Fair Condition vs Average Condition Rating

[Webbed Feet]

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

I can appreciate post 11 after reading this. Sister LA, there are two uses of these types of nomenclature. The first use is in a factual description of the subject and comparable properties. The second use is in the sales comparison approach as relative terminologies for purposes of showing "steps" of physical condition without implying negative connotations simply because one property might have a remodeled kitchen and another not.

So here is where we trip up on what are really unacceptable assignment conditions that the residential side caved in to taking. Years ago we had check boxes on the forms for Good, Avg, Fair, and Poor for all sorts of things like location, public transportation, etc. What the so-called "investors" pulled was jumping the loan points on the "backside" of the commissions paid if any appraiser dared to use anything "Fair" or lower. So, the extreme pressure to NEVER label anything "Fair" fired up. Appraisers buckled to the pressure in masses. Hence, the creation of the lovely "Average Minus" or "Below Average" relative terminology with hundreds of so-called "Mentors" training their suckers...errr I mean appraisal trainees, to never use the word "Fair" in a report. Fannie has always lent on properties rated or described as "Fair" by appraisers, it was those back end commission points at work that firked that up.

Clients demanding that you cannot use "superior," "Inferior," or "Equal" across your sales comparison grid are camels with their heads in your tent
demanding something they have no right to demand. Especially, if they are AMCs. Have you just told them to stick it yet at all?

Clearly, all page one of the URAR "Condition" indications should be factual, not relative. I fully support Fannie forcing relative terminology that kills the "labeling" bias that has been going on regarding the sales comparison approach. By the way, I went back to calling a "Fair" spade a spade YEARS ago after getting away from the weak kneed shop owners where some of my earliest training came from. But it did give me opportunities for quite a few lovely phone battles! Ahhh... those were the days!

 

[KenAZ]

It will be a different sort of thinking. They said that we have to make a decision on condition, and are not allowed to have 3+ for condition
.
Here are my notes about the condition ratings.

1- New
2- Remodeled
3- Updated
4- No Problemos
5- Repairs needed, but Livable
6 - Unlivable, major repairs

What was interesting is that if a home has never been lived in, but is over 1 year old, it drops to a 4.

Views will also be standardized, with only 2 max options available. If you back a lake and golf plus have a mountain view, you have to decide the top two view descriptions.

 

[DMZwerg]

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

Totally gutted???

Evidence of potentially severe structural problems???
(reference "Mr. Blandings Builds His Dream House" for an example of what I mean)


I do have to agree with Webbed ... if "uninhabitable" is still "Fair" what would it take to be "Poor"?

 

[Rich Heyn]

Do these ratings come with pre-printed descriptions and/or definitions?

They will.

 

[KenAZ]

Yep, and the descriptions will be published in December. They flashed it to us on the big screen, so my notes are vague.

 

[Doug DeMars]

I just can't wait to add more boilerplate to my addendum! I'm thinking of smacking the definitions on the top of page 3 of the URAR.

 

[NORTON]

It will be a different sort of thinking. They said that we have to make a decision on condition, and are not allowed to have 3+ for condition
.
Here are my notes about the condition ratings.

1- New
2- Remodeled
3- Updated
4- No Problemos
5- Repairs needed, but Livable
6 - Unlivable, major repairs



what will be interesting is what is the true definition of remodeled? what's the difference between remodeled and updated? every realtor says remodeled because they got new pergo and paint...to remodel should mean the home has experienced alterations which increase functional utility or appeal....as in changing its prior model to a more modern, flowing use of its space...per dictionary "to change or alter the structure, style, or form of (something)".....good times ahead

 

[Terrel L. Shields]

I've never considered a house that is truely unlivable as "fair", rather it is "poor" or worse. Nor would I suggest that a house is "Unlivable" if there are people living there legally...

Fair would normally mean broken windows, appliances that don't work, holes in the sheetrock, a roof that is falling off in chunks, maybe leaks or soft spots in the floor.

Average means there is no structural issues and all systems are working reasonably well. Dirt, grime, or even a carpet that is terribly dirty but salvagable with a good shot from Stanley Steamer...are not going to degrade that though "below" would be appropriate.

I've seen some pretty bad places that have been remodeled so I am reluctant to say anything is "beyond repair"...but I have made that decision occasionally...

BTW
regarding

Quality rating will be expressed as Q1 through Q6 and condition rating as C1 through C6.

I wonder how many appraisers in adopting this mode will apply it outside Fannie mae. And if you do, how are you going to expect Mr. Homeowner, Mr. Attorney, or Mr. CPA to know what those rankings mean? So are you going to include a key....which the client /user has to wade back and forth to just to read the blessed report? Or, are you going to do the sensible thing and write a narrative or revert to a much older format? just asking

 

[Webbed Feet]

I think "Fair" is being unfairly treated. Condition ratings in English words should be New, Excellent, Good, Fair, and Poor. "Average" doesn't even belong in the list because "average" is a statistical term with relative connotations representing the mean of a group. Top notch appraisers all decided long ago that we can't call an improvement "average" when it is flooded and knocked off it's foundation just because the entire neighborhood is flooded with all houses knocked off their foundations.

 

[CANative]

"Fair Condition" describes a structure with curable obsolesence. "Poor Condition" describes a structure with incurable obsolesence.

Each rating can change without lifting a finger because it is dependent on the market.