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Heating and Cooling paid by Seller?

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Ron D. in NWA

Thread Starter
Junior Member
Joined
Nov 19, 2005
Professional Status
Certified Residential Appraiser
State
Arkansas
Am doing an appraisal for a client that is needing a determination of market value. New, 2 story SFR, good quality materials and construction. One of the comparables identified is very similar, in the neighborhood, with the buyer offering to pay heating and cooling costs for 2 years. This also is a new construction so there is no previous history of utilities to determine an adjustment for this. Would I be better off to just ignore this one and try to find another, or does anyone know a way to adjust for this with support? Thanks in advance,,,,,,, and Merry Christmas to all.
 

VolcanoLvr

Senior Member
Joined
Oct 30, 2003
Professional Status
Certified Residential Appraiser
State
Washington
"with the buyer offering to pay..."

I think you mean 'seller.'

It's definately a concession and needs to be adjusted if used in your report. If you use this comp, talk to the seller and find out what the max amount is they will pay. Chances are they have a figure in mind, and it will be deducted from the sales price, or rebated as 'cash back at closing' which is illegal, but too often done.

Frankly, I would try to find another suitable comp.
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Am doing an appraisal for a client that is needing a determination of market value. New, 2 story SFR, good quality materials and construction. One of the comparables identified is very similar, in the neighborhood, with the buyer (seller??) offering to pay heating and cooling costs for 2 years. This also is a new construction so there is no previous history of utilities to determine an adjustment for this. Would I be better off to just ignore this one and try to find another, or does anyone know a way to adjust for this with support? Thanks in advance,,,,,,, and Merry Christmas to all.

Is this similar comparable a SALE or a LISTING? Did the sale close with the concession in place or without? The seller can offer anything, but it does not always close that way. You need to do more research, but I would use a different sale as a comp.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
Am doing an appraisal for a client that is needing a determination of market value. New, 2 story SFR, good quality materials and construction. One of the comparables identified is very similar, in the neighborhood, with the BUYER offering to pay heating and cooling costs for 2 years. This also is a new construction so there is no previous history of utilities to determine an adjustment for this. Would I be better off to just ignore this one and try to find another, or does anyone know a way to adjust for this with support? Thanks in advance,,,,,,, and Merry Christmas to all.

From the title of your post, I know that you meant to type "seller" where you have "buyer" (in BOLD) above.

Regarding the concession (seller pays 2-yr. heating & cooling) offer in a 'comparable', is this a closed transaction? If 'yes', I assume that there was a credit to the buyer at closing for the estimated dollar amount of these estimated costs. Report and analyze this concession as you would any other concession to the buyer.

OK...had my morning coffee...presents opened...visited the AF...now, off to church.

Merry Christmas.
 

Ron D. in NWA

Thread Starter
Junior Member
Joined
Nov 19, 2005
Professional Status
Certified Residential Appraiser
State
Arkansas
OK I did mean "Seller". I was doing the thinking,,,, but the eggnog was doing the typing. It is a sale not a listing. I will make my calls after the Holidays,,,,,,,,,,,,,,,
 

Mike Garrett RAA

Elite Member
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Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Merry Christmas...

First, decide if this sold is the best available...if it is then contact a party to the transaction and determine if, in fact, there was a concession in the sale... then you must determine if there was a reduction in price, a credit at closing, or even possibly the seller paying the utility bills for the next two years. If it was a reduction in price then you need do nothing. If it was cash back or the seller paying the utility bills for the next two years then you will need to determine the market reaction and adjust accordingly.

The easier thing to do would be find another sale!
 

Kevin A. Spellman

Senior Member
Joined
Aug 30, 2003
Professional Status
Certified Residential Appraiser
State
Massachusetts
I always look at the commissions being offered with the concessions. The seller may offer a concession, but several times I do see the professional fees being lowered to assist in the concessions. The seller may not have paid the entire concession. So review the commission offered and the commissions paid if your MLS service host this data. If the agents involved in the transaction with concessions do not know you, then I believe it would be hard to verify these concessions. Here in MA the statewide H3MLS system does not require the agents to host concessions paid.
 
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