Older But Updated Vs Well Maintained For Good Condition

[TRESinc]

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?

call it a C3 and be done with it, just explain why. you can have the same condition ratings and make adjustments to the comps, or have different ratings and not make adjustments to the comps, all you have to do is explain why you did what you did and back it up with support.

 

[J Grant]

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.

Appraisers have to separate out condition from upgrades and condition from age ( that is why on the grid there is a line item for age, and another line item on grid , and another line left blank where appraiser can write in upgrades /updates/other )

The VALUE of any of these differences, reflected by adjusting to how market reacts in price, is done after the items are sorted out in your mind and on the grid. The adjustments/value is part of the appraiser's analysis, while condition, age, upgrades is what physically exist in the house.

In the above example, comparing a 15 year old house with no updates (since it does not need them yet) with a 60 year old house updated 10 years ago, if they are both C3 the adjustment would be in age (if market is reacting to age ). If market shows no difference for age in price/marketability between the 2 properties then explain and make no adjustments.

If 2 houses of the same age, say 30 years old, were recently updated but one was done with high quality updates and the other with low grade quality, that could be adjusted under C 3 and explain, or line item write in ( updates/sup ) for the superior updated house and adjust there.

 

[Mike Kennedy]

JG "If 2 houses of the same age, say 30 years old, were recently updated but one was done with high quality updates and the other with low grade quality, that could be adjusted under C 3 and explain, or line item write in ( updates/sup ) for the superior updated house and adjust there."

Suggest segregating Quality from Condition - both might be in similar Good Condition, but the market may clearly demonstrate higher demand and value for superior Quality - or not (high quality may or may not represent functional obsolescence, superadequacy in a particular neighborhood.

 

[J Grant]

The appraiser has to be careful NOT to adjust updated higher quality upgrades or replacements in the Q ratings section of the grid, since the Q ratings are for the entire dwelling, the exterior of the property not just interior upgrades or updates. Which is why, though as Mike Suggests, at a certain point putting in too high quality updates or upgrades can become a super adequacy or over improvements relative to the Q rating for the entire dwelling.

For example, putting a new Viking range superior quality grill would not be an over improvement in a Q2 dwelling, (in fact, in Q2 that may be market expected ) but putting in a Viking Range likely would be an over improvement in a Q4 dwelling.

An owner could outfit a Q 4 low ceiling wood frame house with all high quality interior replacements . upgrades... the quality rating is still Q4 for the dwelling since it is still a low ceiling cheap build wood frame house, but the condition might become C 2 or the upgrades as superior ...there are always exceptions of course...general comments to be applied per individual property


( the most common below ) Quality Ratings and Definitions posted below )
Q Q2 Dwellings with this quality rating are often custom designed for construction on an individual property owner's site. However, dwellings in this quality grade are also found in high-quality tract developments featuring residences constructed from individual plans or from highly modified or upgraded plans. The design features detailed, high-quality exterior ornamentation, high-quality interior refinements, and detail. The workmanship, materials, and finishes throughout the dwelling are generally of high or very high quality
. Q3 Dwellings with this quality rating are residences of higher quality built from individual or readily available designer plans in above-standard residential tract developments or on an individual property owner's site. The design includes significant exterior ornamentation and interiors that are well finished. The workmanship exceeds acceptable standards and many materials and finishes throughout the dwelling have been upgraded from "stock" standards.

Q4 Dwellings with this quality rating meet or exceed the requirements of applicable building codes. Standard or modified standard building plans are utilized and the design includes adequate fenestration and some exterior ornamentation and interior refinements. Materials, workmanship, finish, and equipment are of stock or builder grade and may feature some upgrades. Q5 Dwellings with this quality rating feature econo