Finalizing a process that began 13 months ago, the Appraisal Practices Board has adopted new guidance that will help valuation professionals help determine the value of seller concessions in the appraisal process.
The new advisory tells appraisers how and when to adjust for concessions made by home sellers in order to snare buyers. It also offers advice on how to verify such popular concessions as seller-paid closing costs, and discusses the impact and application of concessions on both the cost and income approaches to calculating values.
“We believe this guidance can be helpful to a large number of appraisers who may not have a great deal of education or exposure to recognized methodologies in addressing concessions,” said APB Chair Gary Taylor. APB is an independent board of the Appraisal Foundation, a Congressionally-authorized non-profit chartered in 1987 to develop voluntary guidance on recognized valuation methods and techniques.
The new advisory is especially timely, coming at a time when sellers often offer concessions as a way to set themselves apart from the competition. Concessions are always a part of the market, but are even more so in a buyers' market.
The board also is working on new guidance about appraising residential properties in a declining market.
