Property Inspection & Analysis: The Improvements Chapter 7 Property Inspection & Analysis: The Improvements Basic Real Estate Appraisal: Principles & Procedures – 9th Edition © 2015 OnCourse Learning

STUDENT LEARNING OUTCOMES Page192 Describe what Tools are Useful when making a Field Inspection Describe the Data emphasized in each of the Three Approaches to Value Identify the Major Components and Features of a Structure Describe Four Construction Classifications Explain what is meant by Functional Utility © 2015 OnCourse Learning

7.1 PLANNING THE BUILDING INSPECTION Page 193 Much of same equipment and tools that were needed for the Site Inspection are needed (see Chapter #6) The biggest difference and most important is to have an Inspection Checklist or Form for Recording your Data and Observations The Improvement Section of the Uniform Residential Appraisal Report (URAR) can serve this purpose (see next slide) . © 2015 OnCourse Learning

URAR – OLDER DESCRIPTON FORMAT Page 194 © 2015 OnCourse Learning

URAR – USING THE UAD FORMAT Page 194 © 2015 OnCourse Learning

WHAT INFO SHOULD YOU COLLECT? Page 195 Consider the Intended Use of Appraisal? Consider the Value Definition Special Conditions What Value Approaches Apply? © 2015 OnCourse Learning

7.2 PERFORMING THE INSPECTION Page 198 What to Inspect Extent of Inspection – Interior and/or Exterior Plan Where to Start Must You View All Finished Areas? Consider a 200-unit Apartment – All Units? What does the Client Expect (i.e. Scope of Work)? Attic, Basement and Mezzanine Areas © 2015 OnCourse Learning

EXTERIOR & INTERIOR FEATURES Page 200 Exterior Foundation, Wall Finish, Windows, Doors & Roof Other Structures, Landscaping, Paving Interior Number of Room and their Sizes Number of Baths and Fixtures in Each Type & Conditions of Materials, and Workmanship © 2015 OnCourse Learning

UNIFORM APPRAISAL DATASET Page 200 UAD Condition Ratings © 2015 OnCourse Learning

UNIFORM APPRAISAL DATASET (Con’t.) Page 201 UAD Quality Ratings © 2015 OnCourse Learning

UNIFORM APPRAISAL DATASET (Con’t.) Page 201 UAD – Updating & Remodeling Standards © 2015 OnCourse Learning

UNIFORM APPRAISAL DATASET (Con’t.) Page 202 UAD – Updating & Remodeling Standards Document all Observed Modifications with Photos! © 2015 OnCourse Learning

RATING FOR APPEAL & MARKETABILITY Page 202 Construction Quality & Physical Condition Room Sizes & Layout Closets & Storage Energy Efficiency Plumbing & Baths Electrical, Heating & Air Conditioning Kitchen Layout, Cabinets & Equipment Car Storage & Landscaping General Livability and Appeal Put Yourself in the Shoes of the Typical Buyer! © 2015 OnCourse Learning

EVALUATING CONSTRUCTION QUALITY Page 203 Typical Quality Ratings Per Cost Manuals Good – Better than average materials and workmanship Average – Medium quality meeting FHA and VA minimum standards Fair – Minimally acceptable; Meets minimum building codes Poor – Substandard UAD Quality Ratings are becoming the Standard © 2015 OnCourse Learning

EVALUATING PHYSICAL CONDITION Page 204 Also Reference UAD Condition Ratings Observe General Level of Upkeep Note and Document Items of Deferred Maintenance and Structural Defects Working Order of Appliances, HVAC, Plumbing and Electrical Signs of Water Leakage (Roof or Plumbing) Signs of Moisture / Mold © 2015 OnCourse Learning

EFFECTIVE AGE Page 206 Usually defined as the relative age of a structure considering its physical condition, marketability and degree of updating; versus the historical or Actual Age However, to comply with UAD standards, adjustments should be based on Actual Age! Effective Age estimates are considered too Subjective, versus more Absolute UAD terms Condition, Updating and Remodeling can be adjusted for separately from Age (Year Built) © 2015 OnCourse Learning

MEASUREMENTS & DRAWINGS Page 206 Gross Living Area (GLA) Finished and Heated Areas ANSI Standards Above-Grade vs. Below-Grade Areas Unfinished Areas Gross vs. Net Areas for Commercial Tape Measures vs. Laser Devices Balancing the Building Diagram (Close) Required Photographs © 2015 OnCourse Learning

BUILDING DIAGRAM EXAMPLE Page 209 © 2015 OnCourse Learning

7.3 CONSTRUCTION DETAILS Page 210 Construction Classifications are based upon framing/structural materials and resistance to fire. Class A – Fireproof steel frame, and reinforced concrete or masonry floors and roof Class B – Reinforced concrete frames and reinforced concrete or masonry walls, floors & roof Class C – Masonry exterior walls, and wood or exposed steel floor and roof Class D – Wood or light steel frame and roof; common for most residential structures in the West and South © 2015 OnCourse Learning

CONSTRUCTION DETAILS (Con’t.) Page 211 © 2015 OnCourse Learning

CHOICE OF MATERIALS Materials selection dependent on… Page 213 Materials selection dependent on… Climate, Availability and Cost Style, Durability and Code Requirements Typical Residential Specifications vary by location and continue to change Typical residential construction components, materials, and features are outlined on Pages 214 through 218 of the Textbook © 2015 OnCourse Learning

FUNCTIONAL UTILITY / FLOOR PLAN Page 220 Measures the Livability of a House Judged by a combination of usefulness and attractiveness along with floor plan and equipment/appliances Orientation of structure to views, sun, weather and natural topography A floor plan is judged by access to rooms, separation of areas, efficient and pleasant layout, and potential furniture placement © 2015 OnCourse Learning

STUDY IN FLOOR PLANS – HOUSE A Page 221 © 2015 OnCourse Learning

STUDY IN FLOOR PLANS – HOUSE B Page 221 © 2015 OnCourse Learning

ARCHITECTURAL STYLES Page 221 © 2015 OnCourse Learning

CHAPTER SUMMARY Page 223 The inspection and analysis of real property improvements require preparation and planning. The intended use of the report greatly affects the amount and kind of data required in the inspection and analysis of improvements. The purpose of most appraisals is to estimate market value. This generally requires a detailed description of the physical structure and a rating for market acceptability. © 2015 OnCourse Learning

CHAPTER SUMMARY (Con’t.) Page 224 Regardless of the approach to be emphasized, the building inspection should accurately describe and rate the physical features of the structure for marketability, quality of construction, and physical condition. It is desirable that the appraiser have a basic knowledge of design principles in construction. © 2015 OnCourse Learning

IMPORTANT TERMS & CONCEPTS Page 224 Above-Grade Effective Age ANSI Standard Floor Plan Architectural Styles Functional Utility Below-Grade Gross Living Area (GLA) Building Specifications Inspection Checklist Condition Quality Construction Classification © 2015 OnCourse Learning