Freddie Mac: Quality & Condition Ratings

[Terrel L. Shields]

Quality custom and high-end construction has thick walls, poured concrete outer walls and impact windows or new quality windows

And you checked to see if that was poured or concrete over block? if the windows were Anderson or Pella and what grade? Sure you did.

was the introduction of the C/Q's an effort to be more objective

Of course, it is but it is still very subjective. You could probably judge the quality level far better by knowing what the original cost of construction was compared to the typical cost at the time the building was constructed. And that is no certitude. We had builders who did very common work but passed themselves off as top shelf contractors simply based upon being one of the older local builders and having ties to state government. They typically drew $10 a SF more than most of their competitors.

 

[J Grant]

And you checked to see if that was poured or concrete over block? if the windows were Anderson or Pella and what grade? Sure you did.


Of course, it is but it is still very subjective. You could probably judge the quality level far better by knowing what the original cost of construction was compared to the typical cost at the time the building was constructed. And that is no certitude. We had builders who did very common work but passed themselves off as top shelf contractors simply based upon being one of the older local builders and having ties to state government. They typically drew $10 a SF more than most of their competitors.

Again, it speaks to competence, accumulating knowledge of cost and construction, and what is expected of different levels of quality in homes of a certain price range.

A builder passes themselves off as better to the public, so what, again, if an appraiser does not understand construction enough to see that the builder uses the same or similar comp tile as the other builders, then that appraiser should not be doing res assignments. One can ask an owner or agent what brand a window is or observe for themselves. It is not rocket science - if the brand is generic or too old to tell, then look at the quality, open the darn window, and see how heavy it is and if it closes securely. Again, this is for valuation purposes. The same limitations exist whether the UAD rating is used or not.

 

[Terrel L. Shields]

what is expected of different levels of quality in homes of a certain price range.

Ah, finally the truth - you guessed because of prior sale and or the local houses appear to be upscale or starter quality.

 

[J Grant]

Ah, finally the truth - you guessed because of prior sale and or the local houses appear to be upscale or starter quality.

Well sure, a price of a prior sale or similar area houses is a clue but I can have no knowledge of a prior sale and be able to tell the quality anyway I have a report to write and do not have endless time to retort to every point you are going to bring up all day - interesting as it is!

 

[J Grant]

For general understanding though, it is important to recognize a C or Q rating as similar or not to our comps, the Q or C rating is based on the house itself, not as a comparison -

Thus a Q2 house whither in Colorado, New York or Miami has things in common even if the local climate, style or trend taste differ. Same for C and Q 1, 2, 3, 4 in each region. Look at the listings on Sotheby's in different regions. Go online; MLS listings are on Zillow and Realtor sites in different regions; check the commonalities among different price points and homes in a region.

That is important because a Q 4 house in an area of Q 2 houses is an under improvement and might be builder bait tear down, whereas a Q4 house in an area o other Q4 houses is not builder bait. A Q2 house in an area of Q2 houses is a super adequacy or over improvement, a Q2 house in an area of other Q2 houses is not super adequate.

Before we can compare, we have to get the C and Q ratings right for the individual property -intrinsic to itself.

 

[alebrewer]

Of course, it is but it is still very subjective. You could probably judge the quality level far better by knowing what the original cost of construction was compared to the typical cost at the time the building was constructed. And that is no certitude. We had builders who did very common work but passed themselves off as top shelf contractors simply based upon being one of the older local builders and having ties to state government. They typically drew $10 a SF more than most of their competitors.

Fully agreed. With the exception of C1/C6 and Q6, the ratings are still subjective. But they're 'absolute' in their subjectivity, not related to other properties in the subject's market. By introducing the terms, they removed one layer of subjectivity - namely that of describing the subject in relative terms.

 

[George Hatch]

Very few appraisers are checking drywall thickness or framing specs or slab thicknesses. Probably not 3/100. I only do it when the construction is at the foundation or in framing.

Ceiling heights, flooring, trim, condition of interior/exterior finishes, kitchen buildout quality. That's about all any buyer can see without a detailed technical inspection. Supposedly the software can identify specific models of the appliances and fixtures.

As I say, using the tech to supplement and even cross check the appraisers observations would appear to be a plus when compared to working without the electronic minion. Even if they only use it once in a while to bring them back to the actual specs for the UAD or other benchmark reference.

It may be years before a user-grade version of the app becomes available. Or not.

 

[J Grant]

Very few appraisers are checking drywall thickness or framing specs or slab thicknesses. Probably not 3/100. I only do it when the construction is at the foundation or in framing.

Ceiling heights, flooring, trim, condition of interior/exterior finishes, kitchen buildout quality. That's about all any buyer can see without a detailed technical inspection. Supposedly the software can identify specific models of the appliances and fixtures.

As I say, using the tech to supplement and even cross check the appraisers observations would appear to be a plus when compared to working without the electronic minion. Even if they only use it once in a while to bring them back to the actual specs for the UAD or other benchmark reference.

It may be years before a user-grade version of the app becomes available. Or not.

Speaking of appliances -
Wolfe and Viking are two of the popular options in Q2 and Q1 home - 15k for a range, or 20k for a sub-zero fridge low profile depth with custom wood or lacquer finish to blend into the cabinets, a faucet costs as much as a bathroom in a C 4 house, etc.

 

[J Grant]

Some of the hardest for me are the older architecturally significant or period houses from 1920 and such, restored not just renovated - it is really hard to get a handle on that - as far as cost - though it can cost more to restore those kind of details then building new in some cases

 

[FLApr04]

Imo the ratings ( and their explanations) are pretty good. However, there should be a plus or minus sign we can add -


C3, or C3-. or C3+ , because there are variants within a condition or quality of a property. We can adjust for it within a condition or Q rating, but assigning a plu, minus or leaving it middle would help explain it.

I completely agree and have been saying the same thing to my colleagues for years. I like how they try to make the condition fit into some neat little box as if that's how the real world works so there has to be room for variations. Certainly there is factual information in our appraisals but valuations by definition are opinions so they are, and always will be, subjective. Another issue I have is that I think our estimated values should be listed as a range of values and tied to a confidence rating because in most cases we aren't good enough to say the property is only worth X amount, no more no less.