Fair Quality of Construction

[Diana Malcolm]

Thanks everyone. I did check the "flashback" link and it's an identical thread Sorry, I should have looked. All good stuff, as usual.

 

[Terrel L. Shields]

We all know what a fair quality house is but they won't loan on fair quality.

Quite obviously from the thread we don't "all know" what "fair" quality is.

The beauty of the old Boeckh system of classification was that the classes were obtuse and didn't get vetted by UWs. They were X, A, B, C, S, etc. But each class had a specific defined set of standards. Picking the closest definition defined the classification. I haven't M & S'd in a while but "fair" is a classification and somewhere in the manual is a definition of what that means....It is what you are referencing I assume. National Building Cost and Means SF costs also has classifications. And NBC does not have a "fair" classification. They have Custom, Best, Good, Average, and Minimum...That eliminates that problem because typically "Good" would be M & S "Average" and M & S Fair = NBC Average leaving "minimum" in NBC to equal "low" ... That is not intentional I suspect but it will eliminate those pesky UW calls....use NBC.

Of course, the core problem remains. They want comparisions to the neighborhood "superior, average, inferior" - a totally stupid and inaccurate method but remember that's the fannie/freddy/FHA/taxpayer way....submit to them or die. It's just like Count Dracula. Play ball with the Count or he'll take his bat home.

Another classic example why appraising should be freed from the slavery of the GSEs...or are they GOEs now that they are Government OWNED enterprises.

 

[fifteen]

Checking out M & S on low and fair quality, they both can have asphalt flooring. There's really not much difference between low and fair except that low has minimal fenestration while fair has moderate and front elevation inexpensive trim. Minimal eaves and no eaves is another difference - nothing else as far as I can tell. As described NBC works.

 

[jay trotta]

after some thought, heres one from a UW I got a couple of weeks ago;

because most HO's upgrade their housing over time, would comp.2 be equal ? Q-was on a build date adjustment (minor). if their thought process or guidance leads them into different directions, Fair would become a stumbling block; in most of the area's we cover, zoning codes came in during the 1950's or slightly before. Prior to that some building codes came into effect, which I believe entered the arena 1920's, but with old tyme air dried woods & full 2" / 4" etc. lumber, buildings could withstand longer life periods.
Newer construction and engineers came up with the idea of "Tyvec wrap", 6" wall studs and the like. Making housing "air tight" might not be such a great idea, it doesn't allow the building to breath and may cause it to decay from the inside (between the walls) out. It will be a wait N see process.
Green buildings, may also provide questions, but this will also be a wait N see process; I enjoy "new ideas" and efforts to provide better housing, but need to question why those 1800's houses are still standing and most are in great physical condition. Corn cobs & newspaper were the wall insulation factors of this bygone era - winders always needed an improvment (always air leaks). Cast iron radiators, hardwood flooring, and what was known then as "asphalt tile" kitchen floors. Just makes one wonder dunnit.....

 

[Webbed Feet]

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.

Sorry..... you are wrong.

An appraiser's rating of quality of construction is NOT a relative rating of everything around it. That kind of logic in real estate appraising would have appraisers all saying an entire subdivsion of burned out homes were all in "Average" condition as well!!!

An appraiser should be using a published source for describing quality of construction... NOT be using your relative method of rating it. If any appraiser is using Marshall and Swift for their reference, and state so, then subject properties AND ENTIRE MARKETS could be "Fair" quality construction....

 

[Webbed Feet]

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 above is a request that you participate in "Sanitizing" a real estate appraisal report. This is a battle over the word "Fair."

"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. "

The above is a bunch of blatent lies, undue pressure used to manipulate a real estate appraiser..... and horse crap.

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

Any comments?

Yes, your boss is a total weak suck and you may tell him or her I said so.

What you have done is absolutely correct and completely supportable. You are supposed to be using a published reference for the determination of quality of construction and that reference's label for it. You are NOT to be using relative ratings against the "Market" for this one anymore than we should be pulling that kind of crap for our "condition" ratings.

I explained this in my prior post. If we start using relative ratings for things like condition or quality of construction then that would mean almost everything real estate appraisers would do would always be rated "Average." It would be "Average" to be brand new if an entire subdivision was brand new. It would be "Average" for a house to have 24k gold door nobs if all of them in one area had 24k gold door nobs. As I indicated before, if an entire market had houses that had slid off their foundations, due to an earthquake, would all houses in that market be in "Average" condition? .... OF COURSE NOT!!!!! That is not appropriate nor how real estate appraisers should be rating things. Relativity should not be used for these two aspects of real estate appraising.

If you used Marshall and Swift quality ratings for your published source for your quality determination... and M&S labels that level of construction quality to be "Fair," you have done absolutely what you are supposed to be doing. Stand your ground, tell these bunch of weak suck manipulators and dishonest lending staff to suck eggs. Not one single source from Fannie has said what they are claiming was said.... They are all lying to you just to try and get the word "Fair" out of the report, and your boss is too big of a weak suck to stand up for you.

 

[Webbed Feet]

Quite obviously from the thread we don't "all know" what "fair" quality is.

<....snip.... >

I completely disagree. I can open up my M&S and know EXACTLY what "Fair" quality is! And that is the entire point of using a published source for the description of quaility of construction... NOT relativity ....

 

[Terrel L. Shields]

You are supposed to be using a published reference for the determination of quality of construction and that references label for it. You are NOT to be using relative ratings against the "Market" for this one anymore than we should be pulling that kind of crap for our "condition" ratings.

Yep and I have sat thru FHA classes where the FHA review appraisers holding the class taught just exactly that. They wanted superior, equal, or inferior in virtually every grid no matter that it tells you nothing about the comp.

They are all lying to you just to try and get the word "Fair" out of the report.

true...and unfair to fair. The UWs problem with the word "Fair" is their problem...

Quite obviously from the thread we don't "all know" what "fair" quality is.

<....snip.... >
I completely disagree. I can open up my M&S and know EXACTLY what "Fair" quality is!

Yes, but my observation was that some in the postings above don't agree with you and i.

 

[Webbed Feet]

Our appraisal reports must be able to be replicated by reviewers and others. Using relativity for quality of construction makes this impossible. A referenced source for quality of construction must be used in a Cost Approach to value.

Folks this is right out of Fannie Regs!!!!!

"In reviewing the appraisal report, the lender should make sure that the appraiser's analyses and comments for the cost approach to value are consistent with comments and adjustments mentioned elsewhere in the appraisal report."

The above is rather bloody impossible when we start using relativity instead of published sources that describe Quality of Construction... Not only this but Fannie regs also say......

"Including an unsupported descriptive comment or drawing an unsupported conclusion from subjective observations is an unacceptable appraisal practice that may have a discriminatory effect."

Appraisers MUST use a published source for reference for their determinations of Quality of Construction. Not their pulled out of their asses opinions of how quality is relative to everything else and by doing so meaninglessly call everything they see "Average."

 

[Webbed Feet]

Quote:

You are supposed to be using a published reference for the determination of quality of construction and that references label for it. You are NOT to be using relative ratings against the "Market" for this one anymore than we should be pulling that kind of crap for our "condition" ratings.

Yep and I have sat thru FHA classes where the FHA review appraisers holding the class taught just exactly that. They wanted superior, equal, or inferior in virtually every grid no matter that it tells you nothing about the comp.<.....snip......> .

IF I understand what you're meaning here correctly, you either took what those FHA review appraisers were saying incorrectly, or they had their heads shoved up their asses.

Once we used a PUBLISHED source for our subject quality of construction rating for the subject on the left hand side of our SCA grid....for the subject .. .. then everything to the right of that for the comparable certainly could be rated as any of "Inferior, Equal, or Superior" because that sort of relativity is performing a sales comparison approach to value. It tells you much about the comp because then, relative to a properly rated subject using a published source, we know if the comp is the same, inferior to, or superior to, that subject. But we do NOT begin our quality determination for the subject itself based on area wide relativity! Our rating is to come from our published source and it is to match our published source rating we use for our damn cost data! .... And if those FHA review appraisers did not teach it this way.... I need to go to their classes so I can pee on their shoes...