Contract, New Construction

[J Grant]

I appraised approx. 8,000 SFR for F/F prior to moving in another direction. I think that gives me enough experience to opine on the subject. And yes, I signed that same statement and adjusted every one on a $4$ basis for concessions.

Then you mislede your clietns and singed a false statement. The fact that perhaps you got away with it still does not change that..

 

[J Grant]

And it invariably does. Or, to reverse. What would the price be if no concession was made. Well, who knows because 9 of 10 times without the concession the buyers cannot execute the contract for lack of money to bring to the table....therefore, it won't really meet the test of "cash" equivalence. Cash on the barrel head is cash on the barrel head not creative financing.

One misunderstanding piled atop another.

Cash equivalence is not financing vs cash. Cash equivalence is cash, or financing at terms similar to.

A concession is not the same as creative financing. A concession should be stated in the contract and then we can judge if it affected the price or not. Creative financing can mean lots of things, seller mortgages, interest rate buy-downs, silent second mortgages, exotic loans... the sky is the limit.

You are correct that some cash-strapped borrowers can't purchase or close without a concession. In this case, the concession still might not have affected the price. It did facilitate the sale though..

 

[William Rightsell]

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.

There is nothing to argue about. THIS above is on the certs of the 1004 form (since lending work uses these forms ) and we sign that is what we did. You are interjecting net to seller, what they got more or less as their in their net, with the above which concerns price as measured by the market ( the market reaction ) . There are times when dollar for dollar is the same as the effect on price, then explain that is why you based it on $ 4$. But if the price is not affected, if it is equivalent to what other properties sold for without the concession, then we make no adjustment and explain why

Like I said..others will argue. In my world $1 affects the sales price by $1. And yes I am aware of the certs. It doesnt say its wrong to do do, just that the adjustment must approximate the markets reaction. Again...a dollar is a dollar. My opinion. Your may vary.

 

[Mark K]

You don't; even do lending work and here you are acting lecturing about it..

You're wrong...again, as usual. I do lending work for a few small banks, not much, but some. Enough to know that F/F appraising is a world of its own and their guidelines and regulations are theirs alone and they don't care if the appraisals are based on faulty premises. The purpose of F/F is to make as many loans to as many people as possible, risk be damned, the taxpayers will cover them if/when they go south.

But, in the long run, I'd rather be condescending than ignorant any day. Your lack of understanding of basic economic principles keeps you parroting the same nonsense over and over. You have my sympathy.

 

[Terrel L. Shields]

Cash equivalence is not financing vs cash.

That is the exact definition of it. You adjust favorable financing to a CEV. You adjust when a second mortgage is held at a higher rate - again to a higher rate.

 

[J Grant]

You're wrong...again, as usual. I do lending work for a few small banks, not much, but some. Enough to know that F/F appraising is a world of its own and their guidelines and regulations are theirs alone and they don't care if the appraisals are based on faulty premises. The purpose of F/F is to make as many loans to as many people as possible, risk be damned, the taxpayers will cover them if/when they go south.

But, in the long run, I'd rather be condescending than ignorant any day. Your lack of understanding of basic economic principles keeps you parroting the same nonsense over and over. You have my sympathy.

Like I said..others will argue. In my world $1 affects the sales price by $1. And yes I am aware of the certs. It doesnt say its wrong to do do, just that the adjustment must approximate the markets reaction. Again...a dollar is a dollar. My opinion. Your may vary.

We all live in the same world. A dollar is a dollar on the HUD statement and net to seller. In sale prices, the way financing or concessions influence the price is not always $ 4$, regardless of Fannie guildienes. I see it all the time, I sold RE and have been appraising for almost 30 years. Mar'ks condescending tone is what it is, the market does what it does and regardless of our personal opinion, the certs are what they are. The certs instruct not to adjust $ for $ mechanically. When the market price reaction is equivalent to dollar for dollar of the concession amount,then we adjust accordingly. And when the prices are not showing any adjustment for a concession, we are not supposed to make a rote mechanical one.

 

[Mark K]

When someone doesn't understand what they're talking about, I'm thinking that any attempt to help them probably sounds condescending to them.

Oh well. The burdens some of have to bear!! LOL!!

 

[Mark K]

We all live in the same world. A dollar is a dollar on the HUD statement and net to seller. In sale prices, the way financing or concessions influence the price is not always $ 4$, regardless of Fannie guildienes. I see it all the time, I sold RE and have been appraising for almost 30 years. Mar'ks condescending tone is what it is, the market does what it does and regardless of our personal opinion, the certs are what they are. The certs instruct not to adjust $ for $ mechanically. When the market price reaction is equivalent to dollar for dollar of the concession amount,then we adjust accordingly. And when the prices are not showing any adjustment for a concession, we are not supposed to make a rote mechanical one.

 

[J Grant]

When someone doesn't understand what they're talking about, I'm thinking that any attempt to help them probably sounds condescending to them.

Oh well. The burdens some of have to bear!! LOL!!

You are making an incorrect assumption that I don't understand what I am talking about. LOL

The fact remains is that you told appraisers here to ignore the cert on the URAR -

 

[J Grant]

Fannie and the URAR certs aside, the market itself shows not every concession affects a price $ 4 $
Sometimes a concession speeds up a sale, or compensates for a minor repair issue, Or the seller owns the house outright and is willing to make a concession to help a cash-strapped buyer purchase
A concession always affects net to seller dollar for dollar but net to seller and the sale price are not one and the same thing.