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The 'Effective Age' Disease/Scam

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Craig Farr

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Junior Member
Joined
Sep 26, 2004
Professional Status
Certified Residential Appraiser
State
Arizona
In another thread I used the phrase 'Effective Age Scam' because I believe that EA is a horrible joke.

Not only does it give 'license' to appraisers to venture for comparable sales, it has now infected our county assessor's brains.

Believe it or not the YEAR BUILT in our county's records is EA. Yes! The assessor is steadily losing, forever, the actual year built of the county's structures......simply by assigning some weasily EA.

Example, a house I appraised last week was actually built in 1914. The owner showed me documents. When I pulled county records I discovered the the assessor lists 'year built' as 1976. That's the assessor's EA. That's BS.

What utter nonsense!!!!

Fortunately, the voters threw the assessor out of office on Nov 4th. A Certified General appraiser will soon take office. Hopefully, we can get the new assessor to quickly kill the EA plague before it spreads further.

And, hopefully, the EA disease/scam will be outlawed in all appraisals someday, soon, in the future!
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
pssssst...... dont post which county or the AVM & BPO companies will send assassins. :new_snipersmilie:


on second thought...... write a Letter to the Editor of the local and regional newspapers and local cable tv , radio news directors..(and the local Bar Association) .....etc. EXPOSING the impact on ALL recent sales, refis, reos, cmas, AVhums, BPOs and "long distance" appraisal reviews, as well as appraisals done by less Diligent (a)ppraisers (especially out of towners) which based values on Public Records which were never verified.

COULD, and Should, get interesting.
 
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Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Actually Arizona assessor's in all counties have been using effective age in their calculations of the cost approach since 1968. The formula that has been used since that time is: original home constructed in 1914 has 1200 square feet, addition in 1976 has 500 square feet, another addition in 2005 adds another 800 square feet to the structure. The house now has 2600 square feet of livable area. When the effective age was calculated in 2005, the last addition. The area constructed in 1914 was 46% of the total structure, that part is 91 years old x .46 = 41.86 years. The area constructed in 1976 is 19% of the total structure, that part is 29 years old x .19 = 5.51 years. The area in 2005 is 30% of the total structure = 0 age. 41.86 + 5.51 + 0 = 47.37 effective age 2005-47.37 = 1958, the effective age posted in assessor's records and then transferred over into all computerized systems. That is why I go to the assessor's office and make a copy of the original property record card that shows original year and the year of each addition--and what was added each time. Had a nasty fight with a property owner one time when I completed a private party appraisal so she could determine an asking price. The effective age in computerized reporting systems showed a year of 1939. The original property record card showed a home built in 1910 with additions in 1965, creating the artificial effective age of 1939. So when I described in my report the original year, she came unglued. I could tell by the design, materials, room arrangements, finish, etc, etc that the 1910 construction year was more applicable.

That explains why in a tract subdivisions most homes will have an original construction year of 1952 to 1958 for example, and all of a sudden there is one with a year of 1982. The original home was built in the fifties but the carport was enclosed, the covered patio was enclosed also and they added on a master bedroom. All those changes to the square footage kicked in the effective age calculation so that now 1982 is reported. The effective age is used for their market approach to value when linear regression is utilized in their AVMs.

Spent fourteen years of my life doing those calculations while in ad valorem appraising in three Arizona counties in the sixties and seventies.
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
That's just crazy! Who dreamed that system up and what were they chugging? :new_all_coholic:
 

George Hatch

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Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
They probably felt they needed a rigid formula for calculations that would give the benefit of the doubt to the taxpayer. So as to avoid constant challenges.
 

Terrel L. Shields

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Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
i agree in the use of "effective age" but the assessor records should state the year built and then the year remodeled. Clearly, condition is paramount. But saw last week where the "year built" was 1985 when I had documents that the dwelling was built in 1962±. An 800 SF bungalow, it was probably re-sided with vinyl and reroofed in 85, the soffits are deteriorated, shingles at end of economic life, etc. Nothing was "added". EA should be calcuated and I avoid the use of adjusting EA by choosing houses of apparent similar effective age...further, I have the habit of using a range. EA = 10-15; 20-25; 30-40, etc. not 17 or 23 etc. I ain't that good.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
Actually Arizona assessor's in all counties have been using effective age in their calculations of the cost approach since 1968. The formula that has been used since that time is: original home constructed in 1914 has 1200 square feet, addition in 1976 has 500 square feet, another addition in 2005 adds another 800 square feet to the structure. The house now has 2600 square feet of livable area. When the effective age was calculated in 2005, the last addition. The area constructed in 1914 was 46% of the total structure, that part is 91 years old x .46 = 41.86 years. The area constructed in 1976 is 19% of the total structure, that part is 29 years old x .19 = 5.51 years. The area in 2005 is 30% of the total structure = 0 age. 41.86 + 5.51 + 0 = 47.37 effective age 2005-47.37 = 1958, the effective age posted in assessor's records and then transferred over into all computerized systems. That is why I go to the assessor's office and make a copy of the original property record card that shows original year and the year of each addition--and what was added each time. Had a nasty fight with a property owner one time when I completed a private party appraisal so she could determine an asking price. The effective age in computerized reporting systems showed a year of 1939. The original property record card showed a home built in 1910 with additions in 1965, creating the artificial effective age of 1939. So when I described in my report the original year, she came unglued. I could tell by the design, materials, room arrangements, finish, etc, etc that the 1910 construction year was more applicable.

That explains why in a tract subdivisions most homes will have an original construction year of 1952 to 1958 for example, and all of a sudden there is one with a year of 1982. The original home was built in the fifties but the carport was enclosed, the covered patio was enclosed also and they added on a master bedroom. All those changes to the square footage kicked in the effective age calculation so that now 1982 is reported. The effective age is used for their market approach to value when linear regression is utilized in their AVMs.

Spent fourteen years of my life doing those calculations while in ad valorem appraising in three Arizona counties in the sixties and seventies.



That is not effective age .. its composite age, and its very effective as described within your bolded comments. As far as counting carports, covered patios, etc ... that should be something judged far better by those doing the calculations than it appears they are doing.
Composite age is very useful and helpful when measuring a home like you have shown that has additions constructed that are equal in quality to the balance of the home, however, its is not effective age ... its actual composite age of the structure.

Depreciation can be calculated much in the same way .. applying measured depreciation against each "component" of the home having differing ages with all considered together to provide a total depreciation for the structure.

As a final note, I would venture to guess that effective age is used by assessors because it results in higher value indications based upon a newer age placed on an older structure. I trust homeowners will challenge these "rules" for it is but one more means for a government to rip the taxpayer off .. and but another means for less than ethical appraisers to hit higher values. Neither is appropriate.
 

Terrel L. Shields

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Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
A friend who worked for our assessor briefly said his boss there hated fee appraisers and made them do whatever necessary to keep the values high. It was a big political issue, but nothing was done about it. So much for "fair taxation"....

Most assesor methods seem inscrutible and I really get sick of having them tell me they are doing "sales" market appraisals when each and every valuation they do is strictly a cost approach..and a poor one at that. For a while they didn't even value the land (lot) values in the same years as the improvement values.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Craig said, I believe that EA is a horrible joke.
and
EA disease/scam will be outlawed in all appraisals someday, soon, in the future!

Why do you feel its a scam? What system would you suggest the assessor use?
If the assessor kept EA and Actual Age would you still feel its a disease?

How do you deal with depreciation and its relationship to market values?
Assessors traditionally use a cost approach, modified by market sales and
depreciation. I don't think they have the time or inclination to grid out
comparables and base their adjustments on 'paired sales.'
 

Joe Booth

Junior Member
Joined
Oct 16, 2003
Professional Status
Certified Residential Appraiser
State
California
California uses effective age too. I did an inspection of a property today that was built in 1953 and the assessors record says "effective year built - 1990". Granted the property was completely renovated in 2004. So... I owned a house on the east coast that was built in the late 1700s. Thats right, late 1700s (no specific date because the town hall burnt down, twice). When we renovated and opened the walls, the studs on the first floor were tree limbs with the bark still on them. The floor joists were logs with bark still on them. We did a total renovation, gutted the whole place. BUT.... we did not replace the granite foudation sill plates or the framing. I am so happy to have gotten out of that place.
 
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