Freddie Mac: Quality & Condition Ratings

[J Grant]

The C and Q ratings are for valuation purposes, not for construction purposes or expected to be seen behind walls.

 

[George Hatch]

I wasn't referring to a substitution but rather supplemental in order to get appraisers working off the same benchmarks.

When we're only using the data internally for the one comparison and only for reconciling to the one value conclusion the consistency between the ratings for the 3-6 sales in that one SC then "internally consistent" is all that's necessary.

When they're trying to use the same data for larger analyses then the consistency needs to be referenced to the external benchmarks. Internally consistent is no longer adequate; they need externally consistent, too. S#1 has to relate to all the other properties in the larger dataset, not just the direct comps in this one SC.

 

[Tom4value]

The toughest ones are properties that have not been updated but are in pristine condition. I recently inspected a house where I had to check the calendar on the wall. I thought for sure I walked into a new house in 1972. C4 stated that some updating/maintenance is needed…not the case here. Yeah, I know the furnace was original but we know that they can work great….until they don’t . However, C3 specifies that there is recent updating. I called it C4 because I felt that “recent updating” is more direct than “maintenance required”.

 

[J Grant]

The toughest ones are properties that have not been updated but are in pristine condition. I recently inspected a house where I had to check the calendar on the wall. I thought for sure I walked into a new house in 1972. C4 stated that some updating/maintenance is needed…not the case here. Yeah, I know the furnace was original but we know that they can work great….until they don’t . However, C3 specifies that there is recent updating. I called it C4 because I felt that “recent updating” is more direct than “maintenance required”.

I was in the reverse a week ago - a house built in 2011 but looked like a POS - it has been used as a rental and looked all beat down - it got a C 4 -

 

[sputnam]

I wasn't referring to a substitution but rather supplemental in order to get appraisers working off the same benchmarks.

When we're only using the data internally for the one comparison and only for reconciling to the one value conclusion the consistency between the ratings for the 3-6 sales in that one SC then "internally consistent" is all that's necessary.

When they're trying to use the same data for larger analyses then the consistency needs to be referenced to the external benchmarks. Internally consistent is no longer adequate; they need externally consistent, too. S#1 has to relate to all the other properties in the larger dataset, not just the direct comps in this one SC.

If we want appraisers to actually be working from the same benchmarks, we would need to have field training. Appraisers would have to visit and inspect, with an instructor, various dwellings and be told... 'Okay class, this one is a C2'. Even that wouldn't be completely effective, since it's still opinion.

 

[Terrel L. Shields]

The C and Q ratings are for valuation purposes, not for construction purposes or expected to be seen behind walls.

Then the Q ratings is a Cosmetic rating, measuring the superficial appearance of a house made to look more expensive than it is.

 

[J Grant]

Then the Q ratings is a Cosmetic rating, measuring the superficial appearance of a house made to look more expensive than it is.

You exhibit a fundamental misunderstanding fo the Q ratings then. The Q ratings are intrinsic to the construction itself, not just the decor or cosmetic upgrading

An appraiser who, when inspecting a house they can not tell the difference is incompetent.

 

[Terrel L. Shields]

You exhibit a fundamental misunderstanding fo the Q ratings then. The Q ratings are intrinsic to the construction itself, not just the decor or cosmetic upgrading

Read it yourself. If you don't observe the engineering of the trusses and rafters, you don't even know if the wals are 4" or 2", 16' or 24" centers, 3/8th or half inch sheetrock, you didn't check to see if the windows are Pella or Window World, or the CHA is the cheapest unit available, then how do you have any idea about the "quality". All you are judging is the superficial VISIBLE accouterments of the dwelling.

And how many of us can accurately assess the functional issues built into custom homes? Remote controlled ceiling fans, that half-bath that has black fixtures and black and white tile, that dangerous sunken living room grandma fell in last year, or the built-in commercial refrigerator, the elevator, handicap accessories, etc. And virtually every mid to upper scale home has its own unique functional super-adequacies. We are doing a hand waving adjustment of no adjustment under a (false) assumption that those defects are equal between the comps.

What about that 1966 rancher that had a 2 story addition built in 2002 that is equal in size. Do you blend the two effective ages, assume the new addition takes on the old effective age or the old part takes on the new parts effective age just because they replaced the floor covering and appliances and added a granite countertop? Is there a functional address for having 2 living rooms? Or, what about the very structure of that 2 sty add-on to the ranch home? Would you build such a contrived home if you were building it all new? Of course not. Such adjustments are dartboard exercises, improbable to accurately estimate.

 

[J Grant]

Read it yourself. If you don't observe the engineering of the trusses and rafters, you don't even know if the wals are 4" or 2", 16' or 24" centers, 3/8th or half inch sheetrock, you didn't check to see if the windows are Pella or Window World, or the CHA is the cheapest unit available, then how do you have any idea about the "quality". All you are judging is the superficial VISIBLE accouterments of the dwelling.

And how many of us can accurately assess the functional issues built into custom homes? Remote controlled ceiling fans, that half-bath that has black fixtures and black and white tile, that dangerous sunken living room grandma fell in last year, or the built-in commercial refrigerator, the elevator, handicap accessories, etc. And virtually every mid to upper scale home has its own unique functional super-adequacies. We are doing a hand waving adjustment of no adjustment under a (false) assumption that those defects are equal between the comps.

What about that 1966 rancher that had a 2 story addition built in 2002 that is equal in size. Do you blend the two effective ages, assume the new addition takes on the old effective age or the old part takes on the new parts effective age just because they replaced the floor covering and appliances and added a granite countertop? Is there a functional address for having 2 living rooms? Or, what about the very structure of that 2 sty add-on to the ranch home? Would you build such a contrived home if you were building it all new? Of course not. Such adjustments are dartboard exercises, improbable to accurately estimate.

You don't have to know the exact thickness of the rafters or wall.s for a Q rating. The items of construction are analyzed for valuation purposes, not reproduction/construction purposes

Quality custom and high-end construction has thick walls, poured concrete outer walls and impact windows or new quality windows, concrete tile or metal roof, The mid-range construction range has CBS or brick, good quality Comp tile roof or mid-range S tile, etc etc. and avg construction might be lower quality BS or wood frame, avg or low-quality comp tile roof. Since people like to nit pick here are a few examples only, of course, each house can differ; but anyone can look up examples of construction online and correlate it to price points

As far as houses themselves, yes, there can be different quality components or ages of replacements in one property. The Q and C ratings are holistic, what best fits the whole and are main impact features or defects - just as the words avg or good convey the whole -

 

[alebrewer]

The ratings are still subjective. Less so than before the ratings were adopted... but subjective. No two appraisers will ever see attribute of a property in exactly the same way.

In your opinion, was the introduction of the C/Q's an effort to be more objective, or an effort to state the subject's (and comps) C/Q in absolute terms (as opposed to the relative terms good, average, fair)? Or a combination of the two?