Contract, New Construction

[J Grant]

The problem I've seen is the rarity when a "concession" is not a dollar for dollar impact upon the seller's resulting net from the sale.

It is NOT about the seller's resulting net from the sale!!! That is a mistake that we see made. It is about the PRICE in the sale. Did the concession affect the PRICE (regardless of net to seller,)

That means the price as compared to the prices of similar homes that sold without a concession. While it is rare for sales to match up perfectly, enough can be compared to see if the concession affected the price or not.

If the concession affected the price, it might be $ 4 $, or it might not. We should be able to see that in the price especially after all key adjustments were made.

 

[Terrel L. Shields]

It is NOT about the seller's resulting net from the sale!!!

Yes it is - that's the true sale price - net to seller and that includes the RE commission. Absolutely. Otherwise it's the old "I sold my coon hound for $1200 but I had to take 10 $100 barn cats in on the trade" problem.

 

[J Grant]

This^^^

What some appraisers apparently are unwilling or unable to understand is that the 'market reaction' to a $ is a $. All buyers, sellers, (the market) and brokers understand this but for some reason some appraisers want to try to deny this fact. F/F would prefer that appraisers essentially ignore the 4$4 reality so that appraised values can be high enough to grease the lending wheels and keep the market rolling along. Its all part of F/F's shell game.

Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession, but the dollar amount of any adjustment should approximate the market’s
reaction to the financing or concessions based on the appraiser’s judgment

Are you aware that the above is on every URAR lending form? Since that comprises the bulk of these discussions, it is relevant. You are giving appraisers directly against what they are instructed to do .

Dollar for dollar affects the NET a seller receives, but not necessarily the PRICE, as compared to OTHER PRICES ( market reaction) The client is not hiring a buyer, a seller, or a broker to appraise it. The client is hiring us as an appraiser, and we are supposed to appraise it the way the appraisal says we are doing it, not the way other parties might see it.

Your comment that F/FF would prefer what you call the $4$ "reality" may or may not apply in every case, but it is your opinion, the reality remains the instructions are about the concession impact on price, not its impact on net to seller, and sometimes the impact on price is $ 4$, and other ties it has not, or has no impact on price.

A seller can offer a concession to speed up marketing time or close a deal in a shaky market and be willing to absorb the loss, so it clearly did not affect the price. As far as builder prices, they are y, derived from cost items added up, cash register style added to lot premiums etc. Any concessions, whether monetary or in the form of "free" upgrade packages, are usually a wash because the builder inflated the prices to include them.

 

[Terrel L. Shields]

Are you aware that the above is on every URAR lending form?

What about the Interagency Guidelines?

The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.​

 

[J Grant]

Yes it is - that's the true sale price - net to seller and that includes the RE commission. Absolutely. Otherwise it's the old "I sold my coon hound for $1200 but I had to take 10 $100 barn cats in on the trade" problem.

The sale price includes a commission (usually ) but has nothing to do with the net to the seller . I sold my condo for a recorded price $200,000, whether I need $200,000 or $100,000 or nothing

What in the world is a "true sale price"??/ That is cringe-worthy, like when appraisers talk about a "trueValue. " they are made up weasel words.

It is your personal problem about the coonhound and cats and trades- IF a deal is too funky and weird we are not supposed to use it. However, a deal with normal seller concessions is usually cosndierd a typical transaction. Then the appraisal question is, did the concession affect the price as compared to other prices, not did it affect it that one price because of a net to seller-

 

[Mark K]

Any adjustment should not be calculated on a mechanical dollar for dollar cost .... blah, blah, blah... are usually a wash because the builder inflated the prices to include them.

Thank you for making my point regarding the appraisers that are either unwilling or unable to understand that buyers and sellers ALL know the value of a $. Its a shame that some appraisers can't grasp this simple concept.

THE MARKET REACTION TO A $ IS A $.

If you could understand this you could sign your report with a clear conscience knowing that you've adhered to the sacred F/F instructions.

 

[J Grant]

What about the Interagency Guidelines?

The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.​

was the PRICe affected, not was the net to seller affected !!!

The price means the price compared to other similar home market prices without concessions.

 

[Terrel L. Shields]

was the PRICe affected, not was the net to seller affected !!!

The price means the price compared to other similar home market prices without concessions.

and when is there a situation where almost everyone is getting the same concessions...they are still concessions. I bet short of paying CASH, almost everyone gets the same incentives BUT when that lone cash buyer shows up the price magically drops exactly the amount of the concessions.

 

[J Grant]

Thank you for making my point regarding the appraisers that are either unwilling or unable to understand that buyers and sellers ALL know the value of a $. Its a shame that some appraisers can't grasp this simple concept.

THE MARKET REACTION TO A $ IS A $.

I did not make your point, I pasted the verbiage direct from a URAR directing appraisers NOT to mechanically adjust for concessions 44$ t

Are are being contrary just to be contract, ? Appraisers are not unwilling or unable to understand buyers and sellers (what you wrote) We very well understand it, I used to sell RE and so did many others. It seems YOU do not understand that the market reaction, in fact, is not always $ 4$ - not the way we are supposed to gauge it in an appraisal, which means the market reaction is priced compared to other similar homes sold without a concession

If FF and the URAR want to accept your version and replace what exists with instructions to always adjust a concession 4 4$, I will be happy to adjust concessions $4$ every time. It sure would make life easy. Surely you can recognize that your advice is the opposite of what an appraiser signs off as what they did on a URAR lending appraisal.

 

[J Grant]

*Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are
necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are
readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing
adjustments can be made to the comparable property by comparisons to financing terms offered by a third party institutional
lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical
dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s
reaction to the financing or concessions based on the appraiser’s judgment

Above on the URAR certs and lining conditions - since that comprises the bulk of lending assignments -I assume folks on the board can read English?