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Realtors and concessions

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Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
I need some input from my peers.

We are a non disclosure state. Meaning that you do not have to reveal what you sold/bought real estate for. MLS is the only reliable source for information. That means we have to rely on the Realtors for our information.

Often times, well probably most times, the sales price listed in the MLS is higher than the listing price. Most times that means that they included the concessions in price. When I call to verify this I get half-*** answers from most of the Realtors. They want to go by memory and just dont want to help you.

So here is what I am thinking about doing from now on. I am going to fax their office a form that reads:



I am using a house you sold located at: ___________________ as a comparable sale in an appraisal. The sales price listed is in the MLS is more than the listing price. I have to have the actual sales price and a break down of the concessions.

I would greatly appreciate it if you could FAX or Email this information to me as soon as possible so I may complete this appraisal.

Thank you!
Jeff Horton

ACTUAL SALES PRICE________________________________

CONSESSIONS __________________________________________



Once I dont hear back from them (I dont actually expect many will answer) I am thinking about putting the following assumption in my reports under my statement of assumptions:

4. Concessions. Sales prices listed in the MLS data bank sometimes shows sales prices higher than the listing price. In these cases I have attempted to contact the selling agents to find out the details of the transaction. If the concessions are marked as unconfirmed in the sales grid it means that I was unable to contact the Realtor and/or they would not return my call. Therefore I have made the extraordinary assumption that the house actually sold for the list price. The difference in the list price and the sold price is assumed to be concessions and an adjustment was made in the sales grid to allow for the assumed concessions.

OK fire away!!

BTW I am going to call out Boards President and talk with her and see if we get something changed in the future.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
I like it. Now let's hear from other more experienced appraisers and the lawyer wannabes.
 

Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
LOL Thanks Pam. I am anxious to hear from some others too. Two heads (or more) are always better than one.

BTW 2 of the 3 Realtors today have answered. Just got a fax as I was typing this so maybe my form worked. Today I pulled up 26 sales from a rough search that I then narrowed down to 4 sales that were comps I could use. I decided to just print out the list and look at it.

16 of the 26 (if used as comps) would require additional information from the Realtor about consessions.

9 of the 16 have sold prices above the list price.

Plus I have one sale from a few weeks ago that listed at 310K sales price. Honestly didn't seem out of line, upper end of market but I didnt question it. I called the realtor about another sale and while I had her on the phone I mentioned that I was using this one. She said "Oh, you need to know that there was a $25000 allowance in that to build a pool!"
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Good going! Maybe I'll plagerize your post - and we are not a non-disclosure state. I do have verifiable sale prices in the public records, just sometimes they don't match the MLS sale prices.

One Realtor asked me to make sure I didn't disclose the concessions he told me about because it would mess up the way they were raising the neighborhood pricing!!!!

:rofl:

:2gunfire:
 

Oregon Doug

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Oregon
A few months ago, the head of our state Real Estate Commission stood before the Board and informed us that he has decreed henceforth that brokers are no longer allowed to disclose concessions to appraisers. A lively discussion ensued.

There wasn't a single appraiser (other than board members) in attendence to hear this proclamation. Do appraisers care?

How come you don't attend your board meetings?

Oregon Doug
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If the sale is FHA, there are concessions, usually $1000 minimum for what the seller has to pay of the buyer's costs. If it's VA, the cost can run as much as $10K. It's not unusual to pay up to 3% for concessions in a conventional loan now. When it appears that concessions are involved and I can't confirm it, if it's less than 3% I make a comment that such concessions are typical and no adjustment is made. After all, if they pretty much all have some concessions, they stop being unusual for the market. And that's what we have to adjust for.

Example is the Community Lending deals around here. Home lists at $95, sells at $106. Buyers down pmt, closing costs, everything is loaded into the loan and sales price.

Roger
 

Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Example is the Community Lending deals around here. Home lists at $95, sells at $106. Buyers down pmt, closing costs, everything is loaded into the loan and sales price.

I am not sure if I follow you on this one. But we have lots of USDA Rural Develpment loans. The Realtors try to include all the closings cost into the sales price and pass that off as the selling price. But that is not the sales price, that is the financed amount. Are you saying that you don't adjust for any of that and use the sales price you use in the report is the loan amount or the sales price plus whatever they roll into the deal?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
My first question regarding the listing price vs a higher sale price is "Would the seller have sold it for the listed price if the sale was cash?"
Of course they would have. The rest, at least, are sales concessions as far as I'm concerned.
 

Jeff Horton

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Thats what I am thinking Pam. I always adjust anything out like closing costs and or fees that have been rolles in. Realtors would love it if I would use the "inflated" value they try to give us. :)
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Out here in SoCal many properties sell for over the list price due to the high demand and low inventory. Multiple offers within hours of being listed and then the bidding wars begin. It makes it difficult, at best, to support some of the contract prices. Oh, and the amount that the public record shows is the amount that goes in the report.
 
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