Fair Condition vs Average Condition Rating

[LA Woman]

What is your definition of a home in FAIR condition?
How does it differ from an AVERAGE rating?

I've always considered a home in FAIR condition if it had items in disrepair that made it unlivable, no heat, no water, no toilet, etc.

But as most of my work is REO work, from time to time I see homes where the floors, walls, counters, etc. are sooo dirty and stained and with many misc. repairs needed that I call it fair condition, as it is not Average.

What does the forum say?

 

[CANative]

I use the M&S descriptions found in the depreciation tables. It's objective and no one can dispute it.

Excellent Condition - All items that can normally be repaired or refinished have recently been corrected, such as new roofing, paint, furance overhaul, state of the art components, etc. With no functional inadequacies of any consequence and all major short-lived components in like-new condition, the overall effective age has been substantially reduced upon complete revitilization of the structure regardless of the actual chronological age.

Very Good Condition - All items well maintained, many having been overhauled and repaired as they've showed signs of wear, increasing the life expectancy and lowering the effective age with little deterioration or obsolesence evident with a high degree of utility.

Good Condition - No obvious maintenance required but neither is everything new. Appearance and utility are above the standard and the overall effective age will be lower than the typical property.

Average condition: Some evidence of deferred maintenance and normal obsolescence with age in that a few minor repairs are needed along with some refinishing. But with all major components still functional and contributing toward an extended life expectancy, effective age and utility is standard for like properties of its class and usage.

Fair condition (Badly worn) - Much repair needed. Many items need refinishing or overhauling, deferred maintenance obvious, inadequate building utility and services all shortening the life expectancy and increasing the effective age.


Poor Condition (Worn Out) - Repair and overall needed on painted surfaces, roofing, plumbing, heating, numerous functional inadequacies, substandard utilities etc. (found only in extraordinary circumstances). Excessive deferred maintenance and abuse, limited value-in-use, approaching abandonment or major reconstruction, reuse or change in occupancy is imminent. Effective age is near the end of the scale regardless of the actual chronological age.

 

[Verne Hebert]

Well hey! Can't dispute M & S can you. I mean all of the office boys are in the office. I'd bet you, none of them have walk into a raunchy repo in poor condition and taken a deep breath.

I haven't looked at these tables in years; thanks for the CE. Good is too generous. Average is not generous enough. Fair is not generous enough. Poor? well.

I think of it this way, in terms of effective age, a quantity; probably went to school too long. 17 to 25 years effective is Fair. 26 to 35 years is poor; at about 36 effective you are the proud owner of a "scraper". 12 to 16 years effective is Average. 8 to 11 years is Good.

Works for me.

 

[Metamorphic]

I like CAN's version better than what I was using. I will steal it and tape it to the back of my clipboard forthwith.

 

[Peter LeQuire]

Another useful gift from M&S is its Life-Cycle Chart - Residential Properties. (Res. Cost Handbook, p. E-15)

 

[Mike Garrett RAA]

Here is an interesting point...Fair condition is acceptable to Fannie Mae, HUD, and VA.

I expanded my conditions to include Above Average and Below Average. Works a little better for me and it has never caused a problem with underwriters. I have had loan officers tell me a property must be in Average or better in order to do the loan to which I tell them...

"it is what it is. I can't make chicken soup out of chicken poop!". The above stated conditions, as taken from M/S, is a very good guide.

 

[Webbed Feet]

What is your definition of a home in FAIR condition?
How does it differ from an AVERAGE rating?

I've always considered a home in FAIR condition if it had items in disrepair that made it unlivable, no heat, no water, no toilet, etc.

But as most of my work is REO work, from time to time I see homes where the floors, walls, counters, etc. are sooo dirty and stained and with many misc. repairs needed that I call it fair condition, as it is not Average.

What does the forum say?

I say if that is "Fair" to you, what in the ding dong is "Poor"?

 

[CANative]

what in the ding dong is "Poor"?

Repair and overall needed on painted surfaces, roofing, plumbing, heating, numerous functional inadequacies, substandard utilities etc. (found only in extraordinary circumstances). Excessive deferred maintenance and abuse, limited value-in-use, approaching abandonment or major reconstruction, reuse or change in occupancy is imminent. Effective age is near the end of the scale regardless of the actual chronological age.

 

[LA Woman]

Here is an interesting point...Fair condition is acceptable to Fannie Mae, HUD, and VA.

I expanded my conditions to include Above Average and Below Average. Works a little better for me and it has never caused a problem with underwriters. I have had loan officers tell me a property must be in Average or better in order to do the loan to which I tell them...

"it is what it is. I can't make chicken soup out of chicken poop!". The above stated conditions, as taken from M/S, is a very good guide.

For years I have also included "above average" or "below average" for those in-between properties, it is also a more accurate description. But lately clients are saying they can only have the avg, good, etc. I didn't know that FAIR was acceptable condition!

 

[LA Woman]

I always have a hard time calling a home that is not in livable condition as "average".

I rarely use "fair", trying instead to say "below average" when the client will accept that.

Using "average" on these types of properties forces the comps that are in true average (superior) condition to be called "good" condition which they are not and this I feel is misleading. And this all started because now clients are not accepting "superior" or "inferior" or "equal".

I