A standardized appraisal rating that summarizes a dwelling's maintenance, wear, deterioration, repairs, and overall physical condition.
A property condition rating is a standardized appraisal classification that summarizes a dwelling’s maintenance, wear, deterioration, repair needs, and overall physical condition as of the appraisal date.
Condition can affect comparable-sale selection, appraisal adjustments, value support, collateral eligibility, and whether repairs are required before closing. The rating gives the lender a consistent starting point, but it does not replace the appraiser’s photographs, defect descriptions, and comments.
The rating is absolute rather than relative: the appraiser applies the defined criteria to each dwelling instead of calling the best home in a weak neighborhood “C1.” Two properties can receive the same rating and still need a value adjustment because the rating bands cover a range of observed features.
A condition rating is not a home-inspection grade or a guarantee that every component works. The appraisal addresses value and lender collateral requirements. A buyer’s home inspection serves a broader defect-discovery purpose.
Borrowers may see C1-C6 ratings in the appraisal report, comparable-sales grid, collateral review, or a Reconsideration of Value discussion. The subject and comparable properties receive ratings so the appraiser can analyze material condition differences.
If the report identifies serious deficiencies, underwriting may require an Appraisal Repair Requirement, an appraisal completed subject to repairs, or later verification. The reported defect and loan-program rule control the result, not the rating label by itself.
| Rating | Plain-language orientation |
|---|---|
| C1 | New, recently completed, never occupied, and showing no wear or physical depreciation |
| C2 | Like-new, recently constructed or comprehensively remodeled, with no deferred maintenance or needed repair |
| C3 | Well maintained, with minimal wear and limited age-related physical depreciation |
| C4 | Adequately maintained, with moderate normal wear and generally minor or cosmetic deferred maintenance |
| C5 | Significant wear from inadequate maintenance; repairs are needed, but the dwelling remains usable and functional |
| C6 | Severe damage, defects, or missing components affecting integrity or occupancy and requiring immediate correction |
The appraisal’s governing rating definitions provide the exact criteria. This table is a borrower orientation, not a replacement for those definitions.
The rating applies to the dwelling as a whole as of the appraisal’s effective date. Individual components can be better or worse than the overall category, so the borrower should still read the photographs and condition comments. A C4 dwelling, for example, may contain a newer roof and an older kitchen without either component alone determining the final rating.
A completed repair or renovation can support a different rating in a later appraisal, but the change is not automatic. The later appraiser must observe or receive adequate evidence of the work and apply the rating criteria to the resulting overall condition.
A subject home is adequately maintained but has dated finishes, worn flooring, and minor deferred maintenance. The appraiser assigns C4. A comparable remodeled to like-new condition is C2. The appraiser analyzes whether buyers pay a supported premium for that condition difference instead of assuming both homes are equal because their size and location are similar.
The C4 rating alone does not automatically require repairs. A specific safety or structural defect could require correction even when the overall rating is not C6.
Condition rating differs from Property Quality Rating. Condition describes present upkeep and deterioration; quality describes construction, workmanship, materials, and finish level.
It differs from Condition Adjustment. The rating classifies the property, while the adjustment reflects a market-supported value difference between subject and comparable.
It also differs from Physical Depreciation. Physical depreciation is value loss from age, wear, or deterioration. The condition rating summarizes the dwelling’s observed physical state, which can help the appraiser analyze that depreciation.