2 Questions for you guys?

[65076507]

1. Is it ok to use non-MLS sales for your comps such as FSBO's?

2. I know this one has been covered extensively on here but assume the following of a sale:
a. listed price 200,000
b. buyer offers 200,000 and asks for 5,000 in seller concessions.
c. Seller accepts.

Do we make an adjustment of 5,000? My guess is "No" since value was not affected. However, the seller is walking away with 195,000 so that's what the house is worth right? 2 different mentors told me 2 different answers.........Any advice?

 

[Michigan CG]

1. Is it ok to use non-MLS sales for your comps such as FSBO's?

2. I know this one has been covered extensively on here but assume the following of a sale:
a. listed price 200,000
b. buyer offers 200,000 and asks for 5,000 in seller concessions.
c. Seller accepts.

Do we make an adjustment of 5,000? My guess is "No" since value was not affected. However, the seller is walking away with 195,000 so that's what the house is worth right? 2 different mentors told me 2 different answers.........Any advice?

Is this $200,000 sale your subject or your comparable?

You adjust comparables, you don't adjust subjects. If it is a comp you adjust.

However, you need to research the effect of the FSBO in that the seller is not paying the 5-7% Realtor fees ($10-$14,000 commission). I would suggest (if this is a comparable) to call (or knock on the door) of the seller or purchaser. Due diligence (confirming the sale)is a great thing.

 

[JRS at OBX]

$200,000 sales price with $5,000 sales concessions = $195,000 to the seller.

$250,000 sales price with $55,000 sales concessions = $195,000 to the seller.

$1,195,000 sales price with $1,000,000 sales concessions = $195,000 to the seller.

I would deduct the $5,000.

 

[Lee Lansford]

1. Is it ok to use non-MLS sales for your comps such as FSBO's?

2. I know this one has been covered extensively on here but assume the following of a sale:
a. listed price 200,000
b. buyer offers 200,000 and asks for 5,000 in seller concessions.
c. Seller accepts.

Do we make an adjustment of 5,000? My guess is "No" since value was not affected. However, the seller is walking away with 195,000 so that's what the house is worth right? 2 different mentors told me 2 different answers.........Any advice?

RE: "Do we make an adjustment of ($)5,000?"

Is the property the Subject of your appraisal or is one of the sold comparisons?

If you want some information regarding the manner in which appraisers (specific to the definition of MV and the treatment of concessions to buyers as found in the current Fannie forms), e-mail at Lansford @ ameritech. net (remove the spaces), provide me with your e-mail address, and I'll provide you with the article (it's brief).

 

[65076507]

I should have claified.....the sale is a copmp

 

[Deleted member 77547]

You can use the FSBO sale as a comp if you have enough information regarding its condition and selling conditions eg., arms length? concesssions, room count, etc. If all you have is an address and sales price, I'd steer clear.

Regarding seller concession. Assuming it is the comparable, what is the cash equivalency of that sale? Adjust the comps to the subject, not the subject to comps.

 

[65076507]

so it sounds like you guys would adjust the 5,000

 

[Deleted member 77547]

Assume all properties are the same:

Subject Property
$195,000 no concession

Comp 1 $200,0000 w/$5,000 concession
Comp 2 $210,0000 w/$15,000 concession
Comp 3 $195,000 no concession

Based on this simplistic example, what is the estimated value of the subject property? Do you adjust for the concession?

What if you did not adjust for the cash equivalency of the comps, what would be the estimated value of the subject? Would a concession adjustment be appropriate market driven adjustment in this case?

 

[hastalavista]

I'll give you my answer for #1:

The issue as I see it is confirming the conditions of the sale.
I don't know about your market, but in my market, MLS sales lend themselves (as a rule) to verification of the terms/conditions of sale. MLS is so prevalent in my market that I only use non-MLS sales as secondary data points. In other words, non-MLS sales do not make my value, but they may support my value that I've already made. :icon_lol:

Of course, if I could reliably verify the terms/conditions of a non-MLS sale, and include that verification in my report, then I'd bump-it to a primary data point.

The originating appraiser may be comfortable in his or her weighing of a non-MLS sale. I have no problem with that. But the report goes forward to the client and intended user; they may not have the same comfort level as the originator. I try to support my valuation based on who is going to use it and for what purpose (and, how they can evaluate my rationale which means reviewing my comps). You are probably a better judge than anyone on this forum as to how your market is structured and how a distant user is going to interpret your results.

Good luck! :new_smile-l:

 

[Metamorphic]

Seems like with an FSBO, you'd have to look at what kind of "exposure to the market" it had. If they really marketed the property (sign, adds in the paper, web site, flyers etc) it would seem to be a better sale than if they just told their friends and neighbors they were interested in selling.