UAD Q1 and Q2

[J Grant]

Imo Q1 is rare, unless one is in a very affluent niche market, Q2 is not so rare in high value custom homes, C6 could be seen in a number of run down or older housing stock, C5 is not uncommon for older deferred maintenance homes. Though C3 and 4 are typical of a lot of properties, I doubt it is as high as 99% .

 

[Meandering]

Q1 Dwellings with this quality rating are usually unique structures that are individually designed by an architect for a specified user. Such residences typically are constructed from detailed architectural plans and specifications and feature an exceptionally high level of workmanship and exceptionally high-grade materials throughout the interior and exterior of the structure. The design features exceptionally high-quality exterior refinements and ornamentation, and exceptionally high-quality interior refinements. The workmanship, materials, and finishes throughout the dwelling are of exceptionally high quality.

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.

The difference between Unique and custom is???

It appears that, if the design is similar to other's in the neighborhood, like basic plans were modified to be custom, than it's a q2.

If no other designs are similar to it, it is a Q1.

The Q1 might be those odd shaped things of high quality. I find it easier when dealing with historic homes to separate these ratings. Once you get into newer homes, well, if you have little conformity of design and style in the neighborhood, they might all be q1. But if you have similar ones in the neighborhood, than your's in not unique in design, and it would be a q2.

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[J Grant]

Good stuff Denis. And "no", the RCN does not say Q2. Its comfortably within the Q3 range.

Further thought question: If the appraiser can present a "model match" that sold within the last 3 months can it be Q2? The Q1 definition would seem to effectively preclude the existence of a model match; the Q2 definition comes real close to it.

It would be interesting to try to put together a dichotomous key for the UAD definitions.

A Q1 home likely has no "model match", though it is possible.. a builder can build the same supposedly unique home for several clients , perhaps modifying it a bit to suit. The intrinsic quality of a Q1 home is outstanding, that is what sets it apart rather than simply being unique.. Q2 homes can be used as comps for Q1 but might need an adjustment and the other question is, at what point is a Q1 home a super adequacy if no other Q1 comps are found....

Q1 comps are equivalent in quality rather than model matches, and 3 month time frame is absurd in those markets. One may have to search back 2 years for another Q1 sale. If NO Q1 sales are found in 3 years and within a reasonable area radius, it might be a super adequacy. Reviewing is reaching the level of moronic at this point, asking for sales within 90 days as a matter of rote..I know that pressure comes from the client but a reviewer employed by a client needs to educate them a bit about the reality of markets.

I have appraised a handful over the years of true Q1 homes...these are Architectural digest cover worthy homes that take your breath away ( and are a bit disorienting; one bathroom can literally cost as much as a modest single family house )

 

[J Grant]

If an appraiser can't tell the difference between a Q1 and Q2 home , should they be appraising in those markets/price points? Not every appraiser suits every assignment....that is the problem with the "management" by remote of appraiser panels especially large ones and even more so where choosing by fee is a priority....appraisers are seen as interchangeable, which they are not, and appraisers, desperate for income due to paltry fees, are taking on assignments they have no business doing. I personally am reducing rather than enlarging the kinds of assignments I accept, and even after having done a number of very high end homes over the years, am questioning the wisdom of doing these assignments in the increased scrutiny climate present now. The adjustments can be very large and adjustments can also be more subjective than typical, which makes these assignments scary now since the reviews can be generic and fixed in what they expect.

 

[Peter LeQuire]

The Biltmore, Mar-a-Largo, the Kaufmann residence = Q1?

That said, few houses likely to require a UAD compliant appraisal are likely to rise to that quality level: as was pointed out, the "unique" part of that quality descriptor is not likely to allow development of an appraisal acceptable in the secondary market. Moreover, the reality is that someone with the springs for such a house isn't likely to require a GSE-related mortgage to purchase it.

 

[J Grant]

Peter, in my experience, the Q1 loans are for refinance/line of credit, or a mortgage even when they are buying all cash. Often the client is a form of private funding that they borrow against. Originally, yes, these homes are custom built by the owner now looking to borrow against it (perhaps to buy another yacht, who knows), or they borrow some against their own funds in a purchase even if the contract has no financing contingency.

A world apart...one owner bought their personal assistant a few million dollar, lovely house across the street to have them close by ( they casually mentioned that during house tour, actually referred to a few million dollar house as a "cottage" ). AND, the subject was just their seasonal vacation home! (to make us feel even more like peasants lol)

 

[Deleted member 128537]

I live in a pretty upscale area where there are multimillion dollar homes. Generally I have found that Q1 is for homes that are at minimum $250sf construction. That is generally what is considered luxury construction cost. The problem is from there we have quite a range. I did a house where it was $800sf construction! Unbelievable! The house was 6400sf and 5.5 million to build. But then I've had Q1 that were in that $250sf construction area and still amazing. So even within that Q1 rating there is going to be some varying degrees.

I've probably done about 3 or 4 Q1 homes in my area in the last 3 years.

Where I have a problem is when a house has Q3 and Q2 elements and then I have to make a decision which way to go. Just did one like that this week. I finally rated as Q2 only because it made the most sense with my comparables.

Also I have found that Q2 homes will work with Marshall and Swift cost books. But when it comes to Q1 Marshall and Swift isn't much help. To much of a range for Q1 homes.

What I have noticed more than Q1 and Q2 issues are appraisers making houses Q3 when they are clearly Q4. When I bought my house the appraiser gave it a Q3 rating. He's out of his mind. My house is nice, but it is clearly a Q4 construction quality.

But alas when I do reviews I just look for consistency.

 

[J Grant]

The UAD,condition and quality ratings are supposed to be property specific, (not relative to each other. Meaning that if an OA used Q3 for subject and comps, but it looks wrong to you as a reviewer , the subject and coms should have been C4 per low end construction quality, then it does nnot matter that the appraiser was consistent, they applied an incorrect or misleading quality rating. As a reviewer you would have to comment on that.

In questionable properties where it could be a judgment call as a reviewer I'd likely give the OA benefit of the doubt. However, when it is apparent through photos and property materials that the OA was wrong, then a reviewer needs to comment on that . Otherwise your post was spot on with good observation's!

 

[factsandtruth]

90-95% of the homes I've appraised are C3/C4-Q3/Q4

 

[Deleted member 128537]

The UAD,condition and quality ratings are supposed to be property specific, (not relative to each other. Meaning that if an OA used Q3 for subject and comps, but it looks wrong to you as a reviewer , the subject and coms should have been C4 per low end construction quality, then it does nnot matter that the appraiser was consistent, they applied an incorrect or misleading quality rating. As a reviewer you would have to comment on that.

In questionable properties where it could be a judgment call as a reviewer I'd likely give the OA benefit of the doubt. However, when it is apparent through photos and property materials that the OA was wrong, then a reviewer needs to comment on that . Otherwise your post was spot on with good observation's!

I suppose I could ding an appraiser for making a wrong quality definition, if everything in the appraisal was decent. But there comes a point when doing a review that I have to consider how much I am going to criticize an appraisal. I look for the big stuff that really affects value. If the quality definitions used by the appraiser are wrong and it affects value I will discuss it. But if they don't I'm going to pass on it. The appraiser that did my house for the sale was actually spot on in value. In fact I told my wife when we bought the house it would come in 20,000 higher than we purchased because we hit a distressed seller. The appraisal came in exactly 20,000 higher. I couldn't use my own house for a comparable for that reason. Skewed everything down.

So if I were to review it I would pass on the Q ratings and look for things that would affect value. Now the problem in the long run with this appraiser is what happens when he confronts a real Q3 home. Is he going to rate it Q2? And what about the cost approach then.

What I did find after reviewing some of this appraiser's work is he just picks numbers out of his rear when it came to the cost approach. I did nail him on my reviews of his work for that! My biggest complaint is that if appraisers use the wrong Q rating the cost approach is going to be fouled up if they are following Marshall and Swift. But I find many appraisers really don't do the cost approach properly. They just stick numbers in there, and just say "builders estimates." One of my biggest beefs.