Model home 2 years old sold as never occupied

[Mark K]

The line was always pretty clear to me.

At what age would an unlived-in house be before you report something more than zero depreciation?

 

[J Grant]

Property Condition C1​

C1 homes show no signs of physical wear and tear. The property improvements are new or nearly new, with no prior occupancy. The entire structure, along with its major and minor components, is in excellent condition.

Property Condition C2
C2 homes are either nearly new or have recently been completely renovated, resembling new construction in condition. The enhancements exhibit no deferred maintenance, minimal physical depreciation, and need no repairs. Nearly all building components are either new or recently repaired, refinished, or rehabbed. Outdated components and finishes have been replaced with ones meeting current standards.

 

[DWiley]

At what age would an unlived-in house be before you report something more than zero depreciation?

I do not think there is an absolute answer to that - it depends on the house itself (i.e., the type of construction and materials used), its location, the weather during the time it has sat there, etc.

 

[Mark K]

I do not think there is an absolute answer to that - it depends on the house itself (i.e., the type of construction and materials used), its location, the weather during the time it has sat there, etc.

Agree. Its a judgement call.

Property Condition C1
C1 homes show no signs of physical wear and tear. The property improvements are new or nearly new, with no prior occupancy. The entire structure, along with its major and minor components, is in excellent condition.

"Nearly new with no prior occupancy.."

C1 definition does not say "zero depreciation".

IMO, an existing spec or model home that's had some obvious traffic can still be C1 according to the definition.

"The entire structure, along with its major and minor components, is in excellent condition." It doesn't say 'perfect' or 'brand new'.

 

[timindp]

new construction, never lived in, probably a C1. What wear and tear is there when it is vacant? What depreciation if nothing is used?

 

[DWiley]

new construction, never lived in, probably a C1. What wear and tear is there when it is vacant? What depreciation if nothing is used?

Whether it is occupied or not has no relevance to the aging of the exterior components. The exterior components have two years worth of exposure to wind, rain, sun, etc. regardless of whether anyone has moved in or not. The rating is for the whole house, not just the interior.

 

[JTip]

Pipes full of water, furnace and a/c running to prevent freezing/overheating, shifting frame/settling in.

Just like new/old stock in a car, the fluids and rubber deteriorate.

I'd call it C2 and explain.

 

[alebrewer]

I'd call it C2 and explain.

this. The fact that it has stirred so much debate is sufficient to suggest there is no real clear cut right/wrong. Again - explain what you're doing and why, and make sure you're able to quantify market reaction to (as JTip calls it) 'new old stock' relative to new stock or used stock.

 

[DWiley]

The fact that it has stirred so much debate is sufficient to suggest there is no real clear cut right/wrong. Again - explain what you're doing and why, and make sure you're able to quantify market reaction to (as JTip calls it) 'new old stock' relative to new stock or used stock.

Actually, for a two year old home (as per the OP), I think the answer is clear.

 

[alebrewer]

Actually, for a two year old home (as per the OP), I think the answer is clear.

You would think the GSEs would want it to be clear, wouldn't ya? Only it's not - unless you are aware of a definition for 'near new' that I'm unaware of...