An appraiser observes that a subject property's roof has widespread granule loss, exposed asphalt, and multiple blisters. The roof was installed 12 years ago, and local market data indicates typical asphalt shingle roofs in this climate last 18–22 years. What is the most appropriate condition rating for this roof under the Fannie Mae Selling Guide (Form 1004) condition scale?
Correct Answer
A) C3 — Fair: Some components need repair or replacement; overall condition is below average but functional.
Per Fannie Mae Form 1004 instructions, a C3 rating applies when components show noticeable deterioration (e.g., granule loss, blistering, exposed substrate) but remain functional and safe, with remaining economic life estimated at 50–75% of typical. Here, 12/20 = 60% remaining life aligns with C3. C4 requires impairment of function or safety (e.g., active leaks, sagging), and C5 implies imminent failure or hazard—neither is indicated. C2 is inappropriate given visible, widespread distress beyond minor wear.
Why This Is the Correct Answer
Per Fannie Mae Form 1004 instructions, a C3 rating applies when components show noticeable deterioration (e.g., granule loss, blistering, exposed substrate) but remain functional and safe, with remaining economic life estimated at 50–75% of typical. Here, 12/20 = 60% remaining life aligns with C3. C4 requires impairment of function or safety (e.g., active leaks, sagging), and C5 implies imminent failure or hazard—neither is indicated. C2 is inappropriate given visible, widespread distress beyond minor wear.
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Two comparables' GLA figures came from tax records and the third from the appraiser's own measurement. The best practice is to:
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An appraiser is valuing the leasehold interest in a property where the contract rent is $2,000 per month and the market rent is $2,500 per month. The lease has 5 years remaining. Using a 10% discount rate, what is the value of the leasehold interest?