Positive Adjustment on Seller Concessions

[residentialguy]

RG,
So should Cash get a positive adjustment of 3% if its King when comparing it to financed transactions?

If you could verify it. It would be tough to do. It's not like the buyer/seller would have that on their sleeves. There are some instances where the sellers act like a loan shark and take advantage of a buyer in need of cash.

 

[Mile High Trout]

There are some instances where the sellers act like a loan shark and take advantage of a buyer in need of cash.

Like the auto industry!

 

[residentialguy]

When the premier VA appraisers are all doing it - I just throw in the towel rather than fight that fight.

Only if you are doing a VA appraisal. They certainly are not setting precedence over other appraisals handling concessions.

 

[Mile High Trout]

Except for being the aspired few, those brave few who still get consistent full fees without hassle, and have leeway to interpret guidance without fear of retribution. Those brave and rare few. Heck, I'd do it, except that I started out here, as opposed to there. These days, it's a whole different ball game.

Being an appraiser in 2011 was like being a Baptist. All fire and brimstone for evil doers - no exceptions. The VA is a religion in itself, as far as appraiser parallels go. It's just greener on that side of the fence. Who wants to screw over armed borrowers? Probably not as easy to work over as your regular civi.

 

[gregb]

Saw a home this week. Homes built in 1999, builder/developer retained several homes, rented them out, now selling his few one at a time. Buyer's first offer was $660,000, four counter offers resulted in contract price of $710,000. List price was/is $749,000. Last counter offer from builder/seller stated $20,000 credited to the buyer. Listing agent, when asked what the $20,000 credit was about, stated the buyer did not want to pay over $700,000, and the seller did not want to sell under $700,000, so the $20,000 credit was the solution for the meeting of the minds. Market value appears to be about $680,000 to $690,000...unless weight is given to several REO and Short Sales plus some pending sales.

 

[Scott Kibler]

Wow, 12 pages on the phenomena of how a dollar today is worth more than a dollar in the future, particularly for those who have few of them. The OP's head must be spinning but at least his specific question was answered early. Meanwhile, I'm thinking buyers and sellers understand cash equivalency better than many appraisers.

 

[residentialguy]

I'm thinking buyers and sellers understand cash equivalency better than many appraisers.

:icon_idea:...which brings us back to post 73/74. This is a sale specific adjustment. You want to know the equivalence, just ask the participants of the sale, esp the seller side.

 

[J Grant]

unless weight is given to several REO and Short Sales plus some pending sales.

Are these sales occuring in same development as the high priced builder sale?

 

[Calvin the Airedale]

:icon_idea:...which brings us back to post 73/74. This is a sale specific adjustment. You want to know the equivalence, just ask the participants of the sale, esp the seller side.

I have to disagree. IME sellers (not all sellers and not all markets) only have a rough idea that concessions help them sell their house by making it more affordable to cash starved buyers. If asked, many would say the concession they made added to the SP on a $4$ basis.

However, the concession in fact may have added more. Several rehab speculators I've interviewed have told me that concessions usually add more than the amount of the concession to the price of their home. They are selling to buyers who have the capacity to make debt payments, but who have little savings to use for the DP and etc. Without the concession, they'd wouldn't even make the offer. To such buyers, the concession may contribute to price at some multiple of the nominal amount.

The AF seems keen on asking buyers and sellers what the contributory value of the concession was. I say, who cares what they say. Contributory concessions are best determined based on the actual results of contributory concession in many deals over a period of time and are less reliable when judged on simply an anecdotal basis.

 

[J Grant]

The AF seems keen on asking buyers and sellers what the contributory value of the concession was. I say, who cares what they say. Contributory concessions are best determined based on the actual results of contributory concession in many deals over a period of time and are less reliable when judge on simply an anecdotal basis.
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I agree with this, for the most part. While it can be useful to interview buyers/sellers/realtors and ask their opinion what concessions added to price (if any), in the end, the client is asking for OUR opinion, not THEIR opinion. Because buyer/seller realtor opinion relates to their personal situation and may not reflect the trends and data from the market. Individual buyers and sellers do what they believe is good for them to make a deal work, but their motivation is individual. The MVO asks us to consider the actions of the TYPICAL buyer/seller, which may or may not reflect the actions of an individual buyer or seller.


Our opinion on what concessions added to price takes into account the information from the parties, but also market information, comparative prices of other comps both with and without concessions, etc.