Chapter 6 The Improvements Section

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1 Chapter 6 The Improvements Section In this section, identify specific data relating to the improvements on the subject property. Improvements refer to any structure permanently attached to the site. 31

2 URAR Identify the structure and the amenities associated with it. Different agencies such as FNMA and various state appraisal boards have indicated that this is one of the weakest areas in most appraisal reporting. The Appraisal Standards Board has published AO-2, which provides some guidance on how to perform and report property inspections, as well as AO-23, which deals with relevant property characteristics. It is important to identify the relevant subject property characteristics along with the other information gathered in response to SR 1-2 in order for the appraiser to make a sound scope of work decision. The important elements of SR 1-2(e) are: Property location and physical, legal, and economic attributes; The real property interest to be valued; Any personal property, trade fixtures, or intangible items that are not real property but are included in the appraisal; Any known easements, restrictions, encumbrances, leases, or other items of a similar nature; and Whether the subject property is a fractional interest, physical segment, or partial holding Accepting a prospective assignment based on incomplete information may result in a significant mismatch between the scope of work and the valuation problem to be solved in the appraisal assignment. Many appraisers find the information spaces provided on the URAR to be incomplete; so additional information is often included in a supplemental or comment addendum. By communicating with the client, an appraiser should gather as much information about the purpose, intended use, intended users, etc. as well as characteristics of the subject property before deciding which characteristics are relevant and the appropriate scope of work. The following paragraphs illustrate the parts of the IMPROVEMENTS section of the URAR form. General Description In the Units section, check the One block if the subject contains only one unit. Check the One with Accessory Unit block if the subject property has an additional unit. In the # of Stories area, enter the number of above-grade stories in the unit. The Type area answers indicate if the unit is attached to any other unit, or if it stands alone. Is it Existing, Proposed, or Under Const.? If it is a proposed residence, this would be a hypothetical appraisal, and you may need to include several extraordinary assumptions. Is the structure complete, or are there some construction details to be finished? Check the appropriate boxes. 32

3 The Improvements Chapter 6 What style is the house? Design refers to its exterior appearance. Use a term that is common to the area where the property is located. s include ranch, colonial, Tudor, Spanish hacienda, and modern. In the Year Built area, enter the year the home was built. How old does the structure appear to be? How much market appeal does it have? You make this estimate based on the quality of construction, maintenance, and possible renovation. Since it is an estimate, you do not need to be precise. Some appraisers give a five-year range for Effective Age (35-40 years). Others express effective age in five-year increments, (20, 25, or 30 years). It is the effective age (not the actual age) that is the basis for the age adjustment that is made later in the appraisal grid and the depreciation calculations performed under the cost approach to value. General Description Units One One with Accessory Unit # of Stories One Type Det. Att. S-Det./End Unit Existing Proposed Under Const. Design (Style) Ranch Year Built 1988 Effective Age (Yrs) 15 Attic If the subject property has an attic, the appraiser has to identify the characteristics. This is done with simple check marks. Items that affect the value and desirability of the property may require further elaboration and you may need to address these items with analysis and commentary. None If the property has no attic, indicate by checking the box. Drop Stair If the attic is accessed by means of a pull-down ladder or stairs indicate by checking the box. Stairs If the property has permanent or fixed stairs leading to the attic indicate by checking the box. Floor If the attic has a floor, indicate by checking the box. Scuttle If the attic is accessed by means of a scuttle, a small square hatch that leads to the attic crawl space, indicate by checking the box. Finished If the attic is finished, indicate by checking the box. Heated If the attic is heated, indicate by checking the box. Attic Drop Stair Floor Finished None Stairs Scuttle Heated 33

4 URAR HUD is requiring appraisers to perform some duties that involve home inspections. The attic is an area that is important because it will often reveal infestation, roof leaks, and some structural problems. Therefore, if you are using the URAR for a FHA appraisal, you need to pay special attention to the attic. Foundation This item develops the characteristics of the foundation. Place a check mark in all boxes that apply. In some parts of the country, the foundation can be a combination of basement, slab, and crawlspace (raised foundation). In such cases, you will need additional explanation in your Comments Addendum. Concrete Slab Crawl Space Full Basement Partial Basement If the foundation is poured concrete, indicate by checking the box. If the foundation contains a crawl space, indicate by selecting the box. If the foundation contains a full basement, indicate by selecting the box. If the foundation contains a partial basement, indicate by selecting the box. If there is a basement, further development of the characteristics of the basement is required. Some split-level homes built on hillsides have areas that appear to be basements, but they are part of the square footage. It is important for the appraiser to determine if the basement is part of the house s square footage. In order to be part of the square footage, the basement area has to have heat, windows, and electricity. Basement Area Basement Finish Outside Ent/Exit Sump Pump Evidence of Enter the square footage of the basement here. If the house does not have a basement, write not applicable. Enter the percentage of the basement that is finished, regardless of the ratio of basement to the total ground floor area. If the basement were 30% of the ground floor area but was completely finished, it would be listed as 100% finished. Indicate whether the basement has an outside entrance/exit. In some parts of the country this is standard, and lacking an outside entrance is considered functional obsolescence. In other markets, outside basement entrances do not exist and do not affect value. Address this issue with analysis and commentary when applicable. A sump pump removes water from the lowest part of a basement and is designed to minimize dampness and the problems associated with it. Indicate whether the property has a sump pump and whether it is typical for the area. Does the lack of a sump pump affect the value or desirability of the property? If this is a significant issue, address it with analysis and commentary. Indicate if the basement shows evidence of Infestation, Dampness, or Settlement by selecting the appropriate boxes. 34

5 The Improvements Chapter 6 Foundation Concrete Slab Crawl Space Full Basement Partial Basement Basement Area 900 sq. ft. Basement Finish 50 % Outside Entry/Exit Sump Pump Evidence of Infestation Dampness Settlement Heating FWA HWBB Radiant Other Fuel If the heating system used is a forced warm air (FWA) system, indicate by checking the box. If the heating system used is a hot water baseboard (HWBB) system, indicate by checking the box. If the heating system used is a radiant system, indicate by checking the box. If the heating system is some other type, indicate by checking the box and entering the type of system. Enter the type of fuel used by the heating system. Heating FWA HWBB Radiant Other Fuel Electric Cooling Indicate whether the cooling system is central air-conditioning or some other type. It might be a window unit or swamp cooler. Window units are usually personal property and would not be considered air conditioning in this section. If no cooling system is present, evaluate whether this causes functional obsolescence in the subject property and quantify its impact on value and desirability. Address this with analysis and commentary as appropriate. Cooling Central Air If the property has central air conditioning, indicate by checking the box. Individual Other Individual If the property has individual units, indicate by checking the box. If the property has some other type of cooling, such as an evaporative cooling system, indicate by checking the Other box and provide an explanation in the comments section. Central Air Conditioning Other 35

6 URAR Exterior Description materials /condition Foundation Walls Exterior Walls Roof Surface Gutters and Downspouts Window Type Storm Sash/ Insulated Screens Exterior Description Foundation Walls Exterior Walls Roof Surface Gutters & Downspouts Window Type Storm Sash/Insulated Screens Describe the type of material used to construct the foundation walls and their condition. Describe the type of material used to construct the exterior walls and their condition. Many types of materials are used in different areas of the country; use terminology that is common to the area. Describe the type of construction material and condition of the roof. Describe the type of material used for the gutters and downspouts and their condition. If gutters and downspouts are not present, state the material used for the roof overhang. Is this material able to drain water away from the foundation? Address the lack of gutters and downspouts with analysis and commentary, stating its impact on value and desirability in the marketplace. Identify the type of windows used, the material used, and the condition of the windows. Become familiar with the many styles of windows used in your area, their names, and materials. Abbreviations may be necessary for this item. Indicate whether storm windows or insulated windows are installed. If installed, indicate their condition. Indicate whether window screens are installed. If installed, indicate their condition. materials/condition Block Good Stucco Excellent Tile Excellent Aluminum Good Double hung wood Good none Aluminum Good Amenities State any additional amenities that may affect the property s value. This is done by checkmark, but if further elaboration is necessary, provide the appropriate analysis and commentary in the comments section. FNMA, State Appraisal Offices, and others have indicated that one of the recurring problems with URAR reports is the lack of suitable and complete property descriptions. Advisory Opinion 23 in the back of the USPAP manual should be consulted for additional information and suggestions. Your Comment Addendum needs to have an adequate description of the property amenities. So, we recommend that besides checking the appropriate box below, the appraiser describe the property amenities in some detail in the Comment Addendum. Fireplace(s) # Indicate whether the property contains fireplaces and the number of fireplaces if applicable. Further details should be provided in the comments addendum. 36

7 The Improvements Chapter 6 Patio/Deck Pool Wood Stove(s) # Fence Porch Other Indicate whether the property contains a patio, deck, or neither. Further details should be provided in the comments addendum. Indicate whether the property contains a pool. Further details should be provided in the comments addendum. Indicate whether the property contains wood stoves and the number of wood stoves if applicable. Further details should be provided in the comments addendum. Indicate if the property has a fence. Further details should be provided in the comments addendum. Indicate if the property has a porch. Further details should be provided in the comments addendum. Indicate if the property contains any additional amenities not listed previously. Address these amenities in the comments addendum. Amenities Wood Stove(s) # Fireplace(s) # 1 Fence Patio/Deck Porch Pool Other Interior materials/condition Floors Enter the material that covers the floor (tile, hardwood, carpet, vinyl) and its condition. If a home has custom flooring, the appraiser will need to discuss this in an addendum. Walls Trim/Finish Bath Floor Bath Wainscot State the material that covers the walls (drywall, plaster, wood paneling, and ceramic tile) and its condition. State the trim and finish of the interior (standard molding, custom molding, paint, or plastic) and its condition. Enter the material that covers the floors in the bathrooms (tile, vinyl, hardwood, carpet) and its condition. Wainscot is the splash surface in showers and tub enclosures. State the material it is composed of (ceramic tile, cultured marble, fiberglass, waterproof wallpaper) and its condition. Interior Floors Walls Trim/Finish Bath Floor Bath Wainscot Materials/condition Hardwood/Carpet - Good Drywall - Good Paint - Poor Vinyl - Average Ceramic - Avg 37

8 URAR Car Storage Car storage is an important issue, especially in areas with high population density. Accurately describe what car storage exists on the subject property and analyze this information to determine its impact on value and desirability. Enter the number of cars that can be stored in the garage and/or carport and check the boxes for each item that exists on the property. Car Storage None Driveway # of Cars 2 Driveway Surface Concrete Garage # of Cars 2 Carport # of Cars Att. Det. Built-in Appliances Identify the appliances that are included in the appraisal. Typically, these will be considered fixtures and are items that were once personal property but have since been permanently attached to the land or building. However, non-fixture items that are being sold with the property may be included here as well. Appliances Refrigerator Range/Oven Dishwasher Disposal Microwave Washer/Dryer Other (describe) Finished area above grade contains: List the count for each category provided on this line. Rooms are identified as the total of above grade rooms, not including bathrooms, foyers, laundry rooms, attics or basements. Finished area above grade contains: 7 Rooms 2 Bedrooms 2 Bath(s) 986 Square Feet of Gross Living Area Above Grade Additional Features (special energy efficient items, etc.) Has the information presented in the previous sections on page one provided a complete picture of all of the property s amenities? If there are additional items that influence the value or desirability of the property, list them here. As appropriate, address these items with analysis and commentary on additional addenda if necessary. If you have no additional amenities to report, state None. Additional Features (special energy efficient items, etc.) extensive landscaping front and rear. Subject also has special energy efficient windows throughout, gazebo in rear yard, and 38

9 The Improvements Chapter 6 Describe the condition of the property (including needed repairs, deterioration, renovation, remodeling, etc.). Thus far, on the form, you have given a thorough identification of the improvements, but you need to describe the quality of the improvements and their condition here. Address these issues with analysis and commentary for quantification later in the presentation. If there are any physical deficiencies or conditions, describe them here or in an addendum. If there are no deficiencies affecting the value of the property, write N/A or leave blank. 1 Describe the condition of the property (including needed repairs, deterioration, renovation, remodeling, etc.). The subject is in good overall condition. No functional obsolescence or external obsolescence was noted. Physical depreciation is typical for this neighborhood. 2 Describe the condition of the property (including needed repairs, deterioration, renovation, remodeling, etc.). The subject is in fair overall condition. There is deferred maintenance in both the interior (carpet and paint) and exterior (roof and paint). No functional obsolescence was noted. The subject backs to the freeway creating external obsolescence. The depreciation caused by physical and external factors is quantified in this report in the cost approach. Are there any physical deficiencies or adverse conditions affecting the livability, soundness, or structural integrity of the property? If the physical deficiencies or conditions affect the livability or soundness, or structural integrity of the property, select Yes and describe how, here or in an addendum. If they do not affect the livability or soundness, or structural integrity of the property, check No. Are there any physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity of the property? Yes No If yes, describe Does the property generally conform to the neighborhood (functional utility, style, use, construction, etc.)? If the property generally conforms to the neighborhood, select Yes, if it does not select No. If No is selected, describe how the property differs and how that affects the value of the property. Does the property generally conform to the neighborhood (functional utility, style, use, construction, etc.)? Yes No If No, describe 39

URAR Chapter 6 Review Exercise Instructions: Using the information provided, complete the blank URAR Improvements section. Check your work using the Answer Key in Appendix A.

This is a single-story ranch style house built in 1988 and contains eight rooms, including four bedrooms, two full baths, and 1680 square feet of above grade living area.

The foundation is concrete slab (in excellent condition) and the home contains no basement. Heating as well as cooling is provided through a central forced air unit.

10 URAR Chapter 6 Review Exercise Instructions: Using the information provided, complete the blank URAR Improvements section. Check your work using the Answer Key in Appendix A. The subject property is an existing single family detached home. This is a single-story ranch style house built in 1988 and contains eight rooms, including four bedrooms, two full baths, and 1680 square feet of above grade living area. The home is in excellent condition and appears to be between 10 to 15 years old. An unfinished attic is accessed via a scuttle located in a hallway closet. The foundation is concrete slab (in excellent condition) and the home contains no basement. Heating as well as cooling is provided through a central forced air unit. The exterior walls are painted stucco and are in excellent condition. The roof surface is concrete tile in excellent condition. Aluminum gutters and downspouts are installed and are in good condition. The windows are single pane with aluminum framing in fair condition. There are no storm windows and the window screens are aluminum framed in fair condition. The living room has a stone-faced gas-fired fireplace. There is a concrete slab patio and cinderblock walls in the backyard, both are in excellent condition. The home also includes a concrete patio with an in-ground heated spa. The interior walls are painted 40

11 The Improvements Chapter 6 drywall with standard painted molding and trim in good condition. The floors are a combination of vinyl flooring and wall-to-wall carpeting, which are in excellent condition. The bathroom floors are vinyl with vinyl wainscoting throughout, also in excellent condition. There is a detached 2-car garage and a poured concrete driveway. The fixtures that are included with the appraisal are a built-in dishwasher, a garbage disposal, and a built in oven and range. There are no physical deficiencies or adverse condition that would affect the value of this property. The overall quality of the property is excellent and generally conforms to the neighborhood. 41

12 URAR 42

GROUNDS Grading General Grading, slope and drainage: Satisfactory N/A See Notes. Grading and slope at house wall

GROUNDS Grading General Grading, slope and drainage: Satisfactory Grading and slope at house wall Satisfactory (within 5 feet from building) Sidewalk Concrete Brick Flagstone Other Patio stones Driveway