Concessions

[Tim Hicks (Texas)]

Mentor,

Reading your comments are like attending a mortgage brokers conference promoting loopholes for financing.

 

[Mr Rex]

How does the market react to concessions? Like free money or money on paper. Free money and money on paper (unless its official US linen blend with the embedded strip and new monopoly money colors with shape shifting 2D technology) are not cash equivalents.

 

[JSmith43]

Mentor,

Reading your comments are like attending a mortgage brokers conference promoting loopholes for financing.

Tim, there's a bit of a difference. I don't care what you guys choose to do on an individual basis. You act like I'm getting paid by an industry consortium to post here. Now really, what interest group do you think would want to own all my posts, let alone fund the activity?

None. My points of view are my own and they only favor one interest or another only by accident/coincidence.

Now I know how GB feels when people accuse him of invading Iraq to take their oil. I only wish

 

[Elliott]

Mentor,
There was a article in last Sunday's Oregonian, in the Jobs section. They interviewed
a young MB. She said said MBs made $400K, which is $100 K than most of us
appraisers. Though she added, most MBs starting out made $50-60K.

We know you like us....you just have different self-interests than us hod carriers.

 

[JSmith43]

Mentor,
There was a article in last Sunday's Oregonian, in the Jobs section. They interviewed
a young MB. She said said MBs made $400K, which is $100 K than most of us
appraisers. Though she added, most MBs starting out made $50-60K.

We know you like us....you just have different self-interests than us hod carriers.

Elliot, I like your signature line.

Are you talking about now? Maybe one out of 100 LO's will stand to make 400K+ this year. They have assistants that work like galley slaves and the LO's that do that much work generally are exceptionally talented & work their asses off.

It is kind of like the real estate 90/10 rule. Also, perhaps 4 out of 5 LO's don't see their 2nd or third year in the business, and that is in normal times

I suppose you don't believe that stuff when it comes to stories about appraisers cleaning up.

 

[Marcia Langley]

state,

The averaging of concessions thingy is pure baloney. No competent appraiser would ever consider such a thing.

The market value of the concessions has to be left up to your own analysis, just like the definition of market value says.

In a general poll, most appraisers (including me) agree that dollar for dollar is what they find to be appropriate in their markets.

 

[JSmith43]

Do you have a link to that poll?

 

[timd354]

In most of the areas that I appraise, it is appropriate to make a dollar for dollar adjustment for sales concessions. However, there are some neighborhoods where virtually every sale has significant sales concessions and a dollar for dollar adjustment is not appropriate. I find this is often the case in some lower income neighborhoods where very few of the potential buyers are able to come up with all of the required downpayment and closing costs. In some of these neighborhoods, it is simply virtually impossible to sell a property, except at a very deep discount, unless a seller is willing to pay a significant portion of the buyer's closing costs since by doing so, a seller would eliminate almost all potential buyers in that market area. n these areas it is very likely that the seller will net more by granting a sales concession than he or she would by tyring to sell a property with no seller concession. In such a case a dollar for dollar adjustment is certainly not appropriate.

 

[Atlanta CG]

A neighborhood that essentially has seller paying up to 5% of cosing costs - not specifying which costs, just all those that end up in the buyer's column. How do you separate which are normal and which are not? Deducting dollar for dollar results in your value of the subject as an anomoly.

 

[Judy Whitehead (Florida)]

I still say that you would be a very lucky appraiser to get the real estate broker to fill you in on all of the details of who received what in commissions on a real estate transaction. I sold real estate for almost 10 years prior to my 15 years in appraising and the settlement statement and all of the commission splits are not recorded in the public records in Florida.

There is no doubt that other concessions occur in some transactions and all we can do is try to determine the "cleanest" sale to use as a comp. Appraising in this market is more difficult that anything that I have ever done, realizing that I am appraising in one of the highest foreclosure and short sale markets in the country. The original question in this thread, however was a question whether or not the sales concessions should be "averaged." I believe the answer to that question should be "no."

I can definitely see a situation where some homes would never be sold without some kind of closing cost and down payment assistance, which is why you have to ask yourself why these considerations are adjusted on the comps, but not the subject........Hmmmmm.....a tough one. Was the comp house really worth $110,000 or was it worth $100,000? What if another seller had to give up $15,000 rather than $10,000? How does that change things? Or does it? That is the difficulty that I have in negative adjustments is that there is not a "standard percentage" which is what I was asked to "ignore" and not deduct for. The amounts were all different.