Denver appraiser Fred Rossiter had this as the topic of his most recent blog post, and he makes a compelling argument that providing a rating condition on MLS listings is not only a good idea but easy to implement in a fair and reasonably consistent manner.
As Fred states in his first paragraph, which you can read at www.FredRossiter.com, condition “is neither asked nor is there a field provided for an answer. Condition is a glaring omission on our MLS input forms. It’s time for a change!” I agree.
You may think that a listing’s condition is too subjective to quantify, but he points out that Fannie Mae has created a “Property Condition Rating” system that all appraisers must follow and which could easily be adopted by REcolorado, Denver’s MLS.
Here are the 6 ratings which appraisers can assign to homes, along with guidance for selecting each rating:
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.
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 All outdated components and finishes have been updated and/or replaced with components that meet current standards.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.
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.
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.
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.
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.
For each of the above ratings, Fannie Mae provides “notes” giving additional guidance about selecting each rating level, which makes it easy even for a non-appraiser such as a listing agent to assign the right condition rating to a listing.
The only field currently in our MLS that relates to condition is the term “fix-up,” but that’s an undefined term, not required, and some sellers tell their listing agent they don’t want that term used.
I like this rating idea a lot.