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Older But Updated Vs Well Maintained For Good Condition

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Nick1985

Freshman Member
Joined
Oct 9, 2016
Professional Status
Appraiser Trainee
State
Kentucky
I just wanted to get some opinions on how other appraiser adjust for condition or for how many updates a property has. How do other appraiser adjust when an older property , perhaps 60 years old, but was updated say 10 years ago vs adjusting for a property that is only 15 years old and hasn't been updated. The updated property would have slightly newer appliances and updates, but neither would qualify for C2 condition. However both are in good condition. It's not something that would be supported in an age adjustment, because a property could be 100 years old, but in my market, if it has been updated it can sell for just a much as a comparable newer home.

So how do other appraiser handle situations like this? The one that is slightly newer in updates would most likely command a slightly higher value if it had been renovated. Do you guys give partial condition adjustments? How would you derive support for those adjustments? In my very limited market area trying to provide any actual support, statistical or otherwise, would be practically impossible. My old supervisor said they used to allow + and - for the appraisers opinion on condition ratings, where now it has to be straight C2 or C3.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Well, to start: I would not compare a 60 year old house to a 15 year old house. I would use sales more similar in age and there should not be a large difference in condition. Now, if you are only referring to the condition rating I would understand your concern. Just follow the Fannie Mae UAD definitions and you will be fine .
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
C2 is basically a down to studs rehab in an older home and a near new rehab in a newer home. C3 is updated and/or so well maintained that there is little that the typical buyer would think needs upgrading. I suggest you take a look at the Marshall and Swift Residential Cost Handbook condition and quality ratings as they correlate to the UAD ratings but are easier to understand and have more background in the overall text.
 

Nick1985

Freshman Member
Joined
Oct 9, 2016
Professional Status
Appraiser Trainee
State
Kentucky
Yes, I have looked many times at the condition, but basically the ratings just encompass to broad of a range imo. A house that house been completely rehabed 10 years ago is not in C2 condition anymore, but also a house that is 15 years old and well maintained is also not in C4 condition. Both are in good condition but it is still obvious that the one that was updated 5 years more recently will still carry more value.

Unfortunately in my area I don't have the option to not compare houses of different ages. Around here finished living area and overall condition are king... Just like I can't place much concern with comparing a ranch to a cape COD. If the GLA and condition are similar, sometimes there just aren't other options. There also isn't anywhere near enough information to support adjustments here for design style differences. But that is beside the point...

It boils down to, when you feel like there is a slight difference in condition, if one is a little more freshly updated, but not enough to bump up to C2 or one down to C4, what do you do?
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
I have a separate line item (using the UAD URAR 1004 form for comparison - just under the "Porch/Patio/Deck" line) that I call "upgrades/extras" or updates

I then adjust the comps for any differences and explain. Just make sure to explain
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
They can have the same C rating and still have an adjustment. You just need to explain why there is an adjustment within the same condition rating just as you would need to explain why there is a difference in condition rating when that is the case. You are local and have local info. The user may be 1000’s of miles away and not know anything about your local market. Your job is to erase the distance and explain the local market as best you can so that the end user is comfortable in their understanding of your local market.
.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
No one will like my suggestion.
Cost the two out and do a straight line depreciation on the major components (assemblies if you will) as a comparative analysis. Now do a market extraction (refer to Donald Epley's work) of depreciation of the most similar houses. Draw your judgments from that.
Epley, Donald, The Concept and Market Extraction of Effective Age for Residential Properties,

or

http://www.appraisers.org/docs/defa...pment-of-effective-age-estimates.pdf?sfvrsn=0
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
No one will like your suggestion because we are supposed to mimic market participants actions and reactions within the market. No one other than an appraiser would take your approach other than an engineer type that thinks himself smarter than an appraiser and the market. Cost and “feelings” are totally different and the market moves around based on feelings not “costs”.
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
The market obviously revolves around cost. Most every buyer has a price / cost range they are looking in.
All that feelings crap comes in later. :leeann:
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
A Graph is worth a 1000 words.

Bell Condition.jpg
 
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