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"real" Sales Price

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Robin Leaf

Freshman Member
Joined
Apr 2, 2003
Professional Status
Licensed Appraiser
State
Virginia
I have a comparable that listed at $130,000 with a final sales price of $135,100 that is listed on MLS and Public Record. However, the sellers concessions are $10,100. The way I see it the unit really sold for $125,100. Any thoughts? Robin
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
You have the proof of this concession, use it. Put in the sale price of the $135,100 - put in the -10,100 in the concessions line and go on from there. Make sure you explain the concessions.

***Make sure all of the 10,100 really is over and above what a seller would pay to close for a 'typical' sale in your market.
 

Geoff Hatcher

Junior Member
Joined
Jan 23, 2002
Professional Status
Certified General Appraiser
State
Ohio
This has come up before, although others will argue otherwise, I agree that the cash equivalent price is $125,000. A downward adjustment should be made on the concession line.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
You are correct, Geoff. Again, we sign each Statement of Limiting Conditions that includes the Definition of Market Value. Something we all need to read over again once in a while. I also highly recommend sending it to Realtors every chance you get.


DEFINITION OF MARKET VALUE:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* granted by anyone associated with the sale.


*Adjustments to the comparables must be made for special or creative financing or sales concessions. No adjustments are necessary for those costs which are normally paid by sellers as a result of tradition or law in a market area; these costs are readily identifiable since the seller pays these costs in virtually all sales transactions. Special or creative financing adjustment can be made to the comparable property by comparisons to financing terms offered by a third party institutional lender that is not already involved in the property or transaction. Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgement.

(From Fannie Mae Form 1004B 6-93 Appraisal Form)
 

Robin Leaf

Freshman Member
Joined
Apr 2, 2003
Professional Status
Licensed Appraiser
State
Virginia
Many thanks to you all for such speedy responses. Robin
 

John Wilson

Junior Member
Joined
May 1, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
Originally posted by Robin Leaf@May 9 2003, 01:27 PM
I have a comparable that listed at $130,000 with a final sales price of $135,100........... Any thoughts?
I'd think about finding a different comp. ;)
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
In the FNMA Certification as Pam posted, this statement is made....

"Any adjustment should not be calculated on a mechanical dollar for dollar cost of the financing or concession but the dollar amount of any adjustment should approximate the market’s reaction to the financing or concessions based on the appraiser’s judgement."

So dollar for dollar adjustments are generally out, unless they're really market adjustments.

So how do you do it???? Simple. Appraise the comp.

Throw the comp with the concessions in the grid against the others. Hopefully, you're analyzing more than three. Make all adjustments leaving the sales concession for last.....if the adjusted sale price of the sales concession comp is way over the others..there's the market value of the concession.

Then, if you're analyzing more than three to get the value of the concession, you really don't need it as a comp. The best advice has already been given. Don't use it, if you don't have to.

Ben
 

DanWaechter

Freshman Member
Joined
Aug 26, 2002
Professional Status
Licensed Appraiser
State
California
Ben, thank you so much for your advice. Robin (the person who originated this post) is a coworker and we both had questions about making proper adjustments for sales concessions. Your advice sounds extremely appropriate in helping to determine the "value" of the concessions. It is much appreciated.

Dan
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
Was the concession all financial or was some used for repairs or upgrades? If it was used to replace the roof on the sale then a grid adjustment for seller concession might not be the correct. Rather, you might want to change the condition rating or effective age of the sale to reflect the physical change to the sale. Either way if you've got a better sale I'ld use it because it takes would take to much writting to explain your adjustments either way.
 

Robin Leaf

Freshman Member
Joined
Apr 2, 2003
Professional Status
Licensed Appraiser
State
Virginia
After speaking with the listing agent for the property better information was supplied than one could have inferred. The property was sold to a first time buyer whose loan was generated by a non-profit organization "Ameridream" (something like that). Anyway, the seller paid $5066.00 as a "donation" to this organization who then gave the buyers a check for just over $4000 at closing. The agent said that they raised the price of the home to $135,100 to reflect this transaction. Essentially the home sold for $130,000 with a $5000 concession - the public record shows the higher transfer amount. Boy, what you find out when you ask a few questions!!! Thanks so much for everyones input. Robin
 
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