The Condition Rating Conflicts With The Reported Age

[Fargo1]

So does anyone know what the magic age/condition rating is? It seems pretty ridiculous to me that condition is solely a function of age. Why is this even checked?

In this case it was on a couple of comps that were 2 years old. The way I read the guidelines, the difference between a C2 and a C3 is the difference between 'little physical depreciation' and 'limited physical depreciation'. Is there some secret point in age when 'little' becomes 'limited'? I don't think so. I was informed in the past that you can't have a C2 on anything over 1 year old. Now I am told that 2 years old is a C2 and not a C3. Granted, I could go either way on this. Its a pretty fine line. But do they really have to crate warning on this to make us explain how little depreciation is on a 2 year old house and why it is a C3 but could possibly be a C2. I'm not liking the CU thing too much. Too many small details that really don't make a difference in the final opinion of value.

 

[Sid Holderly]

Each reviewer is different. A 100 year old house could be a C2 is it was totally gutted, rebuild,re-skinned, and re-outfitted with appliances.
Explaining condition to a form checker who just reads general guidelines, that have lots of holes, is a good reason for higher fees.
Now, remember the next time you use the same comps you must use the same condition ratings or they have another reason to ding you again. Save the explanation to use again.

 

[hastalavista]

If the significant difference between C2 and C3 is physical depreciation, then the chronological age of the subject is irrelevant.
I have a house that is 2-years old and The Who uses it as their crash pad. Probably a lot of physical depreciation has accumulated in a short time.
Next door, the original craftsman (90-years old) has just been renovated and is like-new.

You obviously know this. But my response if asked would be-

Other than the C1 rating, which is defined as being "recently constructed and previously unoccupied", condition rating differences between C2 through C4 are significantly dependent on the different levels of accumulated physical depreciation. Chronological age is not the benchmark; effective age is the benchmark. A house that is 2-years old may have significant wear and tear and has accumulated physical depreciation in excess of what would be expected. Likewise, a 4-year old home that was extremely well maintained may have limited depreciation such that it accurately fits within the C2 rating. Obviously, a 90-year old home that has been significantly renovated would, by definition, fit in the C2 category. The determining factor for the C2-C4 rating is not chronological age, but the level of depreciation which is reflected in the effective age estimate. Regular maintenance, updates, and replacement of worn-out components reduces effective age and extends the economic life of a residence.
Based on the subject's condition (as evidenced by the photos and my description), the subject is best described as C2. I've rated the comparables X,Y,&Z and have explained any difference in condition rating (and adjustments) in the report.

I have a standard template comment that I use regarding condition ratings. But, I will tell you this: I recently was conditioned regarding a C1 vs. C2 condition adjustment I made. I thought I explained it clearly in the report. I called the reviewer and we talked about it; once I pointed out what I had written (and he did read it the first time) he said, "ahh, now I get what you are saying"... but he didn't get it until I said it again and in plain English on the phone. I consider that my fault, not his. The expectation is if there is a difference in condition rating, there would be an adjustment; when something different happens, then the expectation is to explain why that is so. I thought I had clearly spelled it out but I didn't. In the future, I will take more time to try to clearly state what I mean.

I have a habit of writing detailed comments (believe it or not! LOL!). One technique I've found useful is to end my comments with a clear statement:
Blah, blah, blah....(two paragraphs later)...blah. In other words, although the subject is 4-years old, as discussed in detail above, it warrants a C2 rating and has a similar level of physical depreciation as the 2-year old homes.
The "in other words" lets me net-it-out. I find it to be an effective communication technique.

Good luck!

 

[Deleted member 128537]

Arbitrary BS. In my area where the homes are second homes lived in only a few months of the year they have little wear and tear. Some look almost like new. I rate the C2 all the time and haven't had a problem. Typically anything below a 5 year effective age I rate as C2. But that's just me when I see "little" depreciation.

 

[KenAZ]

The short answer. If you want it to pass CU, then follow the following guidelines . . .

C1 up to 1 year
C2 up to 5 years or refurbished older home
C3 Up to effective age of 25
C4 older than 25 effective age
C5 Needs too many repairs to be considered livable
C6 dangerous to enter

It is of course stupid. As I have mentioned in other threads, the age is the age. The condition should be relative to the age.

A 100 year old home that have been renovated and almost like new, then give it a C1.
If it has been completely remodeled or above average C2
Updated or average-ish C3
Average, but looks like some or all materials are 100 years old C4
Needs many repairs to roof, plumbing, wiring etc, C5
Poor Condition C6

Or as I posted in another thread, here is the Monty Python solution:

"Then, shalt thou count to C3. No more. No less. C3 shalt be the number thou shalt count, and the number of the counting shall be C3. C4 shalt thou not count, neither count thou C2, excepting that thou then proceed to C3. . . . C5 is right out. Once at C3, being the third rating to be reached, then, lobbest thou thy Holy Hand Grenade of Antioch towards thy foe (CU), who, being naughty in My sight, shall snuff it"

 

[Tim The Enchanter]

I have a house that is 2-years old and The Who uses it as their crash pad.

Maybe not a problem these days. And you might want to remember Daltrey in the old days,
if you have seen him sing more recently on youtube, you can't unhear it, sadly.

On point, It's a good thing this doesn't apply to small income properties.
What would you say to a 100 year old unit C4, paired with a brand new 1 for a duplex?
Agree, stupid system. It's not really any less vague than the old one.

 

[Terrel L. Shields]

It is of course stupid. As I have mentioned in other threads, the age is the age. The condition should be relative to the age.

The reason we had "effective age" was to create an age descriptor that included condition. And contrary to what some appraisers believe, it is really the remaining life we are concerned with. And further, that is based on the assumption that no major repairs will be made in the future since obviously a remodel means houses built in the 19th Century remain livable and that all important remaining life slips on into the future. You have 6 classes. With effective age you can have 40 to 80 or more (the total economic life). Or, in a typical cost book, you have 5 with plus and minus applicable, or about 15.

 

[Fargo1]

Hey guys, thanks for all the good and insightful comments. I was a bit agitated the other day when I posted them. The CU had come back with some ridiculuous comments (*see below) and I really didn't have time to address them. The C2-C3 thing was just the topping on the cake. But it was something I had struggled with in the past. I can see where houses under 5 years old could really go either way and whether or not you get a stip for more clarity will all depend on what other appraisers (who may or may not have seen the property) will call it. Its less common in my area, but I can also see where an older property that has been completely remodeled could also be a C2. I'm sure that will require lots of secondary comments as well.

* Side note: I also have to wonder how the CU picks suggested comps. My subject was a 2-stroy property with 3-levels. The CU sent back 5 suggested comps. None of which were even a 2 story house. They were terrible. If I were to use the suggested comps, my report would be so misleading it would lose my license. In fact the suggested comps were so different it looked like they were randomly pulled out of a hat. It was frustrating that I had to dig up all these sales and review them when they weren't similar in any stretch of the imagination.

Anyway, thanks again for all the comments on the C2-C3 stuff. I'm going to review my appraisal again and try to clarify things for the lender. I may even have to reconsider my original ratings. I wander how much that would screw up the CU.

 

[Tim The Enchanter]

Appraiser should cooperate locally to fix Q & C ratings on all sales in their area.
Problem solved, and it's definitely not like price fixing.
More like herding cats.

 

[Pam Wyant]

The short answer. If you want it to pass CU, then follow the following guidelines . . .

C1 up to 1 year
C2 up to 5 years or refurbished older home
C3 Up to effective age of 25
C4 older than 25 effective age
C5 Needs too many repairs to be considered livable
C6 dangerous to enter

It is of course stupid. As I have mentioned in other threads, the age is the age. The condition should be relative to the age.

A 100 year old home that have been renovated and almost like new, then give it a C1.
If it has been completely remodeled or above average C2
Updated or average-ish C3
Average, but looks like some or all materials are 100 years old C4
Needs many repairs to roof, plumbing, wiring etc, C5
Poor Condition C6

Or as I posted in another thread, here is the Monty Python solution:

"Then, shalt thou count to C3. No more. No less. C3 shalt be the number thou shalt count, and the number of the counting shall be C3. C4 shalt thou not count, neither count thou C2, excepting that thou then proceed to C3. . . . C5 is right out. Once at C3, being the third rating to be reached, then, lobbest thou thy Holy Hand Grenade of Antioch towards thy foe (CU), who, being naughty in My sight, shall snuff it"

Sorry, you are a little off on your guidelines - A 100 year old home can never be C1, even if totally renovated. It becomes a C2 at that point. A 100 year old home that is significantly updated but not to the point of a C2 is a C3, average-ish or some updates or significantly updated 20 years ago a C4. Needs significant repairs but still livable is C5, Unlivable C6.