Adjusting When Amount Paid Differs From Amount Received

[makuck]

“There is a .5% transfer tax - funds are
remitted to City's affordable housing program.”

I’ve never heard of the buyer having to pay that type of fee – it’s usually the developer.

It appears this would be paid by the buyer on top of the listing price, but the seller would never see the funds. So would this be adjusted for? On one hand it is a cost related to the real estate... and it would adjust the amount paid for it, but on the other hand it is not the amount received by the seller, so there is a disconnect. I’m unsure!

My initial response would be to fall back on the definition of market value, where the verbiage is: "...the amount paid..." and make an upwards adjustment.

Any responses or insight would be greatly appreciated.

 

[Terrel L. Shields]

net to seller?

 

[J Grant]

taxes or fees paid by buyers or sellers are not typically considred part of price. Comment on it but leave it out of the evaluaton of the subject. It's a small tax a buyer is paying into a CR fund

 

[NachoPerito]

It is unusual, the seller usually pays taxes to state and local authorities at the time of sale. You need to see what is typical in the market. If it is typical that the seller pays this fee and in this case the buyer is paying the fee then you need to add it to the sale price. If buyer usually pays this fee and the buyer paid this fee for all comps then you can leave it out, but you have to leave it out for all your comps also.

 

[Dublin ohio]

“There is a .5% transfer tax - funds are
remitted to City's affordable housing program.”

I’ve never heard of the buyer having to pay that type of fee – it’s usually the developer.

It appears this would be paid by the buyer on top of the listing price, but the seller would never see the funds. So would this be adjusted for? On one hand it is a cost related to the real estate... and it would adjust the amount paid for it, but on the other hand it is not the amount received by the seller, so there is a disconnect. I’m unsure!

My initial response would be to fall back on the definition of market value, where the verbiage is: "...the amount paid..." and make an upwards adjustment.

Any responses or insight would be greatly appreciated.

Is the transfer tax included in the agreed upon sale price in the contract?

 

[hastalavista]

Are all your comparables from the same jurisdiction having the same transfer tax?

If so, I'd comment on it and not adjust.
If not, I'd consider if it impacts value vs. what the market paid for the comparables... but it would be a transactional adjustment, not a concession.

Good luck!

 

[PushinValue]

I say no adjustment. There is a builder in my market that has a similar tax passed on for the sale of the home. If a property has Mello Roos that equates to an additional 1% of the value of the home per year do you adjust for that? What about hoa upfront dues or special assessment levied for a pud (say 1% of the homes value).


Help me understand if you think this is off base

 

[Restrain]

In Florida we have the doc tax paid by the seller, the mortgage tax paid by the buyer and a mortgage intangibles tax paid by the buyer as well. As all deeds are affected, there is no need to make an adjustment as the impact is equal across the board. Atypical concessions, etc yes, but not in the OP's situation as all are affected.

 

[nstanbru]

If a property has Mello Roos that equates to an additional 1% of the value of the

Payment of Mello Roos fees are included in the property tax bill as a separate line item and are not prepaid as a "lump sum" at closing. It is generally a fixed amount and will vary depending on the original amount of the bond. It is also a temporary property tax with the time period established at the onset date of the approval. So the time period remaining will depend on the age of the subdivision. All properties within the Mello Roos district are equally affected. Not saying it has never happened, but I've never seen market evidence to support an adjustment.

 

[J Grant]

. If the seller offered the buyer an incentive, such as seller paying costs typically paid by buyer, and price was inflated to cover that amount, that would merit an adjustment. With every transaction, there are costs a buyer is expected to pay and costs seller is expected to pay. In this subject, it is expected a buyer pay a tax to the CRA fund apart from the sale price. The buyer is paying an expense they are expected to pay so no adjustment .