Confused About Stupid Seller Paid Concessions

[Deleted member 134708]

@residentialguy

Your also the person who said cash sales aren't common...so

 

[residentialguy]

@residentialguy

Your also the person who said cash sales aren't common...so

Your point?

 

[residentialguy]

Typically cash sales are made by investors or high end independently wealthy buyer.. Investors don't buy at market value...they buy from low distress sellers and sell at market value, hence how they make a profit.

 

[Terrel L. Shields]

esp when it would be more likely to appraise at a lower price without the seller concession inflation.

A key point Mark Lewis made was when concessions were added, the LTV is affected. 80%LTV, $100,000 = $80,000 loan. Add $4k as "concession" and 80% = $500 more, potentially the bank may be violating their own guideline and if FDIC examiner declared same then the entire loan would have to be counted against bank reserves.

 

[residentialguy]

A key point Mark Lewis made was when concessions were added, the LTV is affected. 80%LTV, $100,000 = $80,000 loan. Add $4k as "concession" and 80% = $500 more, potentially the bank may be violating their own guideline and if FDIC examiner declared same then the entire loan would have to be counted against bank reserves.

Of course, it falls on the backs of appraisers that bend over and ignore the concessions with the bogus defense of "they're typical"

 

[Deleted member 134708]

Your point?

Cash sales are 40% of transactions.


To correct me: you said "aren't typical"

Which actual makes my argument less, but still...

 

[Deleted member 134708]

appraisers that bend over and ignore the concessions with the bogus defense of "they're typical"

Agree.

That's not me. Disagree all you want. I call and speak to ("interviewing" is for classrooms and PC crowd) Agents, homeowners, buyers etc.

I find concessions are part of the total package. In their minds they paid $100k. They bot for $100k. The home was $100k. It was worth $100k.

Closing costs, concessions, agent fees, county, transfer are sometimes $10k, $20k, $0.

But every single time. The buyer bought that house for $100k and the seller sold for $100k in their mind.

Straight from the retarded horses mouth.

 

[residentialguy]

I find concessions are part of the total package. In their minds they paid $100k. They bot for $100k. The home was $100k. It was worth $100k.

Closing costs, concessions, agent fees, county, transfer are sometimes $10k, $20k, $0.

Really..Put your money where your mouth is. Market test it. It doesn't matter what the opinion of your RE agents and misguided appraisers think. Just ask the seller (or their agent) if they would agree to have sold for $10k less if they didn't have to shell out $10k from their savings account ending with the same check in the end...and have less appraisal issues.

Wanna bet they'll sell for 90k without paying 10k concessions??? I say yes... how about you? No reasonable person wouldn't. Market value is about being "knowledgeable and prudent"

 

[Terrel L. Shields]

What is ignored is a high percentage of loans w houses as collateral are not secondary market but shorter term, in house loans, 5-10 year ARMs, and I have yet to see my first concession on one of those. In fact, in the first 10 years of my career, FHA was the one and only place you saw them. They are only typical in a niche market and segregate a population of FHA v non-secondary sales and the FHA sales will often average between $3500 - $4000 difference...net to seller is same.

 

[DTB]

Dare I say that $4$ is typically a safe bet as far as concession impact goes. Occasionally, it will be even more impactful. At times at certain price points if there are -0- concessions, the property will never sell financed. It will fall into the cash buyer market and get hammered appropriately. 100K price, with 10K concessions or wait for the cash buyer at 65-70K