I don’t believe any appraiser is likely to take into account closing costs. At least not on paper. The only likely way to get the appraisal to show $206k or better is to have the comps to suppport it. Have you done any comp work on it? Do you have a comp service or have looked on several various sites? Some county tax sites show comparable sales. Even a relator can give you comparable sales. You can provide comp information to an appraiser to assist.
Posted by David Krulac on April 13, 2006 at 05:42:31:
the appraiser will need comps for $206K to justify the sale with help. If there are no sales within the last 6 months for $206K, then it would be doubtful that the appraisal won’t be cut.
The way I read your post is your the seller who doesn’t want to pay the closing fees for the buyer and wants to know how you can raise the price to cover the costs so you still get the full price, Is this an accurate analysis?
The way I read your post is your the seller who doesn’t want to pay the closing fees for the buyer and wants to know how you can raise the price to cover the costs so you still get the full price, Is this an accurate analysis?
Posted by Brad (CA) on April 14, 2006 at 02:46:45:
Fil,
I don’t remember seeing 5% mentioned in the USPAP. nto trying to be difficult or challenging, I just don’t honestly ever remember hearing that a 5% variation in value is acceptable, in USPAP.
I am an AG licensed appraiser in CA, but maybe I have overlooked that.
This is only theory, not an actual case
but I guess what I am saying is all of the homes are $200k comps all over
but this one just happens to be paying closings costs
so seller will pay $6000 in closing costs
that’s really a different scenario than the same house where they aren’t paying $6000.
Hi Brad,
Off the top of my head, I can’t quote page number or anything, but that is the figure that has been mentioned in most USPAP classes I’ve taken in both Delaware and Maryland. I am taking a continuing education USPAP class in June and I will make a point of asking about that. But that is what they are teaching around here. It is always mentioned in conjuction with appraising being an “Opinion of Value” and the 5% rule has served me well, in that I’ve never had a bad review (knock on wood) of the value conclusions I’ve come up with. If it is not actually in the USPAP guidelines it is being taught by the local instructors. But I will definitely ask about that in my next class.
Comps 15 months old in today’s market are not true comps. You need some 6 months or less. If it it all just theory I think you ar beating a dead horse.
I think I might be able to answer this one for you since I’ve been an appraiser for over 12 years. What an appraiser will do is usually call the listing or selling agent of the house that sold for $206,000 and verify in fact that closing cost or other concessions were rolled into that sale. Part of the job of an appraiser is to verify that sale because what happen lots of cases is that $8.00 hr clerk is putting that info into the mls and sometime it just wrong. To get back to your example what we would do next is to find out what is typical for the market. If its not typical for closing cost and concessions not rolled into the sale the appraiser would then adjust that difference out in the sales comparison grid. Since I don’t know your market so I don’t know what is typical but in my market anything over 6% is adjusted from the sales comparison approach.