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Seller Concession Adjustments.

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kristofer

Thread Starter
Freshman Member
Joined
Jul 8, 2008
Professional Status
Licensed Appraiser
State
Colorado
I am now confused on when to adjust for seller paid concessions. :shrug: I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Some appraisers do a $ for $ adjustment and some adjust for the difference of what is typical for the market and what was paid. Others may do it even differently. I typically adjust $ for $ as that is the concession being made by the seller. Each sale is unique to itself and I adjust accordingly based upon the sale.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
I am now confused on when to adjust for seller paid concessions. :shrug: I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?

It might also be related to the fact I have yet to read any SFR appraisal report wherein the author had any proof whatsoever that the adjustment should not be dollar for dollar. Rather, I have only read nimrod boiler plate statements that concessions in the market are "typical" so therefore no adjustments for concessions were made at all. This of course assures the final opinion of value will be higher. However, "typically" in such reports I also found the appraiser involved not so much as reporting finanacing concessions anywhere from $4,000 to $18,000 per comparable transaction and their report was forwarded right to the state appraisal board. The board fined them nicely later too.

So far, so much for "Typical."

Webbed.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I am now confused on when to adjust for seller paid concessions. :shrug: I was told by a client that they wanted a dollar for dollar adjustment. I was taught to adjust by the impact it has on the market, which I am now confused about as well. Can anybody give me some guidance and maybe some examples?

If you e-mail at (remove the spaces) Lansford @ ameritech. net I will provide you with an article on the topic of "concessions to the buyer".
 

VolcanoLvr

Senior Member
Joined
Oct 30, 2003
Professional Status
Certified Residential Appraiser
State
Washington
Pull open any current Fannie/Fredddie report form...1004, 2055, etc.

Focus your eyeballs on the Def. of Market Value, concentrating on sentence (5), and the sentence following with the *.

You may not 'need' to make a dollar-for-dollar adjustment, but you certainly 'can.'

Then make the adjustment on line 2 in the grid.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
If you e-mail at (remove the spaces) Lansford @ ameritech. net I will provide you with an article on the topic of "concessions to the buyer".



Kristofer, my offer remains open.
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
The only times I haven't done dollar for dollar adjustments is when the concession wasn't cash. Had four years of guaranteed rent at $2,500 per month when the market rent was $1,500/month, plus had $8,000 of furniture included in the same sale. A dollar for dollar adjustment would have been $56,000 but the market reaction I measured was about $18,000. All recent sales (10 of them) in the development had these concessions. Though it was now "typical" it still needed to be measured and adjusted.

I also question whether a $4,620 towards buyer's closing costs isn't better adjusted at $4,600, but then I second guess myselfbecause it seems arbitrary that I didn't round to $4,500 or even $5,000. It takes out the guess work to just go dollar for dollar when the concession is flat out cash.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
The only times I haven't done dollar for dollar adjustments is when the concession wasn't cash. Had four years of guaranteed rent at $2,500 per month when the market rent was $1,500/month, plus had $8,000 of furniture included in the same sale. A dollar for dollar adjustment would have been $56,000 but the market reaction I measured was about $18,000. All recent sales (10 of them) in the development had these concessions. Though it was now "typical" it still needed to be measured and adjusted.

I also question whether a $4,620 towards buyer's closing costs isn't better adjusted at $4,600, but then I second guess myselfbecause it seems arbitrary that I didn't round to $4,500 or even $5,000. It takes out the guess work to just go dollar for dollar when the concession is flat out cash.

I have to agree with you there, Jim. I was thinking of closing costs and pre-paids being paid by the seller when I said $ for $.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
How do you measure the market's reaction for a specific set of 2 year old furniture?
 
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