Phineas
Sophomore Member
- Joined
- Jan 16, 2009
- Professional Status
- Appraiser Trainee
- State
- North Carolina
So we are working on a new construction appraisal, just getting started, and started to look into some of the 'comps only' builder pre-sales. I have searched and read several different threads about this, but am still somewhat confused.
Essentially there is a major price difference when comparing the comparables' MLS sales prices to their actual recorded / tax stamp based sales prices. The listings do state that there were $XXK of 'upgrades,' however this was clearly not included in the purchase price recorded with the county. We called the listing agents, who said that basically 'the buyers paid cash for the upgrades' in addition to the 'base purchase price' of the houses.
It seems to me that if for example you paid say $500K for the house, and then spent an additional $50K in upgrades, then you would be purchasing the completed house for $550K? (they are not buying the property and subsequently making the upgrades - it's all completed at the time of purchase) In this example the recorded (tax record) sales price would only be $500K whereas the listing states SP of $550K (stating '$50K in upgrades' in the concessions portion of the listing) - if they actually paid that much why would it not be recorded as such?
Also, shouldn't this be reflected in the HUD statement / tax records (as the total purchase price)? And if it's not, then it seems to me that it was not in fact part of the purchase price.
We haven't seen the HUD statements (yet), however asked if this amount was included on them - they said it was not. So the buyers are buying a completed, new construction house - if they paid a certain amount for the house, plus X amount for upgrades, then why would this not be included in the HUD statement / recorded purchase price? Also why would the transfer tax not reflect this?
It doesn't seem like the county would be to appreciative of this (or the IRS for that matter), because the additional $50K basically has no 'track record' as far as I can tell, aside from their comment on the MLS sheets. They did mention change orders, but I would think those would need to be included in the HUD statement as well if they were part of the total sales price, right?
I know this is why verification of sales data is so important, however this is the first time I've run into this particular situation with such major discrepancies, and wanted to get some input / explanations of how you all handle this....obviously (for our appraisal) we will need to expand the search area and analyze re-sales / sales from outside the subdivision / etc, but I am curious as to how folks typically deal with this sort of thing.
It seems extremely mis-leading, first off to have such a large difference on the MLS versus what is recorded, not to mention that if they are actually paying these fairly large sums in cash (if that's even what's happening) in addition to the purchase price, yet not disclosing them on the HUD statements. It was my understanding that it should have the total purchase price as of the date of closing, regardless of how it was paid.
It also seems that the county is missing out on a lot of revenue stamps if this is what's happening - not that it should be any of my concern, but it just all seems pretty shady...any input is appreciated!
Also if this has been beaten to death then please point me in the right direction (sorry if so), I just figured with construction starting to pick back up so much that a lot of other people are probably running into similar 'issues'
Essentially there is a major price difference when comparing the comparables' MLS sales prices to their actual recorded / tax stamp based sales prices. The listings do state that there were $XXK of 'upgrades,' however this was clearly not included in the purchase price recorded with the county. We called the listing agents, who said that basically 'the buyers paid cash for the upgrades' in addition to the 'base purchase price' of the houses.
It seems to me that if for example you paid say $500K for the house, and then spent an additional $50K in upgrades, then you would be purchasing the completed house for $550K? (they are not buying the property and subsequently making the upgrades - it's all completed at the time of purchase) In this example the recorded (tax record) sales price would only be $500K whereas the listing states SP of $550K (stating '$50K in upgrades' in the concessions portion of the listing) - if they actually paid that much why would it not be recorded as such?
Also, shouldn't this be reflected in the HUD statement / tax records (as the total purchase price)? And if it's not, then it seems to me that it was not in fact part of the purchase price.
We haven't seen the HUD statements (yet), however asked if this amount was included on them - they said it was not. So the buyers are buying a completed, new construction house - if they paid a certain amount for the house, plus X amount for upgrades, then why would this not be included in the HUD statement / recorded purchase price? Also why would the transfer tax not reflect this?
It doesn't seem like the county would be to appreciative of this (or the IRS for that matter), because the additional $50K basically has no 'track record' as far as I can tell, aside from their comment on the MLS sheets. They did mention change orders, but I would think those would need to be included in the HUD statement as well if they were part of the total sales price, right?
I know this is why verification of sales data is so important, however this is the first time I've run into this particular situation with such major discrepancies, and wanted to get some input / explanations of how you all handle this....obviously (for our appraisal) we will need to expand the search area and analyze re-sales / sales from outside the subdivision / etc, but I am curious as to how folks typically deal with this sort of thing.
It seems extremely mis-leading, first off to have such a large difference on the MLS versus what is recorded, not to mention that if they are actually paying these fairly large sums in cash (if that's even what's happening) in addition to the purchase price, yet not disclosing them on the HUD statements. It was my understanding that it should have the total purchase price as of the date of closing, regardless of how it was paid.
It also seems that the county is missing out on a lot of revenue stamps if this is what's happening - not that it should be any of my concern, but it just all seems pretty shady...any input is appreciated!
Also if this has been beaten to death then please point me in the right direction (sorry if so), I just figured with construction starting to pick back up so much that a lot of other people are probably running into similar 'issues'
