Contract, New Construction

[DWiley]

I'm trying to figure out adjustments for differences between the subject incentives and comp incentives for closing costs. If the subject receives $10,000 and a comp receives $15,000, would the adjustment be (+) $5,000 because the comp incentive is $5,000 more, reducing the price by $5,000 less that the subject? I also was told by an appraiser that FNMAE only permits downward comp incentive-based adjustments in the SCA.

When considering concessions on a comparable sale, any concessions in the subject's agreement of sale are irrelevant.

The appraiser should determine the impact, if any, that the concession had on the sale price of the comparable and adjust accordingly. In the example cited, the only consideration is how much the $15,000 concession on the comp affected the sale price of that comp.

 

[J Grant]

And it's a coincidence that an appraisal yesterday (not new construction) was a refi of a SFR that sold about 4 months ago. Per the borrower she purchased the home with a loan based upon an appraisal waiver, but that "something went wrong" and the same lender now requires an appraisal after-the-fact. My appraisal exceeded the recent selling price by about 2% but I don't know the implilcations of a "post-purchase appraisal" that did not support the prior contract!!!

if the post-purchase appraisal is lower than the contract price whatever happens because of that, if anything, is not our concern,

 

[alebrewer]

I have adjusted for concessions for one comp and not another in the same report. Based on the definition of MV we use, concessions could have affected one price and not the other. I determine the impact by analyzing the adjusted sales before applying concessions adjustments. If a sale is adjusted higher than the others - and has concessions - I adjust. If a sale is adjusted at, or lower, than the other adjusted sales - and has concessions - I don't adjust.

 

[ZZGAMAZZ]

A purchase agreement is binding on the Buyer and Seller. It is not binding on the appraiser. In the appraisal process, the contract has to be reviewed, analyzed, and the results of that analysis have to be summarized in the appraisal report. It has no authority or bearing on the valuation analysis.

Sooo, what follows if appraiser makes appropriate adjs of $xx and the OV is less than contract price by exact amount? Buyer goes after builder who wrote the contract, then contractor goes after appraiser who's E&O deductable is $2500? ((One thing for sure, I mentioned that clause in the contract analysis but wasnt sure if it should say that it was beyond the SOW. Of course nobody in the history of appraising, including the Sales Office, seems ever to have encountered this issue.))

 

[ZZGAMAZZ]

I have adjusted for concessions for one comp and not another in the same report. Based on the definition of MV we use, concessions could have affected one price and not the other. I determine the impact by analyzing the adjusted sales before applying concessions adjustments. If a sale is adjusted higher than the others - and has concessions - I adjust. If a sale is adjusted at, or lower, than the other adjusted sales - and has concessions - I don't adjust.

As always, you make it seem to be so logical and straightforward. So the downward adj would be the amount of the variance, up to the value of that concession?

 

[Mark K]

Is the purchase agreement for a new construction SFR assumed to be part of the client Engagement with an appraiser?

No.

Would the appraiser comment on an item in the purchase agreement with which he or she can't comply?

IMO, if that's the case, it would fall into the category of unacceptable assignment conditions and I'd turn down the assignment.

It sounds to me like the builder is including some bogus lot premium and wants to let the buyer know in advance that if the appraiser disagrees with this scheme, too bad; they have to proceed with the transaction.

 

[ZZGAMAZZ]

As always, you make it seem to be so logical and straightforward. So the downward adj would be the amount of the variance, up to the value of that concession?

And stealing my own post, regarding a different concession, the Sales Office now has advised me by email 3 times that bc the sales concession is based upon the buyer relying on the designated lender, "the amount of the concession GOES TO THE LENDER." But I wonder: dont they mean to add . . . "On behalf of the buyer?" Emoji for confused.

 

[alebrewer]

As always, you make it seem to be so logical and straightforward. So the downward adj would be the amount of the variance, up to the value of that concession?

Exactly. Sometimes the adjustment is only part of the total concession - only that part that - in my opinion - had an influence on the sales price

 

[djd09]

When considering concessions on a comparable sale, any concessions in the subject's agreement of sale are irrelevant.

The appraiser should determine the impact, if any, that the concession had on the sale price of the comparable and adjust accordingly. In the example cited, the only consideration is how much the $15,000 concession on the comp affected the sale price of that comp.

is that how the MB and GSE's do it when waiving the appraisal...

 

[Surf Cat]

IMO, if that's the case, it would fall into the category of unacceptable assignment conditions and I'd turn down the assignment.

This is what it seemed like to me. I'm glad someone else said what I was thinking.

If that appraisal does not meet the price of the sales contract, everyone's going to beeline for that clause..... I've certainly never seen a clause like that in a purchase agreement