The REAL Price? No Man Knows . . .
July 2nd, 2009 . by Jon ModeneSome houses are like Charles Foster Kane’s mythical mansion, Xanadu. No man knows . . .
You are a regular Joe. You read the Toledo Blade and see that your neighbor’s house sold for $X.
So, you assume, it really sold for $X. Right?
No. You CANNOT assume this.
Because of the various incentives that sellers can pay at closing to the buyers who buy their house, the “legal” sales price is not always the true price.
Don’t blame the Wood County Auditor. They simply go with the number provided them, on a statement generated at the closing that the buyer signs.
But in this market there are many legal, but hard to verify “spiffs” that sellers make:
-Paying the buyer’s closing costs.
-Buying “extras” for the buyer.
-Paying an “allowance” for carpeting, decorating, or repairs.
-Paying, in some cases, the very downpayment money that the buyer needs.
You think that the recent sale indicates that your house has a certain value since your house is “better” or bigger or something else.
But they might not have sold for $X right in their pocket – they may have paid $10,000 for a carpet allowance and $6000 in seller paid closing costs and then thrown in $1000 for a new refrigerator.
It is common for me to get one or two or more calls a week asking me about the existence of any seller concessions from prior closed listings from appraisers trying to divine the “true” sales price for a new appraisal that they are working on.
I imagine for every call that I get . . . I don’t get 2 or 3 or 4 other ones.
What is the “true” sales price?
Do Realtors have a continuing obligation to keep such concessions private?
Do Realtors instead have a duty to report such concessions to help the market move and work efficiently?
How do these concessions effect the market (on FHA loans today ALL my sales have seller concessions)?
What are the relationship between these concessions and the movement of homes and the value of homes?
I have some ideas . . . what do you think?
Join the Discussion! Leave a Reply: