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Concessions CDD Fees.

Discussion in 'General Appraisal Discussion' started by WadeKoutnik, Nov 6, 2009.

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  1. WadeKoutnik

    WadeKoutnik Sophomore Member

    0
    Feb 27, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    All the comps in this neighborhood have concessions where the builder is paying their CDD fees for the the life of the fees (roughly 1200 a year). What number would you use as a concession adjustment for this?
     
  2. Ken B

    Ken B Elite Member

    82
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Is the builder paying up front or just until he transfers all his assets to a new corporation and declares bankruptcy?
     
  3. WadeKoutnik

    WadeKoutnik Sophomore Member

    0
    Feb 27, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Definitely not up front
     
  4. Ken B

    Ken B Elite Member

    82
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    Technically, if you felt it proper to adjust dollar for dollar, you would need to discount all the future payments to a present value using an appropriate rate.

    You should also determine if the builder's contributions are transferable to a new owner in the event the original owner sells. If not, you need to conclude how long the typical owner will retain the property prior to resale.

    In practice, you should ask yourself what, if any, impact the contribution had on value. It may be more or less than the present value of the future payments.

    You do bring up the question of what impact the CDD assessment may have on value of a property in the CDD compared to a property outside the CDD. You may find properties subject to a CDD assessment sell for something less than properties not subject to that assessment.

    A truly astute purchaser would require the builder deposit the future CDD payments in an interest-bearing escrow account with the amount deposited representing the present value of the future payments discounted at a safe rate as represented by the interest paid on that account.
     
    Last edited: Nov 6, 2009
  5. WadeKoutnik

    WadeKoutnik Sophomore Member

    0
    Feb 27, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    My initial thought was the present value of those payments over the time period a typical buyer stays in a home in this market.

    That seems the most logical
     
  6. Ken B

    Ken B Elite Member

    82
    Feb 18, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    But does the market follow your logic? :)
     
  7. WadeKoutnik

    WadeKoutnik Sophomore Member

    0
    Feb 27, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    Does it follow anyones?? :new_all_coholic:
     
  8. Mike Kennedy

    Mike Kennedy Elite Member

    59
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    If All the comps are IN this neighborhood have concessions where the builder is paying their CDD fees ....

    Why would adjustment to the comps IN that "neighborhood"/development be necessary? Would sales OUTSIDE be truly comparable?
     
  9. Mike Boyd

    Mike Boyd Elite Member

    0
    Jan 18, 2002
    Professional Status:
    Retired Appraiser
    State:
    California
    OR, post a bond.
     
  10. VolcanoLvr

    VolcanoLvr Senior Member

    5
    Oct 30, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Washington
    Would someone kindly define "CDD fees."

    (serious inquiry, as I have not encountered this out here in the wild west)
     
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