Fair Quality of Construction

[Diana Malcolm]

I reported the subject as Fair quality and I received these statements in emails from my boss.

"As you can imagine the lender and homeowner is very upset that the home is of Fair Quality as it appears in the report to be average. There are no photos to clearly indicate the home to be of fair quality, and that is not just what I think but also every underwriter that has looked at this report. I really don't want this to go to review but that is the next step that the lender is going to send it out to be reviewed so I need your help to either prove that it is of Fair Quality or to revise the report. "


"The lender has spoken with Fannie Mae, several underwriters as well as several appraisers and they all feel that it is highly unlikely that there would be four homes in the same area, three sales that are all of Fair quality construction. That would mean that each of the Fair quality sales would have been cash sales because the buyers would not have been able to obtain financing on a Fair Quality house. "


Marshall & Swift clearly states that Fair Quality of Construction is not substandard and will meet lending institutions requirements.

Any comments?

 

[Ariba]

Marshall & Swift clearly states that Fair Quality of Construction is not substandard and will meet lending institutions requirements.

Any comments?

Marshall & Swift does not make loans or determine the construction quality. You do. Is this subject fair construction quality for the market area? How does the subject construction quality compare to the market and the comparables? Are all the comparables of fair construction quality? If this is the case they are average construction quality for that specific market.

 

[Steve Metz]

I see a lot of fair quality in some high end developments. I take photos and document fair quality roofs, drywall work ect. I always have a lengthy explenation in the report and have had no problems.

 

[Randolph Kinney]

Have you inspected a fair quality construction home in the past (not fair condition)? Have you submitted an appraisal before rating the subject as fair quality?

Yes, M & S does say the construction is not substandard, just minimum standard that should meet lending requirements and building codes.

M & S does say that fair quality homes are built to minimum standards, designs are simple rectangle shape, using low cost materials for mass-produced housing.

Is there something you can obtain from the homeowner as to what standards were used in the construction of the subject?

Short of that, you could call for an inspection to determine if the subject meets codes and standards.

Some lenders will not lend on fair quality housing as part of their lending standards just as some won't lend on manufactured housing.

 

[Ariba]

I see a lot of fair quality in some high end developments.

Can't be much of a high-end development if you see it a lot. :icon_question:

 

[Lee Lansford]

Did you identify quality of construction in objective terms ("fair quality") and, following (if appropriate), state that the quality is "average for the neighborhood" OR "average among the sales comparisons".

I don't think that it's "fair quality" (as an objective rating of quality) that's the problem, but, rather, that the subject quality is below the norm for the neighborhood (and, the sales comparisons).

Tell us more.

 

[jay trotta]

Randolph;
M & S does say that fair quality homes are built to minimum standards, designs are simple rectangle shape, "using low cost materials" for mass-produced housing.

Lee, I have to agree with your analysis......

M & S - "low cost material".....can somebody Define that M & S statement for me ?? am unfamiliar wit that in my area. Long stretch from Georgia to Washington....weather differentials N all.


Am gonna be the "Bad Boy" here....."M & S does say that fair quality homes are built to minimum standards", I believe that ALL appraisal Reports are based on "similar standards", hence the "minimum" - questioning the "language" and definition all at once......hmmmmmmm
uh, don't gimme the two different animal scenerio......p a l e a s e

 

[Mike Kennedy]

FLASHBACK 2005


http://appraisersforum.com/showthread.php?t=95419

 

[Randolph Kinney]

The 1004 form is asking for the quality of construction.

Construction quality is a rating used to describe the cost, durability, and craftsmanship of the construction design, details, and materials of a building.

Most appraisers and lenders still ask for a comparison with the properties with which the subject competes. If the comparables are similar to the subject's quality of construction and so is the neighborhood, it can be said that the subject is average quality for the neighborhood. Average means standard, typical, or normal.

Therefore in a neighborhood of similar quality construction and similar condition homes, the range of value will be relatively narrow reflecting that homogeneity.

Fair quality of construction compared to a neighborhood of fair quality construction with an active market of sales should be acceptable to a lender because it demonstrates marketability and market acceptance.

Fair only becomes a problem when the subject is in a non-homogeneous neighborhood and sales of fair quality are well below the average price for the neighborhood.

 

[fifteen]

If the neighborhood is all fair construction, and it sounds like it with your comps, then the subject should be considered average construction quality for the subject market area. We all know what a fair quality house is but they won't loan on fair quality. It's the same thing as marking the subject as being in a rural area. UW calls up and asks, Why is the subject zoning rural and you have it's location marked as suburban? Trick question. If it's rural they won't loan on it. Reply : because suburban development is allowed in rural areas. They're happy and make the loan. To me rural is exile island (survivor reference lol)

M&S is a reference, not definitive for all markets and all areas. To me there's just Low/Fair, Average, Good and Excellent. Inserting Fair in M & S is like saying something is Excellent+. Fair is just Average- or Low Quality+. RCN might help you know where the subject fits. If the numbers for Fair don't make it, then Average it is. Personally I think Fair is in there so we will use something in between the stated RCN values. If the values used come out somewhere between the stated Average and Good RCN numbers in M & S, does that make it Average+ or Good- in your eyes?