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Concessions and what to do about

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Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
In my area is not uncommon for the sales price to be listed in our MLS to be higher than the listing price. Often the realtors include closing costs in the sales prices to help the buyers.

Just called on a Realtor I know and trust about to get some info on two sales she had handled with basements. While I had her on the phone I asked about another sale that I decided not to use. It was listed for 299,900 and showed sales price of 310,00. What she told me caught me by surprise. The house had actually sold for $285,000 but the contract read 310.000 so the buyers could include 25K in the deal to build a pool.

How can they legaly put this on these sales contacts?? Isn't that just lieing?? Doesn't this violate their Code of Ethics? Can some of you that hold a Realtor Lic. explain this to me? It is getting to the point where our MLS is not reliable since they don't list any conscession and most Realtors will not return calls and when they do they are vauge about what really happened.
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
My favorite concession instance was on a home that was listed for $220,000 and under contract for $190,00 which still seemed very high. I requested a copy of the sales contract and it was one of those 9th generation lender faxes that looked like a dead sea scroll. Nothing was legible. I finally got a clean copy with signatures and dates (yeah, I'm a total jackass for requesting one of those)......anyway, the sales contract had a BMW and a Bayliner powerboat thrown in with the refrigerator and washer/dryer.......yep, yours truly wrecked the deal by commenting on this in the report.....it's tough being an apprais-a-tore in a real-a-tore world. :)
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Jeff,

If it's not uncommon for the listing price to be lower than the sale price then, apparently, concessions are typical for your area and should be reflected in the comps. As far as contract price, if you're told a certain purchase price make sure you are provided with a signed contract reflecting that price. You should be able to access you local assessor and get the REAL sale price of the comps and a document number. As far as the realtor is concerned, I'd turn them in to you local MLS for mis-representing the sale price.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I forgot to add that we are in a non-disclosure state. Sales prices are not recorded on deeds. Sometimes you might find a mortgage recorded but unless it is a 100% loan that’s no good. Then their maybe concessions included in that mortgaged price!!

I talked to my Representative about the chances of a Disclosure law and he said slim to none. Way to much opposition in the House.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Going back in history almost 40 years in Arizona. Arizona has Affidavits of Value that are filed with each transfer of ownership at the county recorders office, signed by the seller and the buyer and reports the sales price. Anyway these all came about in the 1960s, going into effect in 1968. And where I am leading up to it was the result of a law suit in Kentucky by railroads, I think it was called the 4R act by Congress. As a result of that Kentucky law suit, a law suit was filed in AZ about the methods of valuation for assessment purposes and part of the federal law was that assessors were to track sales in their jurisdiction to determine sales ratios. Which then was required to have an effect on assessments for property taxes. And also required assessments to be uniformly determined. By the way Sandra Day O'Connor was a state representive at the time and was the main force and author of most of the current ad valorem assessment laws in AZ as a result of all those law suits. Anyway, in the non-mandatory states, has any of those types of law suits been done at some time during the past 40 years? If so, why isn't there some type of reporting of sales to the applicable assessment authority? And is there any way to obtain that information from the assessment authority?
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
A contract is a binding agreement between buyer and seller. The appraiser is not directly bound by or has any direct interest in the contract. Yes, there are issues in disclosures and concessions. However, that's real world and we have to deal with it. I see this all the time. If you've got a screwy comp, just don't use it. That's the best answer.
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Jeff and Jo Anne,
I do not Know what "a non-disclosure state" means but here in CA useually the sales price is recorded. Occasionally the sales price is not BUT the transfer tax amount must be made public and the "mill rate" ($ per thousand) . If you have the transfer tax amount and the mill rate you can calculate the sales amount in short order. I would think that mill rates and transfer tax are a matter of public record in all states.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Practical definition is I can tell the clerk that I paid 100 dollars for a million dollar estate and they will accept that. I think most closing attorneys don't do that when they record them but how do you know for sure?
 

Pat Butler

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
That practice of changing the sales price to include concessions has been happening for years. If the sellers agree to sell at $300K and the buyers want $20K in concessions then they'll write up a $320K contract. The $320K is indeed the sales price. That's why the lenders are ordering an appraisal. Irrespective of what the buyers and sellers are doing, is the house worth the final sales price?

In my state, Illinois. the parties to the transaction (buyer/seller/attorney) have to complete a Transfer Tax Declaration that itemizes these sorts of transactions and breaks out the actual selling price versus concessions for property tax purposes. It's a serious offense to lie on the Transfer Tax Declaration and very few people do. It's considered extremely reliable with respect to figuring out what went on with a transaction.
 

Jo Ann Meyer Stratton

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Frederick:
There are about a dozen "non-disclosure" states. In those states there is nothing of public record regarding a sales price in any way or procedure. Transfers of ownership are recorded, but sales prices are only available from either the buyer, seller or realtor. Title companies or attornies are not allowed to disclose any information regarding the sale. So the only verification an appraiser can obtain is verbal information from somebody, nothing in writing. I was an appraiser in a non-disclosure state (NM) many, many years ago. Had to knock on doors, ask property owners if they had heard of any sale recently in their neighborhood. Ask realtors if they knew of any sales and if they knew what the sales price was. Most realtors would quote from memory, not only the sales price but the square footage of the home also. Got some interesting info from the same realtor on the same property quite frequently, none of it agreeing with each other. That particular county assessor also filed everything in alphabetical order by owner's name. So research by an address or an assessor's parcel number to check out the square footage was almost impossible. Also because about 99% of the taxes were obtained from the oil companies, they only picked up a home when it was new and never went back to update any changes or additions for residential property. So the assessor's records could be one to thirty years or more out of date on that specific parcel. Lots of fun!! Arizona is extremely fortunate with their state wide system, much better than CAs. I have researched in both states and compared the two systems.
 
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