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Concession

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Sicklife

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Freshman Member
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Jun 30, 2008
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General Public
State
Arizona
If the seller is contributing closing costs of 3% in lieu of seller's agents commission (related party), should that be considered a concession since commissions are traditionally paid?
 

ZZGAMAZZ

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Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
"Good catch" if this issue pertains to a comparable.
 

Marcia Langley

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Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
Yes. The seller is paying closing costs on behalf of the buyer. On a comparable sale, that is a seller concession.

If the listing agent is also forgiving his commission, that has no impact on the concessions to the buyer. The buyer's costs are not impacted by the family deal between the agent and the seller.
 

Ray Christ

Sophomore Member
Joined
Apr 17, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
I Don't See The Buyer's Agent Commission As A Concession. It Simply Reduces The Cost To The Listing Agent (broker) And Has Nothing To Do With Financing.

If The Commission Was Whole To The Listing Agent With A Split To A Co-broke We Would Not Show A Concession For Any Commission.

The Concession Issue Involves Financing Assistance To The Buyer By The Seller.
 
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Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
hmm...3% less commission....same amount kicked in. it's a wash. I'd report it as a concession but not the market impact is net zero. (that is, the net to seller is the same either way)
 

JSmith43

Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
If the seller is contributing closing costs of 3% in lieu of seller's agents commission (related party), should that be considered a concession since commissions are traditionally paid?


I'd call it a clever attempt at tax avoidance:rof:

The question you ask is similar to what an underwriter might ask, since financing related concessions are limited to....well, it depends upon the product & the amount down, plus the rules lately seem to change so often I'm afraid to log into the system in the morning:icon_mrgreen:

An appraiser should ask to what degree the market reacts to the concession package or, possibly, why they should even play with the MV riddle if they could just move on to the next comp without the complications.
 

Judy Whitehead (Florida)

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
The question that is asked on the URAR 1004 is: "Is there any financial assistance (loan charges, sales concessions, gift or downpayment assistance, etc.) to be paid by ANY party on behalf of the borrower? If Yes, report the total dollar amount and describe the items to be paid.

This applies to the subject property and has no bearing on the final estimate of value for the subject. You simply report it.

Now, if the comparable sales that you are using had concessions paid on behalf of the borrower, then it is a negative adjustment in the sales grid for the dollar amount paid in the Sales and Financing Concessions section on the grid.
 

JSmith43

Elite Member
Joined
May 5, 2003
Professional Status
Certified General Appraiser
State
California
The question that is asked on the URAR 1004 is: "Is there any financial assistance (loan charges, sales concessions, gift or downpayment assistance, etc.) to be paid by ANY party on behalf of the borrower? If Yes, report the total dollar amount and describe the items to be paid.

This applies to the subject property and has no bearing on the final estimate of value for the subject. You simply report it.

Now, if the comparable sales that you are using had concessions paid on behalf of the borrower, then it is a negative adjustment in the sales grid for the dollar amount paid in the Sales and Financing Concessions section on the grid.


Judy, you just rewrote the definition of MV in that part I colored red. Not that the MV definition doesn't need a good re-write, mind you.
 
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