Seller agent is the Borrower

[Fernando]

I did not want to convolute my question, but there is another wrinkle. The Buyer is renting the property back to the Seller (2 year lease) with the Seller paying the first years rent at closing.

Lot of willy dilly happening. Better be sure it's arms length at market transaction. Seller and Buyer know full situation what they're doing.

 

[Artemis Fowl]

Lot of willy dilly happening. Better be sure it's arms length at market transaction. Seller and Buyer know full situation what they're doing.

WTF does that even mean?


Seems to me that if you were to discuss all this in the contract analysis and present your opinion that the agreed upon contract price is not market value indicative, you have plenty of support for that opinion.

 

[glenn walker]

It's a Cluster F.....lmao

 

[J Grant]

I did not want to convolute my question, but there is another wrinkle. The Buyer is renting the property back to the Seller (2 year lease) with the Seller paying the first years rent at closing.

Clearly, all of this is impacting their price, but so what? We are supposed to appraise for the MV, not the CS price anyway -

Just explain - that teh buyer is renting the property back to teh seller and the seller is paying the first years' rent etc, and that these terms impacted the SC price, which is why it is below the MV opinion, Then stop fussing about it and move on and appraise the property.

 

[J Grant]

It's a Cluster F.....lmao

Who cares? The parties can make whatever house of cards or complex deal they want - we appraise it for MV - just desire what they are doing, that it impacted the SC price and that is enough.

 

[Artemis Fowl]

Doing a home that is not listed in the MLS database.. According to a phone conversation with the listing agent, the seller did not want to go through process of showing and marketing. Fine. Then I look at the contract and realize that the seller agent is the borrower. The contract price is significantly below market value. I sent an email to the agent/borrower asking if the Seller was atypically motivated and asked him how he got to his valuation on the property. No response. Report the facts that the borrower is the seller agent and that the contact price is below market value, right? I cannot assume a less than arm's length transaction. Nor am I going to speculate in the report about the Borrowers motives, right?

Seems you nailed it with the OP.

Report the facts that the borrower is the seller agent and that the contact price is below market value, right?
Agreed

I cannot assume a less than arm's length transaction.
Why would you need to? You aren't assuming anything...you are presenting evidence to support that it may not be.

Nor am I going to speculate in the report about the Borrowers motives, right?
No you shouldn't speculate about motive...all you need is evidence that one may exist...and IMO there's plenty there.

 

[glenn walker]

Clearly, all of this is impacting their price, but so what? We are supposed to appraise for the MV, not the CS price anyway -

Just explain - that teh buyer is renting the property back to teh seller and the seller is paying the first years' rent etc, and that these terms impacted the SC price, which is why it is below the MV opinion, Then stop fussing about it and move on and appraise the property.

I can donate or give a house away like I did with my daughter but that doesn't change the market value of the property.

 

[Fernando]

WTF does that even mean?


Seems to me that if you were to discuss all this in the contract analysis and present your opinion that the agreed upon contract price is not market value indicative, you have plenty of support for that opinion.

When I looked at commercial listings for sale, seller "plays" with the rents and using standard cap rates can boast asking price.
Buyer has to be beware of these games.
Same as appraisers to know full story and not get fooled.

 

[paperasir]

I am appraising market value always. The question is whether there is specific evidence that this is or is not an arm's length transaction. It is certainly an atypical transaction. But that does not mean that it is a non-arm's length transaction.

 

[Fernando]

I am appraising market value always. The question is whether there is specific evidence that this is or is not an arm's length transaction. It is certainly an atypical transaction. But that does not mean that it is a non-arm's length transaction.

Regardless, you still need to know full transaction in what's happening.
I do but maybe my peers do less intensive research.