Confused About Stupid Seller Paid Concessions

[Deleted member 134708]

I would have support for the adjustment and would make it. 100% of appraisers wouldn't do a positive adjustment as they would be too scared to go against the status quo...or too lazy.

 

[residentialguy]

I would have support for the adjustment and would make it. 100% of appraisers wouldn't do a positive adjustment as they would be too scared to go against the status quo...or too lazy.

We can't make a positive concession adjustment...and this is not a concession adjustment. If you are doing it as a concession adjustment, then you are wrong. If anything, it would be a quick sale adjustment and I would make that kind of adjustment, if that were the case...so apparently not 100% of appraisers

However, this has nothing to do with your original post. You need to re-think your "no adjustments" for concessions. They almost always do affect the sale price of that sale. You need to start verifying it with the listing agent.

 

[Deleted member 134708]

Where do I put the adjustment for "they liked the buyers letter of intent to purchase better" so they went with the $5k closing cost even though had 10 other no concession offers?

 

[J Grant]

Cookie cutter subdivision....All five sales are FHA/USDA with $3K-$4K seller paid closing costs.

Subject ALSO has $3,500 is seller paids.

The appraisal is not coming in due to all the comps seller paid concessions.

What would you do.

Search back further in time and for other sales in area...what are sales without concessions vs sales with concessions selling for? Read the URAR what it says, the adjustment by appraiser is for market reaction to the concessions, and is made per judgment of the appraiser (which does not make it easier but is the guide) Fannie to muddy the waters in an FAQ suggests basing a concession on what the property would have sold for without it, but imo, that again comes down to appraiser' judgement and how is market pricing seen in concession vs non concession sales. We can call a RE agent and ask them, but their answer comes from their point of view and is not necessarily our answer.

 

[nachocheesefries]

Tim has a good point. Did you call the listing agent and ask them if the seller would have sold for $3-$4k less if they didn't have to pay out $3-$4k from their pocket? 99.99% of the time they would, of course...but there's always that .01% chance.

I have one client that is making me put a specific comment in the report that we interviewed every agent on each sale with concessions...such a waste of time.

 

[Deleted member 134708]

I call all the realtors and ask if they believe concession had any affect. They says no and give myriad reasons.

I don't stop there.

I analyze that sale against others and the story they gave me. Almost always checks out.

I analyze sales price, not net to buyer. Lot of appraisers analyze net to buyer but for some reason leave out realtor fees, transfer, tax etc.

 

[residentialguy]

Where do I put the adjustment for "they liked the buyers letter of intent to purchase better" so they went with the $5k closing cost even though had 10 other no concession offers?

If they needed to sell quicker than reasonable market time, then I would personally put the adjustment on the first line of "arms length". The 2nd line is your concession adjustment line. You could also make a separate line adjustment at the bottom.

 

[nachocheesefries]

Report the correct value and explain that the sale price was affect by the concessions, thus was over market value. On a side note, $3,500 is a very small amount. Do all the comps adjust under the sale price? How about your pending sales? What are they selling for (verified amount after concession adjustment)

So....if the final sales price WAS affected by the concession OR ANOTHER WAY OF SAYING IT IS...the sales price would have been lower if not for the concession, then WE MUST ADJUST for the concession right?

This seems so obvious in 99% of the cases that it is confusing me as to why anyone would NOT make a deduction for the occurrence of seller paids...I'm sure there are obscure reasons out there though.

 

[Deleted member 134708]

If they needed to sell quicker than reasonable market time, then I would personally put the adjustment on the first line of "arms length". The 2nd line is your concession adjustment line. You could also make a separate line adjustment at the bottom.

I would put it on the arms-length line also. But still not a forced quick sale. Just had optionality value for them and they liked idea of cash. They are gold bugs, if someone offered gold they would prob took even less.

Just preference to sell below MV. People make stupid financial decisions all day everyday. Why would a house transaction be any different.

 

[residentialguy]

I call all the realtors and ask if they believe concession had any affect. They says no and give myriad reasons..

You're asking the wrong question. You're asking them an opinion. You need to find out what that house would have sold for if the buyer didn't need the concessions paid. You need to ask them the same thing I stated above. If the buyer told the seller that he no longer needed him to shell out $4k from his pocket, would he agree to lower the price $4k. I've never had an agent tell me that they wouldn't, except for rare circumstances where the buyer was paying him back in another manner, eg financing through the seller.