What is the property condition ratings ?

[Ben Im]

I received a mail from a client who going to invest to a rental property I 've done inspection.
He stated my report does not include " property condition ratings " and he want to pick one from c1 to c6. The mail looks very formal and important to them ( maybe invest group)
now, I have 2 questions;
Anyone knows about this 'property condition rating chart', Where it comes from?
Should I answer him ( based on my report, I 'll pick between C4 to C5)

Here is the chart (Sorry, it's too long. Don't read all if not interested )



Rating
Description
C1
The improvements have been very recently constructed and have not previously been occupied. The entire structure and all components are new and the dwelling features no physical depreciation.
Note: Newly constructed improvements that feature recycled materials and/or components can be considered new dwellings provided that the dwelling is placed on a 100 percent new foundation and the recycled materials and the recycled components have been rehabilitated/re-manufactured into like-new condition. Improvements that have not been previously occupied are not considered “new” if they have any significant physical depreciation (that is, newly constructed dwellings that have been vacant for an extended period of time without adequate maintenance or upkeep).
C2
The improvements feature no deferred maintenance, little or no physical depreciation, and require no repairs. Virtually all building components are new or have been recently repaired, refinished, or rehabilitated. All outdated components and finishes have been updated and/or replaced with components that meet current standards. Dwellings in this category either are almost new or have been recently completely renovated and are similar in condition to new construction.
Note: The improvements represent a relatively new property that is well-maintained with no deferred maintenance and little or no physical depreciation, or an older property that has been recently completely renovated.
C3
The improvements are well-maintained and feature limited physical depreciation due to normal wear and tear. Some components, but not every major building component, may be updated or recently rehabilitated. The structure has been well-maintained.
Note: The improvement is in its first-cycle of replacing short-lived building components (appliances, floor coverings, HVAC, etc.) and is being well– maintained. Its estimated effective age is less than its actual age. It also may reflect a property in which the majority of short-lived building components have been replaced but not to the level of a complete renovation.
C4
The improvements feature some minor deferred maintenance and physical deterioration due to normal wear and tear. The dwelling has been adequately maintained and requires only minimal repairs to building components/mechanical systems and cosmetic repairs. All major building components have been adequately maintained and are functionally adequate.
Note: The estimated effective age may be close to or equal to its actual age. It reflects a property in which some of the short-lived building components have been replaced, and some short-lived building components are at or near the end of their physical life expectancy; however, they still function adequately. Most minor repairs have been addressed on an ongoing basis resulting in an adequately maintained property.
C5
The improvements feature obvious deferred maintenance and are in need of some significant repairs. Some building components need repairs, rehabilitation, or updating. The functional utility and overall livability are somewhat diminished due to condition, but the dwelling remains useable and functional as a residence.
Note: Some significant repairs are needed to the improvements due to the lack of adequate maintenance. It reflects a property in which many of its short-lived building components are at the end of or have exceeded their physical life expectancy, but remain functional.
C6
The improvements have substantial damage or deferred maintenance with deficiencies or defects that are severe enough to affect the safety, soundness, or structural integrity of the improvements. The improvements are in need of substantial repairs and rehabilitation, including many or most major components.
Note: Substantial repairs are needed to the improvements due to the lack of adequate maintenance or property damage. It reflects a property with conditions severe enough to affect the safety, soundness, or structural integrity of the improvements.

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[Jerry Peck]

Sounds like it is from the Property Condition Assessment form, which is a different type of inspection, for a different purpose, which costs more, and is done on the Property Condition Assessment form ... and did I say it the inspection costs more (because it takes longer) ...

You can get the form here: ASTM E2018-15 Standard Guide Property Condition Assessments: Baseline Property Condition Assessment Process

[BARRY ADAIR]

Property Condition Ratings

For appraisals required to be completed with the UAD, the appraiser must assign one of the following standardized Condition ratings in the table below when identifying the condition of the improvements for the subject property and comparable sales.

https://www.fanniemae.com/content/gu...b4/1.3/06.html

[Ben Im]

So, you guys mean that rating is beyond the scope of a home inspection ?

Thank you for those informations

[Jerry Peck]

So, you guys mean that rating is beyond the scope of a home inspection ?

Ben,

Yes, no, and maybe.

Yes - Condition Assessment inspections and Property Condition Ratings are outside the scope of a normal/regular home inspection.

No - they are not outside the scope of what an investor may ask for ... or what they may expect if they thought that was what they were asking for without knowing what to ask for.

Maybe - it depends on what the client asked for, on what you talked about, and what is in your contract ... but Condition Assessment inspections are typically asked for on commercial properties, seldom on residential properties (at least to my knowledge, having retired from home inspections over 10 years ago).

[Markus Keller]

Another HI doing commercial work that doesn't understand its not a home inspection. Different standards, different report, different time and cost.

[Jerry Peck]

Another HI doing commercial work that doesn't understand its not a home inspection. Different standards, different report, different time and cost.

I disagree, Markus - he was not doing "commercial work", it was stated as being a "rental property", which indicates that it is residential, not "commercial", and the person buying the house, as an investor, could very well have asked for a "home inspection".

Then, the investor may have been talking to other investors (who may be investing in commercial properties) started asking about the different ratings.

I would not jump on someone and make a dig at them as "Another HI doing commercial work that doesn't understand its not a home inspection.", when in fact it may well have been nothing more than a "home inspection" which was asked for.

And, yes, I am guilty of jumping on you for your jumping on him with your dig - and, to me, your dig was completely unnecessary when we do not know what was asked for ... which could lead me to say (but I won't) that you do not understand the difference between residential and commercial based on your dig (but, I guess I just did say that, didn't I? ).

We must all fully understand the question (as best possible) before making digs, or, maybe we should not make digs anyway, rather explain differences based on different scenarios of what may, or may not, have occurred.

Putting my shovel down now ... no more digs.

Here is the shovel so you can dig your way back up to ground level ... (just lending a helping hand here).

[Ben Im]

The buyer ordered a 'Home Inspection' and I gave them a report on the duplex ( 5bed/3bath on each unit) which many tenants reside.
then the buyer asked me about the 'property condition rating' a week later
...
that's all

[Rich Goeken]

Another HI doing commercial work that doesn't understand its not a home inspection. ......

Cold Markus... VERY cold!!!!

[Tom Rees]

Another HI doing commercial work that doesn't understand its not a home inspection. Different standards, different report, different time and cost.

A Duplex is not normally considered a commercial property.

[harvey kelly]

Once the house or duplex is available for rent then it has to be considered commercial property as this is a predominently business asset and the owner does not live in the house. I think it is a good move by the invester to hire a home inspector because who would know more about inspecting homes? If they just want you to rate it according to the forms ratings, then I guess you can do it or refuse. The only concern I would have is the liability issue.

[Jerry Peck]

Once the house or duplex is available for rent then it has to be considered commercial property as this is a predominently business asset and the owner does not live in the house.

That would be an incorrect consideration as the building was constructed under the Residential Code, is considered residential property, and is used for residential purposes (until it is turned into a lawyer's office or similar, at which time the occupancy changes from R (Residential) to B (Business) ... at which time many things need to be reassessed for the new occupancy, not the least of which would be the separation wall and its fire resistance rating, accessibility, among other things.

Just because it is a duplex (which is, after all, nothing more than a two-family dwelling) has no bearing on being "commercial".

I think it is a good move by the invester to hire a home inspector because who would know more about inspecting homes? If they just want you to rate it according to the forms ratings, then I guess you can do it or refuse. The only concern I would have is the liability issue.

The catch here is that the investor asked for a "home inspection" ... then later asked about condition assessments ... two completely different types of inspections.

[harvey kelly]

Just because it is a duplex (which is, after all, nothing more than a two-family dwelling) has no bearing on being "commercial".[/QUOTE]

The main point I was making is that the duplex is being turned into a business asset which would allows for different tax treatment and would be a business asset. I can only assume that the inspection was order before the property changed hands which would put it in the home inspection catagory. The new owner is going to make changes in the future and he is going to want that tax treatment. It is a good ideal to get the house inspected by an expert. As he moves along to where he wants to be he may need other things such as a conditon assesment.



The catch here is that the investor asked for a "home inspection" ... then later asked about condition assessments ... two completely different types of inspections.[/QUOTE]

I still think that the inspector can either reply or reject the request. He can reply and send him a bill. He can reply and send no bill in the hopes that maybe this person will hire him for more work. He can also say no. They may be two different types of inspections but that is not the issues. The issue is how you want to deal with it.

[Jerry Peck]

The main point I was making is that the duplex is being turned into a business asset which would allows for different tax treatment and would be a business asset.

So, if you apply what you are saying ... EVERY home which is purchased by: an investor to rent, a flipper to sell, an investor to sell, and every single homeowner who thinks they will reap the benefits of home ownership (appreciation is one of the largest perceived benefits) ... should order a "commercial" inspection.

You are not selling that here to me, or even anything remotely like it, not even a dumbed down version of it.

[harvey kelly]

So, if you apply what you are saying ... EVERY home which is purchased by: an investor to rent, a flipper to sell, an investor to sell, and every single homeowner who thinks they will reap the benefits of home ownership (appreciation is one of the largest perceived benefits) ... should order a "commercial" inspection.

You are not selling that here to me, or even anything remotely like it, not even a dumbed down version of it.

I never mention commercial inspection you are making assumptions to support your position. I do not understand what your point is from the above quote about home ownership and appreciation. There are tax benefits for individual home ownerhip but there are better tax benefits from rental properties or being a landlord. Of course the flip side is bad tenants who destroy your property.

[Jerry Peck]

Once the house or duplex is available for rent then it has to be considered commercial property as this is a predominently business asset and the owner does not live in the house.

The above is what *YOU* said ... *I* am pointing out some of the reasons that is incorrect.

I never mention commercial inspection you are making assumptions to support your position.

You did, see your above quote.

I will use a phrase from a T-shirt my wife recently bought me - "I'm not arguing. I'm explaining why I'm right."

I do not understand what your point is from the above quote about home ownership and appreciation. There are tax benefits for individual home ownerhip but there are better tax benefits from rental properties or being a landlord. Of course the flip side is bad tenants who destroy your property.

So you are adding tax benefits to appreciation of assets as a reason that every home owner has a "business" "investing" in the purchase of their house.

[Garry Sorrells]

Once the house or duplex is available for rent then it has to be considered commercial property...

That would be an incorrect consideration as the building was constructed under the Residential Code, is considered residential property, ....

Geeees, you two are arguing over two different things, an "activity/purpose" and a "zoning classification". IRS VS ZONING

A home office room/area declared as a business expense does not make the entire house a commercial property.

[Garry Sorrells]

If you are using a property as collateral for a loan/mortgage and you are not going to reside in that property a bank will look at the paper as commercial in nature and there is a different set of requirements for a bank to make that loan.

Fannie Mae requirements for appraisal are used by different lenders as part of their loan process that may not be connected to a Fannie May backed loan.

The fact that Ben's client asked for the condition report seems to display ignorance on the client's part. That is assuming that Ben obtained a contact for what Ben's services covered, both in scope and form of the report for the property inspected.

As in all inspection work there is liability for what you do and what you write. The condition statement would add just another layer to those liabilities.

I look at the Condition Report as just a different inspection format, kinda check list oriented.


This is a good link to understand Fannie Mae
https://www.fanniemae.com/content/gu...b4/1.3/06.html

B2-2-03: Multiple Financed Properties for the Same Borrower (03/29/2016

https://www.fanniemae.com/content/guide/selling/b2/2/03.html