Seller concessions for a cash sale?

[alebrewer]

So the burden of proof, and it is a very high burden, is for the appraiser to support a concession adjustment (read, "You are crazy if you adjust for a concession.").

Isn't the burden of proof on the appraiser for any adjustment he or she applies?

 

[J Grant]

I adjust if its clear they had "an impact on price". If the list price is $200k and the sale price is $210k with 10k in concessions, I adjust $4$. RE isn't fungible so there is always going to be some variance in prices, even for seemingly identical houses. I use data to tell me #1: Should there be an adjustment? and #2: How much. I almost always "tighten up" the adjustment based on the comps I used so it makes sense to the reader.

The same here. Actually, all you and I are doing is following the GSE guidelines ( adjust if the concession had an impact on price, and the impact might be $ for $., or more, or less).

I will tighten the range of the comps to see if a better adjustment is indicated, - but I won't artificially tighten it just to make it look pretty. Sometimes, after my comps are adjusted, I will remove or replace a comp that is far out of the range and doing so usually improves the appraisal.

 

[Elliott]

Isn't the burden of proof on the appraiser for any adjustment he or she applies?

Well, there is being in a bullseye and being cannon fodder.

 

[Mark K]

You're making assumptions about folks' motivations that may, or may not, be true.

I used to own a brokerage with 18 agents and as owner I was also Principal Broker. Part of that job was to review every contract that came thru my office, ballpark of 250 per year.

I can't tell you the number of purchase agreements that came thru had wording similar to "Purchase price to be $200K with $10K in concessions/closing costs". Counter offer would be similar to "Sales price to be $190K with $0 in concessions." 2nd counter would be "Sales price to be $195K with $5K in closing costs." Everyone signed. They all knew what a $ was worth.

Will concessions help make deals work? Of course. Are sellers giving concessions without regard to sales price? Absolutely not.

No mind changing going on or expected.

 

[alebrewer]

I used to own a brokerage with 18 agents and as owner I was also Principal Broker. Part of that job was to review every contract that came thru my office, ballpark of 250 per year.

I can't tell you the number of purchase agreements that came thru had wording similar to "Purchase price to be $200K with $10K in concessions/closing costs". Counter offer would be similar to "Sales price to be $190K with $0 in concessions." 2nd counter would be "Sales price to be $195K with $5K in closing costs." Everyone signed. They all knew what a $ was worth.

Will concessions help make deals work? Of course. Are sellers giving concessions without regard to sales price? Absolutely not.

No mind changing going on or expected.

I didn't say that quid pro quo didn't happen - I said it's not the only motivation.

 

[Vermonter]

Isn't the burden of proof on the appraiser for any adjustment he or she applies?

Hate to point out that a $4$ concession adjustment is the probably most supported adjustment you can ever make in an appraisal report.

 

[alebrewer]

Hate to point out that a $4$ concession adjustment is the probably most supported adjustment you can ever make in an appraisal report.

I would certainly agree that it's the easiest adjustment (assuming you're doing $ for $). No actual analysis required.