Fair Quality of Construction

[Webbed Feet]

Funny, Webbed! No, but if they all slipped off their foundations I would hardly call them "fair." You would have the even more controversial term Poor" involved.

Ok, so you'd agree then that condition ratings should not be "relative," but rather factual. So I would say we are half way home to getting you to finally agree that quality of construction, to not be subjective about it which we must not be, cannot be "relative" either but has to come from a published source in order to have objectivity that has meaning.

So scan up to where I quoted Fannie saying unsupported conclusions from subjective observations can be an unacceptable appraisal practice.....

 

[Randolph Kinney]

............assuming you are employing the cost approach you could reference M&S as your source for your opinion. I guess you could use it for your source even if just using the market approach. However, if they are 40-50 year old houses and they are still standing and fully functional, I would call them average quality for the neighborhood. How much responsibility should we take in educating fannie and freddie. Even FHA has changed their definition of FAIR to AVERAGE if they meet MPS.

So never using the true cost of materials and design to reflect fair quality but average quality does what for your appraisal? Make it not credible?

Every neighborhood in existence by your definition can be nothing other than average quality and all the comparables along with the subject is average quality.

 

[Doug Wegener]

Fair quality

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?

Is that a hill you want to die on?

 

[Couch Potato]

I agree with Randolph. However, most appraisers do not have the experience or background to determine "fair as opposed to average quality." Furthermore, what distinguishes "fair" is typically inside the walls, inside the materials and is often exacerbated by poor workmanship.

You've got that right. These days most appraisers have barely enough knowledge to get a license. I would expand on the comment, but idiots are easily offended. :new_all_coholic:

 

[Terrel L. Shields]

Web said

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.

In 1994 when I first took the FHA class this troubled me but if you did an FHA, you'd better do this or face those same people. "Johnny" was one of them. Nice guy. Then I went to Tulsa and took the FHA classes there, one in OKC. Same BS. Even had one guy get up and explain how to do this or that and the "Big Guy" - head of the office, got up afterwords and said, "Don't do it that way." Crap, they couldn't even agree among themselves. I didn't agree then but did a few FHA in the mid-90s, until I decided it was a fraud. I dropped off the FHA list & have never considered going back.

There are a lot of things that can be used to estimate "quality" but the quick way is READ THE COST BOOK and see what those classifications mean. The old Boeckh (rest in peace) system had a computer program that started out with a questionaire. How many corners. Year built. What added features, etc. Then it told YOU what the grade (quality) was.
In the NBC computer program, again, you go thru the questionaire and rank each component (similar to the Additive method in M & S) as opposed to the SF method. Is it vinyl & avg grade carpet?

Clearly, there is room for a class for Residential appraisers that literally takes them on a Lumber Company tour and shows them the difference in "good" carpet and "fair" carpet is; between good construction and average quality. You got plastic or tile fixtures in the bath? You got tile or vinyl floor covering? cheap plastic faucets or brass? Hardboard siding or brick veneer. El cheapo Alum windows or Anderson windows?
All these can give us a hint as to "quality". BTW, if nothing else, my assessor lists their quality ratings at 1, 2, 3, 4, 5. Class 1 is High cost and can have a plus or minus rating of any size. Class 2 is custom, 3 is average, 4 is standard, 5 is minimum.

BTW, when Pinnacle Hills (the high dollar place to be in NW Arkansas) was first built, there were some spec houses built to cash in on demand. They were big houses...but quality sucked. Small windows. Large unbroken slabs of brick on walls. No molding in rooms, unfinished closets, simple chrome fixtures. It left the Assessor in a position after the first sale of lowering the values to 89% of the neighborhood factor while Manf. homes just outside the property were 120% of the NF. So in a "relative" way, those cheap houses would still be called "good" quality when they were "average" at best, but since whole streets of them were built, I suppose they are "average" for that immediate area. Actually, they are substandard to most of the rest of the development where the homes are highly individual and custom built by better craftsmen.
I noticed that several of those first homes (just over 10 years old) have already been remodeled and added to to make them better houses.