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Unusual Amount of Seller Paid Closing Costs

Discussion in 'General Appraisal Discussion' started by BlueDog007, Jun 28, 2011.

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  1. BlueDog007

    BlueDog007 Member

    0
    Jan 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    South Carolina
    I am appraising a newly constructed home/builder sale. A comparable sale that features the exact same floor plan sold for $191,000. This sale included seller paid closing costs of $18,500. Typical seller paid closing costs in our market area are approximately 3%. I have never seen closing costs for a property so high.

    The MLS sheet for this property lists that the seller is willing to pay up to $3,000 in closing costs, not the $18,500. Disclosing closing costs isn't a "requirement" of our MLS, it's voluntary. I have an issue with this scenario. The $18,500 in CC for a $191,000 property is very concerning. The seller will not disclose anything in regards to the closing costs except for "closing costs differ from lender to lender"........Your thoughts about this?
     
  2. Smokey Bear

    Smokey Bear Elite Member

    0
    Dec 8, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    $3k for closing costs. The rest is cash back to the buyer, with the sale price jacked up to include the cash back. That way, the down payment is wrapped into the mortgage. Of course, you need two HUD-1's to pull it off well, since the banks don't like that scenario.
     
  3. Calvin the Airedale

    Calvin the Airedale Elite Member
    Gold Supporting Member

    0
    Aug 17, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Ohio
    Let me get this straight. You're talking about seller finance concessions for the buyer's closing costs?

    How do you typically adjust your comps when they contain such concessions?
     
  4. BlueDog007

    BlueDog007 Member

    0
    Jan 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    South Carolina
    Yes, seller paid closing costs for the buyer in the amount of $18,500 for a $191,000 property. Again, I have never seen anything like this!

    In this case, a negative $18,500 adjustment should be made.
     
  5. Riick

    Riick Elite Member

    49
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware
    $
    If it's one of your comps, yep,

    Conv. Mtg | Assist $18,500 || -$18,500 Adjustment

    /
     
  6. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    750
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    I would call the agent and find out what is the reason...and I would call the borrower if the agent is not cooperative
     
  7. BlueDog007

    BlueDog007 Member

    0
    Jan 25, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    South Carolina
    The agent will not tell me why they were so high. Stated they can't control what lenders charge for closing costs. I told her I understood, but they could control the amount they paid. Why did the seller pay that much? Agent danced around it and continues to ignore the question.

    Something seems shady for sure!
     
  8. MKBURNETT

    MKBURNETT Junior Member

    0
    Sep 11, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    The sales price is adjusted down the excess amount over typical is what I was taught. Lower and explain. That will also stop builder from trying this again and yes I have done this.
     
  9. normando

    normando Senior Member

    24
    May 2, 2009
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    In the past, I knew of a developer paying 3 years worth of HOA for the buyer but was not disclosed to the appraiser. And I wasn't that appraiser.
     
  10. cdeyoung20

    cdeyoung20 Junior Member

    0
    Aug 10, 2008
    Professional Status:
    Certified Residential Appraiser
    State:
    Louisiana
    Just my thoughts, but if this is on the subject property, then there would not be an adjusment in the grid. The purchase contract analysis should stat the the seller is paying $15,000 above traditional closing costs ant that you are not aware of the reasoning for the excess concessions. I would even go so far to state all the folks that you have spoken to in trying to get an answer. COMMENTS GALORE. I doubt very seriously this is going to get through underwriting, but you better cover yourself.
     
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