MLS Disclosure of Sales Concessions

[Proactive]

“Appraisers are required to identify and report sales concessions and properly address and/or adjust the comparable sale transactions to account for sales concessions in the appraisal of all properties to be security for an FHA-insured loan.” (U.S. Department of Housing and Urban Development Mortgagee Letter 2005-02)

“Our definition of market value is intended to ensure that appraisals reflect an opinion of market value after adjustments for any special or creative financing or sales concessions—such as seller contributions, interest rate buydowns, etc.—have been made.” (Fannie Mae Selling Guide, Part XI, 205)

“Sales or financing concessions may have an effect on the price paid for a property. As such, it is important for the appraiser to recognize this and analyze their impact.” (The Appraisal Standards Board, USPAP Q&A, March 2007)

There can be no argument that appraisers are required to address/analyze the impact of sales concessions. Yet I find sales agents have become increasingly more resistant in providing that information, to the point that I am petitioning our MLS Board of Directors to consider adopting a mandatory concessions field for reported sales.

I am asking help from those appraisers who have MLS systems that disclose concessions. Does your MLS provide the concession dollar amount, or a checkbox indicating yes or no for sales concessions? Do your bylaws have specific verbiage pertaining to the disclosure of concessions that you can share? Can you give me the name of your MLS that does have a concessions disclosure policy? Please PM me or post here if you can provide some assistance.

I will share the results of my efforts when I have some. Thanks for your help!

 

[Restrain]

Greater DFW board (primary coverage for Dallas/Ft Worth and surrounding counties) has a place for concessions and the agents are supposed to enter them. However...........

Real estate agents are constantly writing contracts with hidden concessions, "silent seconds", etc. and the terms are not being disclosed in MLS. Sometimes you just have to look at a sale and say, "something's not right", and opt not to use it, or adjust for probable hidden concessions.

An extreme example is one on her desk right now. She asked for the contract, and the agent said "if I knew that you were going to look at it, I would have written it differently". Warning, Will Robinson, Warning! You don't think there's not some concessions and funky stuff going on here, stuff that won't appear in the MLS report?

 

[Ross (CO)]

Steve,.....Your efforts to "get to the bottom of this" are surely warranted there in your market.....if there is a lack of regular disclosure. I hope your local MLS board sees the lights and creates a new field or two within a normal listing data-entry process so that post-sale details can be available for ALL who should be able to better know just what the house+land price was for any sale.

My local MLS's listing entry format has had 3 selected fields for such information for quite a few years. They are called "Sold Concessions", "Sold Remarks" and "Incentives". Little by little, one by one, there are more and more agents using those fields to share and disclose pieces of information that can bring focus on the sundrie transaction details that might comprise the total posted "Sold Price" paid for the property.

I think this concessions issue knows no state or local MLS boundaries. It is a national "problem" and needs to become a new training module within most educational and training programs so that the secret shell can be cracked and removed from the get-go. It's kind of like taking the hard candy shell off of an M & M.......horrible, I know, but the chocolate center needs to be exposed so that the other market participants can know the details.....the appraisers, the county assessors, the AVM'ers (like they really care !), and the rest of the buying public who might find themselves shopping for a house at a time in the future.

This revelation on concessions should come down from the NAR, with new definitions and descriptions of the varied and basic Genus and species of what people normal see and recognize about most concessionary "things".....and this information need NOT be forced upon the industry by some larger government entity. NAR should take the lead on this, but we shall wait to see if they do.

 

[DWiley]

Steve,

Our local MLS requires agents to report sales concessions. Just recently the MLS had a reminder message that failure to report concessions was a fineable offense.

I am in Nashville, TN.

DW

 

[hastalavista]

Steve,

Our local MLS requires agents to report sales concessions. Just recently the MLS had a reminder message that failure to report concessions was a fineable offense.

I am in Nashville, TN.

DW

Danny- Welcome to the forum (it's about time!:new_smile-l: )

Steve-

This movement is afoot (which is a good thing). I believe our fellow forumite, John Hassler, was instrumental in getting one of our local boards to do the same thing.
I further believe that as liability issues grow for real estate transactions, the Realtor Associations as well as the local boards will move toward full disclosure.

As always, it remains up to the individual agents/brokers to follow the policy.
There is always a drawback, however: A party (buyer or seller, I believe) can require the sale price/terms of the transaction not to be published in MLS; in such cases, even when I call the agent and ask, they will not tell me anything citing their binding confidentiality agreement.

 

[Jim Bearden]

I believe most concessions are reported here. I had a contract on one house with a $5000 concession and the comps said that the price was that much higher. The broker called and yelled at me saying I should have considered the property across the street which was listed at the highest price in the whole subdivision.

 

[Proactive]

I believe most concessions are reported here.

Jim, does your MLS require disclosure of concessions? Ours does not; only the final sales price is reported. With our changing market I am finding half to two-thirds of the sales in some price ranges now have some form of concession. Twenty-four months ago anything that paint would stick to sold for the asking price... or more.

I know even if concessions are required to be reported we still won't be getting the whole picture.

But it's a d@mn good start.

Denis, I'll email John Hassler for advice. Anyone else have experience (good or bad) getting concessions reported in their MLS?

 

[Vegan702]

GLVAR (Greater Las Vegas Area Realtors) has a spot for concessions in $ format, actually it is labeled "sellers contribution."

 

[Jim Bearden]

Steve I don't know if it is required but it's usually there. When a property sells above asking price and none are shown I don't use it.

 

[Mike Garrett RAA]

PPMLS ANNOUNCEMENTS - April 12, 2007

DIVISION OF REAL ESTATE FINES APPRAISERS, MORTGAGE LENDERS AND REAL ESTATE BROKERS THOUSANDS FOR MORTGAGE FRAUD: Erin Toll is investigating sales, especially those where there is a discrepancy between List Price and Sold Price, and no disclosure of Sold Concessions. Click here for Task Force recommendations.


The push is on!