Specific Situation Regarding Concessions

[PhiloFarnsworth]

While I have found that the market effect of seller concessions tend to be close to their cash amount in my market, I often have little good specific evidence one way or another (say, marketing for 30 days at $X and then selling at $X + $Y with $Y seller concessions) and base my typical action of subtracting an amount approximately equal to the concessions based on matched pairs. The often suggested method of asking a listing realtor what they could have gotten without offering concessions is generally useless as the typical answer is evasive or simply "I have no idea".

Given such a typical lack of specific evidence on how to treat concessions, how would figure in the statement in the comparable's MLS; "Buyer agent compensation is based on net to seller after deducting any buyer closing cost"? Also, would this have any effect on how concessions were treated for comps of a subject with such s stipulation?

 

[hastalavista]

how would figure in the statement in the comparable's MLS; "Buyer agent compensation is based on net to seller after deducting any buyer closing cost"? Also, would this have any effect on how concessions were treated for comps of a subject with such s stipulation?

If I'm understanding this correctly, the above outlines how the agent's commission was calculated.
So here's the question:
A house sells for $100k. Buyer purchases the house for $100k. Here are three scenarios:
1. Agent's commissions (which are paid by the seller) are typical (say, 6%).
2. Agent's commissions are discounted to, say 3%.
3. Agent is related to seller and charges no commissions.

What did the property sell for and what price should be reported as the selling price?
Were there any concessions to the buyer in any of the three scenarios?

 

[J Grant]

I dont; see how compensation of agents per their comissions has anything to do with how we adjust for concessions.

Appraisers asking a RE agent what the property "would have sold for" is a suggestion of a source of information. It need not be the determinant, as you note, of our adjustment for concessions. The cert page right under MV definition lays it out, appraiser adjusts for concessions per their judgement / affect on price. The impact of concession we are concerned with is about price, not net to seller,. If you see equivalent of Dollar for dollar concession equivalent to $ affect on price that makes things easy.

 

[Meandering]

Given such a typical lack of specific evidence on how to treat concessions, how would figure in the statement in the comparable's MLS; "Buyer agent compensation is based on net to seller after deducting any buyer closing cost"? Also, would this have any effect on how concessions were treated for comps of a subject with such s stipulation?

Uhm, no.
Buyer's agent compensation is computed on sale price minus concessions and has nothing to do buyer closing costs.

1) You have to specifically ask the agents if the concessions were due to;
buyer needing help with closing costs as they lack cash to close, a favorable financing adjustment, or,

2) Something needing fixing that the seller will not fix.
The concession then becomes a condition adjustment, or,

3) The concession is given in lieu of lowering the price if the property did not appraise at full price and the seller does not want to renegotiate. A favorable financing adjustment.

Many list prices are priced high enough to cover a concession, at a full price offer. But not all. If agents won't tell you why there is a concession, I would assume that it is favorable financing which helps to push overall prices higher.

.

 

[Meandering]

From Realtor.com

So You Wanna Buy a House? Step 10: Negotiate Closing Costs

http://www.realtor.com/advice/buy/negotiate-closing-costs/

 

[BarrySW1963]

...

Uhm, no.
Buyer's agent compensation is computed on sale price minus concessions and has nothing to do buyer closing costs..

Around here, the MLS groups all concessions paid by sellers into a bucket labeled "BCCST", for buyers closing costs paid by seller. The actual closing costs may be much higher, than the BCCST, of course. Deals are often struck so that sellers either pay all of the "BCCST" (when those costs are under whatever limits them), or pay the amount up to the limits with the buyer of course paying the rest.