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An agent recently inquired if appraisers take seller paid concessions into consideration; ie, do appraisers subtract the concession from the sales price? The agent explaned that he often heard other agents explaining to their clients that the home "really" sold for Sales Price - Concessions, and asked if this made sense.  It didn't to him because, because, as he correctly noted the house would still have to appraisal for the sales price.

The bottom line is that the sales price ends up being, for appraisal purposes anyway, the contract price of the home which would be the "sales price" plus concessons.  That said, the contract price (sales price plus concessions) is the number the appraiser would have to hit for the deal to work.  Sometimes agents prep their clients by explaining that if the appraised opinion of value is less than the contract price there is at least some room for re-negoicating the amount of concessions.  When writing up a contract with your client keep in mind that concessions are in effect raising your sales price and if the home is in contract at the top of the market, adding concessions to the sales price might create appraisal problems down the line.  In the New Orleans market it appears that normal/typical concessions are up to 3% for conventional loans and 6% for FHA and VA.