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  #1  
Old 03-14-2006, 01:45 PM
Dave Evins Dave Evins is offline
 
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Default Concession Help

I'm appraising a condo that has a special assessment of $9500 for windows.

Its a sale. Asking price was $175,000, contract is for $182,000. It states that seller is prepaying special assessment.

Buyer wants to borrow 100% of the 182,000.

I need advice on how to proceed. ASAP. Thanks
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  #2  
Old 03-14-2006, 02:13 PM
Thomas Fiehler Thomas Fiehler is offline
 
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Location: Cincinnati,OH
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I would first check with the lender but probably they will want you to consider the windows in the value. Just include the value (not cost) in the appraisal and then make the appraisal subject to the new windows being installed. Hopefully your comps will be similar. (Sounds more like an assessment than a concession).
  #3  
Old 03-14-2006, 02:18 PM
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Lobo Fan Lobo Fan is offline
 
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It is what it is. Hopefully you can find comps with new or similar windows. $9500 sounds like a lot. Are there a lot of windows? Did they give the Pella man carte blanche?
  #4  
Old 03-14-2006, 02:25 PM
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Chris Colston Chris Colston is offline
 
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In just about every condo with special assessment that I've completed (many many many), the special assessment has been paid by the seller. Even though the seller will not have the benefit of the new windows. The seller was the one assessed and has to pay the assessment. The sale could fall through, the unit could be taken off the market, whatever. That is why the seller pays. Sometimes it's at the closing table, sometimes it's seperate. The bank usually will not lend on the unit with an outstanding special assessment. I don't see the difference in the list price and the contract price having anyhting to do with the special assessment 175,000 + 9,500 is 184,500 which is more than the 182,000 purchase offer. So it's not the assessment, but could be closing costs, which would be a concession. Could be a "hot" market and this was one of many offers. You'll have to investigate further to find out where the additional $$ are coming from.
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  #5  
Old 03-14-2006, 03:14 PM
Dave Evins Dave Evins is offline
 
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Its a hi-rise building with many large windows per unit. The numbers were rounded. The sales price is actually 8100 more than asking price.

Most recent comp sold for 6000 less than my subject. The assessment was paid by seller but separatelt from sales/contract price.

My subject's price includes the assessment.

Thanks for the replies.
  #6  
Old 03-14-2006, 04:47 PM
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Pamela Crowley (Florida) Pamela Crowley (Florida) is offline
 
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FIRST:

Ignore the subject contract and just do the appraisal as if there were no contract and you have no clue what the purchase price might be!!!!!!!

Once you're done with that, put in the report the factual information regarding the contract and it's terms, the listed price, etc.....

If your market data shows the contract is too high, then they will have to renegotiate it or cancel it. NOT the appraiser's problem!!!
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  #7  
Old 03-14-2006, 05:57 PM
Brad Ellis Brad Ellis is offline
 
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Dave,

Hi-rise condo- replacement windows? Hope you are not telling us that only some of the units are getting new windows...

Now if all of them are getting the windows then would not the slaes from this building have the same sort of sepcial assessment? Hmmm...

Chris,

Not sure of the laws in your state but back in IL the buyer was the one forced to pay any special assessment- not the seller. The HOA did not assess the seller; it assessed the unit and could not really care who owned it. The courts back there confirmed that the special assessment- if disclosed as is legally required there- would be payable by the one who benefitted the most.

I know- I ended up paying for my Dad's special when I brokered a condo to him!

Brad
  #8  
Old 03-15-2006, 02:19 AM
Dave Evins Dave Evins is offline
 
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Brad

The building was just assessed and there is not much sales data yet.

The whole building was assessed.
  #9  
Old 03-15-2006, 07:23 AM
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DTB DTB is offline
 
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Quote:
Originally Posted by Brad Ellis
Dave,

Hi-rise condo- replacement windows? Hope you are not telling us that only some of the units are getting new windows...

Now if all of them are getting the windows then would not the slaes from this building have the same sort of sepcial assessment? Hmmm...

Chris,

Not sure of the laws in your state but back in IL the buyer was the one forced to pay any special assessment- not the seller. The HOA did not assess the seller; it assessed the unit and could not really care who owned it. The courts back there confirmed that the special assessment- if disclosed as is legally required there- would be payable by the one who benefitted the most.

I know- I ended up paying for my Dad's special when I brokered a condo to him!

Brad
Point to remeber here is everything is negotiable. There is no law as to who pays what. There may be some default mechanism, but it's all negotiable.
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  #10  
Old 03-17-2006, 08:47 AM
Brad Ellis Brad Ellis is offline
 
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Mike,

Yes, of course, this can be handled by the contract. My comment assumed it was not in the contract.

Dave,

OK so the whole building is assessed. Now you can, hopefully, find sales that happened after the assessment, speak with the brokers or buildng sales agents, and hopefully find the ones where a similar situation occured.

That ought to give you the data.

Brad
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