The Appraisal Foundation’s Appraisal Practices Board (APB) adopted “APB Valuation Advisory #2: Adjusting Comparable Sales for Seller Concessions.” This advisory includes guidance on:
• Verifying concessions;
• When does an appraiser adjust for concessions?;
• Methodology;
• Concessions and non-residential property (other than one- to four-unit properties); and
• Impact and application of concessions in the cost approach and income approach.
“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. “This guidance, combined with another topic the APB is currently working on, Residential Appraising in a Declining Market, are thought to be timely based on the housing markets in many parts of the country today.”
The APB commenced the process of developing this guidance in February 2011 by creating a scope of work for the project and soliciting industry-recognized Subject Matter Experts (SMEs), who researched and compiled applicable texts, journals, articles, coursework and other materials pertinent to this topic.
The SMEs, along with assigned APB Board member liaisons, developed a draft of their work product for the APB’s review. After working with the SMEs to address any questions or issues, the APB issued its First Exposure Draft on this topic on Oct. 3, 2011, and accepted public comments through Dec. 2, 2011, and at its public meeting in Atlanta on Dec. 12, 2011.
After considering all of the comments received, the APB again worked with the SMEs to address some of the issues raised in the public comments. The APB subsequently issued a Second Exposure Draft on Jan. 26 and accepted comments through Feb. 29. After considering all of the comments received, the APB adopted the Second Exposure Draft, subject to minor administrative edits, on March 7.
Click here to view a copy of the APB Valuation Advisory #2: Adjusting Comparable Sales for Seller Concessions.
Any questions on APB Valuation Advisory #2: Adjusting Comparable Sales for Seller Concessions or the work of the APB can be directed to Staci Steward, Practices Administrator at (202) 624-3052.