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Concession / Subsidy

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Van Gogh

Junior Member
Joined
Mar 28, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
Just wanted to get a some feedback on this issue. background:I have appraised 2 townhouses in same neighborhood, the subdivision was all section 8 rentals by an investor for 25 years now he updated the exterior about 3 years ago and now is renovating everything on the interior stripped to drywall and subfloor and built out to modern standards.

Now the issue. The first sale (I appraised) has no concessions FHA sale and list price increased $500 for minor changes.Most homes have concessions of 2-3%. I saw that the new sale had a $5,250 increase from the list price. I expected more upgrades (typical for my market), but found a fan upgrade and $5000 concessions tacked to the sales price increase. I considered a bid war but there are too many options to choose from so there was not need to bid this one up. I checked a few others now and saw some that had a similar change but not dollar for dollar change. The listing indicates a 5k concession and a new contract price of $5250 k higher. I am thinking there is some fraud here. I know that the concession is affecting the sales price of the subject. I have 3 recent sales with no concession that I am using now to level the playing field.

I think the appraised value will be within a few hundred dollars of the list price. Does anyone have any comments or experience they can relate. I have disclosed the difference in the contract section.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
The concession inflated the price, you appraised it (or adjusted it if a comp,) for market value without affect of concession...what does it have to do with fraud?

Is this a subject or a comp in your appraisal?
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
I think the appraised value will be within a few hundred dollars of the list price. Does anyone have any comments or experience they can relate. I have disclosed the difference in the contract section.

The list price indicates the seller was willing to accept less, A fan upgrade was negotiated into the contract, above the originally listed condition of the subject property. The contract also has a $5,000 concession with the final contract price that is $5,250 higher than the list price.

Paired sales analysis indicates that similar fan upgrades have been able to garner $XX in the market, and the cost index indicates the cost to upgrade the fans is estimated at $XX. Seller concessions are considered to be favorable financing, which, would not exist with an all cash price. The market value opinion is made in terms of financing is equivalent to cash, see pre-printed jargon.

Be prepared for whining and gnashing of teeth, and "eyelash shy of contract" comments from others.

It is what it is, and the regulations are what they are.

.
 

Van Gogh

Junior Member
Joined
Mar 28, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
The concession inflated the price, you appraised it (or adjusted it if a comp,) for market value without affect of concession...what does it have to do with fraud?

Is this a subject or a comp in your appraisal?

The subject
 
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