Concessions

[J Grant]

Considering Financing and Sales Concessions: A Practical Guide for Appraisers

Scott Reuter, Single-Family Chief Appraisal Officer, discusses common questions about the impact of financing and concessions on market value.

sf.freddiemac.com

In my opinion, they did a good job on this. I have stated repeatedly that a concession is in play if it impacts the sale price - not whether the seller's net $ is affected.


Then next need to clarify how the appraiser should handle seller-paid buyer broker fees ( which lenders permit in addition to and on top of the $ amount of a seller paid concession) I mo it would have an affect on price to merit an adjustment - but that is just my opinion as this is new territory.

 

[alebrewer]

I apply concessions adjustments like any other adjustment - if a sale with concessions is adjusting higher than the other sales, I adjust for concessions. If not, I don't. And I may adjust for concessions for some sales and not for others in the same report.

 

[Tom4value]

Considering Financing and Sales Concessions: A Practical Guide for Appraisers

Scott Reuter, Single-Family Chief Appraisal Officer, discusses common questions about the impact of financing and concessions on market value.

sf.freddiemac.com

In my opinion, they did a good job on this. I have stated repeatedly that a concession is in play if it impacts the sale price - not whether the seller's net $ is affected.


Then next need to clarify how the appraiser should handle seller-paid buyer broker fees ( which lenders permit in addition to and on top of the $ amount of a seller paid concession) I mo it would have an affect on price to merit an adjustment - but that is just my opinion as this is new territory.

Totally agree with your first paragraph.

Also agree with your second. My educated guess as to the future, seller-paid buyer broker fees will be taken out of the mix for the buyer and will not factor into their offer- “not my clown, not my circus. Let the brokers deal with it”. As a result, in most cases, not something that will factor into our work. Could be wrong…..

 

[Mike Ault]

Concessions are the devil's workshop in non-disclosure states.

 

[jay trotta]

Considering Financing and Sales Concessions: A Practical Guide for Appraisers

Scott Reuter, Single-Family Chief Appraisal Officer, discusses common questions about the impact of financing and concessions on market value.

sf.freddiemac.com

In my opinion, they did a good job on this. I have stated repeatedly that a concession is in play if it impacts the sale price - not whether the seller's net $ is affected.


Then next need to clarify how the appraiser should handle seller-paid buyer broker fees ( which lenders permit in addition to and on top of the $ amount of a seller paid concession) I mo it would have an affect on price to merit an adjustment - but that is just my opinion as this is new territory.

IMO- the Broker Fee, has been in play forever - it's not new. The NAR settlement is in regard to how the MLS can no longer display a co-broke fee. The Fee/Commission will always be part of a transaction and as always, the Fee/Commission can be negotiated and always is, based on an Offer & Acceptance.

 

[J Grant]

IMO- the Broker Fee, has been in play forever - it's not new. The NAR settlement is in regard to how the MLS can no longer display a co-broke fee. The Fee/Commission will always be part of a transaction and as always, the Fee/Commission can be negotiated and always is, based on an Offer & Acceptance.

The above is true however there is a difference now, which might affect us as appraisers is that prior to the settlement, the buyer traditionally paid a buyer broker fee ( and there were very few true buyer brokers, so the seller paid the entire commission, and the brokers just split it. Now, a buyer broker is disclosed as the buyer working for the buyer side and not, as you noted, included in a form co-broke fee. So the agent, the buyer, uses to show them the property can be compensated by the seller added to the loan but counted by the lender over and above a concession from the seller. AT least, that is how I understand it to work

 

[J Grant]

GSEs will not count buyer agent commissions in cap on seller concessions - HousingWire

GSEs clarify that they will not count buyer’s agent commissions as part of the allowable interested party contributions.

www.housingwire.com

 

[Tom D]

how will we find out who paid what commisson if included in the concessios on the MLS.
i hope the MLS and realtors figure out how to show that.
or we have to call each comp. to agent, do you remember if the buyer's agent was paid and how much.
no don't rember, but i will be happy to pull it up, figure it out, and call you back.
appraiser waiting for call back. waiting, waiting waiting......
what a mess this may be at the start.

 

[J Grant]

Jmo- but I am not going to call about who paid what commission unless I see the price was affected ( higher than typical, then it would be part of finding out why)

 

[jay trotta]

The above is true however there is a difference now, which might affect us as appraisers is that prior to the settlement, the buyer traditionally paid a buyer broker fee ( and there were very few true buyer brokers, so the seller paid the entire commission, and the brokers just split it. Now, a buyer broker is disclosed as the buyer working for the buyer side and not, as you noted, included in a form co-broke fee. So the agent, the buyer, uses to show them the property can be compensated by the seller added to the loan but counted by the lender over and above a concession from the seller. AT least, that is how I understand it to work

In our State and I believe Colorado, Buyer Brokering has been around for about 40 years. As noted, the commission is negotiable, now on both sides. The potential for the Seller & Buyer to negotiate the Fee is and has always been there. The question will be, is it really a "concession"?

Both Buyer & Seller will negotiate a Fee upfront as required, will that actually impact market value? Past History notes Sale Price, which includes the negotiated Price, & RE Fee's included. What is changing?