTOH we don't need to be doing a "cost to cure" for tens of thousands of dollars. That is a job for a contractor's estimator. I would pretty much eschew any such request if more than $5000.

So itemize what needs done.

New floor, new fixtures, paint etc. Now get a cost book to help you and the best (imnsho) is the 2022 National Renovation and Insurance Repair Estimator. Download the program from the code in the book or I think you can download the whole smear from Craftsmanbooks, who publishes it. This is a typical printout. With it you have an estimate. You have a defensible SUPPORT for such an adjustment. It doesn't make it dead to nuts, it may be high or low and maybe that imaginary additional discount exists. But this is SUPPORT for your opinion instead of pulling a number out of the air.

 

[Michigan CG]

Remember: Cost to cure does not necessarily correlate to value, and the SCA grid is to reflect the market's reaction - not the cost to cure, which may be higher, less than, or equal to, the market's reaction...

It (market reaction) is most likely significantly higher cost.

 

[Terrel L. Shields]

It (market reaction) is most likely significantly higher cost.

Especially in this market and a few K difference, the lender escrows enough to repair it... therefore, C2C is unlikely to be far from dead to nuts. Major renovation...meh, not so much... patching a spot in the floor, installing a new appliance...again, I would aver that the C2C would be far more accurate and SUPPORTABLE, than some pie in the sky "adjustment" for market reaction.

 

[residentialguy]

I have a lender who wants me to put a cost to cure adjustment on the grid because of a bathroom which is presently under renovation. I'm trying to figure out what the best way is to do this. Would I keep the bathroom in the room count and make the adjustment on the room count line or is there a better way? The appraisal is being done "as-is".

How are you doing it as-is if you are saying they have to repair it?
Or maybe a better question: why are you talking about cost to cure when it is as-is?

 

[CGinMN]

In a low supply market, a cost to cure may actually overshoot the market reaction. Lots of condition issues being overlooked by buyers. From Zillow this morning:

75% of recent home buyers have regrets about their new home​

A less frenzied spring market could ease buyer's remorse by giving shoppers more time to weigh their options​

- The top regret cited by recent buyers is purchasing a home that needs more work or maintenance than expected.​