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Seller Concessions

Discussion in 'General Appraisal Discussion' started by Cornelius, Apr 25, 2012.

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  1. NC Appraising

    NC Appraising Senior Member

    0
    Apr 28, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
  2. Cornelius

    Cornelius Junior Member

    0
    Feb 2, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina
    Thanks guys. This was extremely enlightening. I have always thought seller concessions should be adjusted for and do so regularly. And yes I have come up short on the purchase price more than once on new construction homes. My job is to give an honest opinion of value for the lender, not to make the deal work. This is the best data anyone has ever "shared" with me on the subject. I appreciate it very much.
     
  3. Pat Butler

    Pat Butler Senior Member

    10
    Jan 17, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Illinois
    It all starts with the definition of seller concessions. I think what Fannie is trying to do is to deliniate between expenses that are ordinarily paid for by sellers in a particular market-- like perhaps paying for a survey or termite inspection, versus flat out paying a lump sum to the buyer to assist with financing or affordability.
     
  4. Scott FL

    Scott FL Sophomore Member

    1
    Apr 12, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    Florida
    A perfect description of typical, traditional seller paid closing costs is offered by the original poster followed by a plea to support an incorrect position for analysis of concessions.

    The definition of “concessions” is not equal to the definition of “typical, traditional seller paid closing costs.”

    Concessions may be numerically equal to “seller paid closing costs” but concessions do not equal “typical, traditional seller paid closing costs” numerically or by definition.
     
  5. Cornelius

    Cornelius Junior Member

    0
    Feb 2, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    North Carolina

    Scott. I respectfully disagree. IMHO, the builder/seller is offering settlement assistance and it does impact the price a potential buyer would pay for the property.


    288
    Settlement Assistance or Seller Contributions

    289 The most common type of seller concession is settlement assistance to the buyer. Settlement

    290 assistance exists when the seller pays any fees or costs other than what is generally paid by a

    291 seller as a result of tradition or law and are found on virtually all sales transactions. The sellers
    292 payment of items such as: loan origination fees, appraisal fees, attorney fees, loan application
    293 fees, credit report fees, survey fees, fees for preparation of loan documents, fees for
    294 photocopying easements and restrictions, mortgage title policy, loan-related inspection fees, and
    295 recording fees, would all be considered concessionary in nature. These fees, when paid by the
    296 seller, are considered to be concessionary in nature if they are not paid by the seller as a result of
    297 convention or law on virtually all sale transactions.






    298 Settlement assistance is similar to “loan discount points paid by the seller” as it is a sum-certain

    299 amount generally agreed upon during contract negotiations. It is reasonable to conclude that
    300 payment of this type concession or lack thereof would have been a deciding factor and most
    301 likely impacted the price the seller was willing to accept. As such, the impact of said concession
    302 may be at least equal to the actual dollar amount of the concession.






    303 To determine the impact of settlement assistance on the contract price of a comparable sale, the

    304 appraiser may rely on deductive reasoning (along with the appropriate verification) or an





    305 interview with one of the agents or other parties to the sale.






     
  6. residentialguy

    residentialguy Elite Member

    145
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    1234567890-
     
    Last edited: Apr 29, 2012
  7. melissa995

    melissa995 Sophomore Member

    2
    Jun 19, 2008
    Professional Status:
    Licensed Appraiser
    State:
    Colorado
    http://www.hagarinstitute.com/index.php/online-classes.html- Defining Market Value and How to adjust for concession.
    Reporting "Market Value" is at the core of every appraisal. Failure to appraise at this value is a felony. Understanding Concessions are a critical part of determing value. This class will help the appraiser understand the process and how to properly create an appraisal.

    Well worth $25.00 on line. and if you look up the instructor he is heavily involved with appraisal fraud investigation
     
  8. Renee Healion

    Renee Healion Senior Member

    0
    Feb 21, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Connecticut
    APB draft

    Agents here have been counseled that revealing concessions is a violation of confidentiality so that door is now shut. Closings here are done with attorneys and they aren't talking. The best you can get now is when the MLS shows the closing price to be lower than the sales price in the land records. That happens because some agents only "see" the amount their commission is based on (no commission on concessions). That is a clue, not something to hang an adjustment decision on.

    If we are returning to times of private financing, then the good thing is those notes are recorded in order to be enforceable and we can read the terms. If there are unusual terms in institutional notes then the same research would reveal it.

    But that is about it for sources. No one is requiring disclosure of the information we need from those who are privy to it and there is legal advice for some of the sources NOT to report it. But it would be our felony?
     
  9. residentialguy

    residentialguy Elite Member

    145
    Mar 24, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    Minnesota
    So what did Hagar have to say about it?
     
  10. Jo Ann Meyer Stratton

    Jo Ann Meyer Stratton Elite Member

    40
    Jan 16, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    Arizona
    Richard Hagar will be in Phoenix this coming Weds and Thurs May 2nd and 3rd. His seminars are always very interesting and he provides good information. The weather is beautiful right now--come see us!
     

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