New working paper: Seller Concessions in California (U.S.) Residential Transactions

Valuation Engineer Research Labs has published a new working paper, Seller Concessions in California (U.S.) Residential Transactions: Prevalence, MLS Reporting Differences, and Implications for Appraisers, by William Bert Craytor. The paper is in English.

Seller concessions appear in nearly half of U.S. home sales, but California is far from uniform: in Redfin's metro figures they range from about 4% of sales in the San Jose metro to more than half in Los Angeles, San Diego and Riverside. Since the 2024 NAR settlement, MLSs have also reported them differently. CRMLS carries structured concession fields, while MLSListings deliberately has none, so in the Santa Clara and San Mateo markets the agents' remarks are the only MLS source. The paper also notes the April 2024 clarification by Fannie Mae and Freddie Mac that a seller-paid buyer-broker commission following local custom is not counted toward interested party contribution limits.

Two draft protocols follow. The first covers regression models fitted without a concession field. The second covers sales comparison grids built from such models: it shows how omitted concessions enter the estimate, the adjustments and the comparables' residuals, estimates the bias from the frequency and size of concessions and the market's reaction to them, and proposes thresholds for when no change is needed, when the indicated value should be reduced, and when concession data must enter the model.

The paper is available on the web and as a PDF: https://research.valuation-engineer.com/protocols/seller-concessions-california/

DOI: https://doi.org/10.67330/4r391x54 (preservation copy on Zenodo: https://doi.org/10.5281/zenodo.23654838)

Research Labs papers are working papers and are not peer reviewed; the Journal remains the version of record. The two protocols are drafts, and comments are welcome.