As in previous years, a growing number of buyers in the high-end segment of the local residential market in 2020 opted not to disclose the actual sale price of their home with the parish clerk of court.
Instead, they recorded just a nominal sale price of $100 or less “and other valuable considerations” on conveyance documents.
It’s a way to keep the actual sale price out of the public record and it’s perfectly legal, according to local real estate attorneys, who say Louisiana law does not affirmatively state that an accurate sale price must be listed in publicly recorded sale documents.
It’s a major annoyance to appraisers and brokers, however, who complain that keeping the sale price out of the public record robs the market of precious data—the sale prices of comparable nearby properties, or “comps,” which are used by professionals, buyers and sellers to determine value.
In an effort to stem the practice, the Greater Baton Rouge Association of Realtors late last fall enacted a new rule, requiring brokers to record the actual sale price of property transactions in the Multiple Listing Service, Business Report details in a new feature.
The rule change states that the sale price of a property must be recorded as “the amount of money or consideration paid and/or given at closing in exchange for the transfer of ownership of a property,” according to the GBRAR website. “In the event the recorded sales price differs from the actual sales price, the actual sales price shall be reported to the service.”
The GBRAR rules only apply to what is recorded in the MLS and does not affect state law, which continues to allow property sale prices to remain secret. But it ensures that if the buyer or seller uses a licensed broker to represent them in the deal, the actual sale price will be recorded in the MLS.
Local appraiser Wesley Moore, who has been a frequent critic of keeping actual sale prices out of the public record, says he is glad to see the rule change, though he cautions that it could motivate more buyers and sellers to keep their properties off the MLS altogether.
Only time will tell how effective the new regulation will be in forcing buyers and sellers to be more transparent about their transactions. In the meantime, Business Report found several high-end homes that were listed for more than $1 million but their sale prices were recorded as $100 and OVC or less.
See two examples of properties that, given their list price, would almost certainly have made the Top 10 list for 2020 from the latest edition of Business Report. Also check out the top 10 commercial deals of 2020 here.