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Adjusting subject for it's seller concession?

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CANative

Thread Starter
Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I'm wondering if I should make an adjustment to the subject because of a 3% seller credit to the buyer for closing costs.

This assignment is for a refi. The subject property sold last May for $320k. Very small house located in a wooded area outside of town. Very few comps and none recent. The market has stalled and prices for this type of house INSIDE the city limits is declining. Hard to figure out trends for outlying areas. I think stable at best.

So, my best comp for this property is the subject itself and plan on gridding it as comp 4 or 5. There was a 3% seller credit for the buyers closing costs. If this wasn't the subject I would just make a dollar for dollar adjustment. I'm wondering if I should make the adjustment and give this sale the most weight (nothing has been done to the house and no other adjustments... it's a great comp:laugh: )

Of course this will completely blow the deal and the MV indicator will be less than their original purchase price.:shrug:
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
If the subject had never sold, but you had an identical model match next door that did, and it had a 3% concession, what would you do to that comp?

I would suggest the answer would be the same for the subject comp, too.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
Remember you are making 'market adjustments' to the comparable sales. If the market indicates a 1%, 3%, or 5% adjustment then it's appropriate. If the seller gave the inducement to get the sale done and the market doesn't or wouldn't on a similar property then there is no adjustment.
 

CANative

Thread Starter
Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
My dad and I did an appraisal at this location about 5 or 6 years ago. At the time it was 1.5 acres and had a large, but old house and this little house as an accessory unit. It was overpriced and we (he) came in low. The REALTOR threatened and pressured us to raise the value or she would make sure we would regret it. I still have a copy of the letters.

At the time the zoning would not allow a split. Apparently the county changed the zoning and a minor subdivision was approved and the little guest house is now on a small .25 acre lot. It is located at the base of an giant earthen dam which creates Lake Mendocino and the Army Corps of Engineers maintenance facility is adjacent. Lots of fencing with razor wire along the property line.

Between all of the various manipulations in the listing, selling price, revised listing prices, blah, blah, blah on this property and everything else that goes on around here, there is just no telling the "market reaction" to seller credits. So I almost always make $4$ adjustments.
 

stefan olafson

Senior Member
Joined
Apr 2, 2003
Professional Status
Certified General Appraiser
State
North Dakota
Greg, I agree sometime it's not clear cut. From reading your postings I feel you have a pretty good grasp of the business. The important thing is to always explain those adjustments which aren't real simple to understand.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
Greg, not busting your chops here, just trying to learn. What is the advantage of actually putting the subject on the sales grid as a "comp"? Wouldn't it be good enough showing the subject sales history, which will reveal a sale last May for $zzz,zzz. You could state how much closing help was received for the transaction as well as if anything had been done to change the subject since that transaction. This will tell the story, just wondering what the advantage would be to actually putting it on the grid ?
 

CANative

Thread Starter
Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
It's makes for a very clear presentation of how the subject property fits in with competing properties, partricularly when there are no "ideal" comps.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Greg said, It's makes for a very clear presentation of how the subject property fits in with competing properties,....

Looks like a dog chasing its tail to me, of course it looks 'ideal' except
when you catch it.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
<snip>
Of course this will completely blow the deal and the MV indicator will be less than their original purchase price.:shrug:

Mr. Boyd,

Bummer! You're unbiased right? If you were using the prior sale of the subject for an appraisal of some other property, how would you handle the concession? Why, just because you are using a prior sale of the subject against the subject itself would you do any different?

Webbed.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
Greg, not busting your chops here, just trying to learn. What is the advantage of actually putting the subject on the sales grid as a "comp"? Wouldn't it be good enough showing the subject sales history, which will reveal a sale last May for $zzz,zzz. You could state how much closing help was received for the transaction as well as if anything had been done to change the subject since that transaction. This will tell the story, just wondering what the advantage would be to actually putting it on the grid ?

TJ,

Because sometimes there is just no better way to slap underwriting in the face with what the market value of a property really is when other comparable that are available are fair to poor for the comparison.

Webbed.
 
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