08/24/2026
A $20,000 seller concession does NOT automatically mean the appraiser makes a $20,000 adjustment.
This is one of the most misunderstood parts of real estate appraisals.
Fannie Mae Selling Guide B4-1.3-09, Adjustments to Comparable Sales, specifically addresses sales and financing concessions.
The rule is simple:
The appraiser is supposed to measure the MARKET REACTION to the concession, not blindly subtract the amount of the concession.
Fannie Mae states that dollar-for-dollar deductions equal to the seller's cost of the concession are not appropriate as a strict cash-equivalency approach. The adjustment should reflect how much the concession actually influenced the purchase price.
Here's an example:
Comparable Sale #1: Sale Price: $1,000,000 Seller Credit: $20,000
Some people assume:
$1,000,000 - $20,000 = $980,000
Not necessarily.
Now imagine similar homes without concessions were selling around $990,000, while buyers receiving the $20,000 credit were willing to pay approximately $1,000,000.
The market evidence may indicate that the $20,000 concession only increased the sale price by approximately $10,000.
The appropriate appraisal adjustment could therefore be -$10,000, NOT -$20,000.
It could also be $0.
It could be the full $20,000.
The answer depends on what the MARKET DATA supports.
Fannie Mae's definition of market value makes the same point: adjustments for financing or concessions should not be calculated mechanically dollar-for-dollar. They should approximate the market's reaction.
This is why appraisers analyze comparable sales with and without seller concessions, financing incentives, closing-cost credits, rate buydowns and other incentives.
Cost does not automatically equal value.
And a concession does not automatically equal an adjustment.
That's appraisal 101: measure the market, don't make up the math.
Source: Fannie Mae Selling Guide B4-1.3-09, Adjustments to Comparable Sales.
Fannie Mae Selling Guide B4-1.3-09
Anthony Young | Appraiser | Price Consultant | ValuedAudit.com
