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  #1  
Old 08-14-2008, 12:24 PM
kristofer kristofer is offline
 
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Default Seller Concession Adjustments.

I am now confused on when to adjust for seller paid concessions. I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?
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Old 08-14-2008, 02:15 PM
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RSW RSW is offline
 
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Some appraisers do a $ for $ adjustment and some adjust for the difference of what is typical for the market and what was paid. Others may do it even differently. I typically adjust $ for $ as that is the concession being made by the seller. Each sale is unique to itself and I adjust accordingly based upon the sale.
  #3  
Old 08-14-2008, 02:38 PM
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Webbed Feet Webbed Feet is offline
 
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Quote:
Originally Posted by kristofer View Post
I am now confused on when to adjust for seller paid concessions. I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?
It might also be related to the fact I have yet to read any SFR appraisal report wherein the author had any proof whatsoever that the adjustment should not be dollar for dollar. Rather, I have only read nimrod boiler plate statements that concessions in the market are "typical" so therefore no adjustments for concessions were made at all. This of course assures the final opinion of value will be higher. However, "typically" in such reports I also found the appraiser involved not so much as reporting finanacing concessions anywhere from $4,000 to $18,000 per comparable transaction and their report was forwarded right to the state appraisal board. The board fined them nicely later too.

So far, so much for "Typical."

Webbed.
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Old 08-14-2008, 03:25 PM
leelansford leelansford is offline
 
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Quote:
Originally Posted by kristofer View Post
I am now confused on when to adjust for seller paid concessions. I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?
If you e-mail at (remove the spaces) Lansford @ ameritech. net I will provide you with an article on the topic of "concessions to the buyer".
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Old 08-14-2008, 03:40 PM
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Webbed Feet Webbed Feet is offline
 
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If you go to .................

http://oregonaclb.org/media/news7-03.pdf

or

http://oregonaclb.org/media/Summer2005Newsletter.pdf

either one that both have articles starting on page four, you will see my board has been trying to get this one through to appraisers for a very long time.

Webbed.
  #6  
Old 08-14-2008, 08:07 PM
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VolcanoLvr VolcanoLvr is offline
 
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Pull open any current Fannie/Fredddie report form...1004, 2055, etc.

Focus your eyeballs on the Def. of Market Value, concentrating on sentence (5), and the sentence following with the *.

You may not 'need' to make a dollar-for-dollar adjustment, but you certainly 'can.'

Then make the adjustment on line 2 in the grid.
  #7  
Old 08-14-2008, 09:28 PM
leelansford leelansford is offline
 
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Quote:
Originally Posted by leelansford View Post
If you e-mail at (remove the spaces) Lansford @ ameritech. net I will provide you with an article on the topic of "concessions to the buyer".


Kristofer, my offer remains open.
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  #8  
Old 08-14-2008, 09:37 PM
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Mztk1 Mztk1 is offline
 
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The only times I haven't done dollar for dollar adjustments is when the concession wasn't cash. Had four years of guaranteed rent at $2,500 per month when the market rent was $1,500/month, plus had $8,000 of furniture included in the same sale. A dollar for dollar adjustment would have been $56,000 but the market reaction I measured was about $18,000. All recent sales (10 of them) in the development had these concessions. Though it was now "typical" it still needed to be measured and adjusted.

I also question whether a $4,620 towards buyer's closing costs isn't better adjusted at $4,600, but then I second guess myselfbecause it seems arbitrary that I didn't round to $4,500 or even $5,000. It takes out the guess work to just go dollar for dollar when the concession is flat out cash.
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Old 08-15-2008, 09:22 AM
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Quote:
Originally Posted by Jim Klos View Post
The only times I haven't done dollar for dollar adjustments is when the concession wasn't cash. Had four years of guaranteed rent at $2,500 per month when the market rent was $1,500/month, plus had $8,000 of furniture included in the same sale. A dollar for dollar adjustment would have been $56,000 but the market reaction I measured was about $18,000. All recent sales (10 of them) in the development had these concessions. Though it was now "typical" it still needed to be measured and adjusted.

I also question whether a $4,620 towards buyer's closing costs isn't better adjusted at $4,600, but then I second guess myselfbecause it seems arbitrary that I didn't round to $4,500 or even $5,000. It takes out the guess work to just go dollar for dollar when the concession is flat out cash.
I have to agree with you there, Jim. I was thinking of closing costs and pre-paids being paid by the seller when I said $ for $.
  #10  
Old 08-15-2008, 10:08 AM
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Lawrence R. Lawrence R. is offline
 
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How do you measure the market's reaction for a specific set of 2 year old furniture?
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