B-240819, Jan 24, 1991, 70 Comp.Gen. 198

B-240819: Jan 24, 1991

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CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Finance charges A transferred employee may not be reimbursed the amount of a seller financing concession adjustment that went into the determination of the market valuation of his house which was the basis of the offer made to him by a relocation services contractor and accepted by him in the sale of his house. Cox: The issue in this case is whether after selling his house to a relocation services contractor. A transferred employee of the Air Force may be reimbursed for the amount of a seller financing concession adjustment that was part of the basis of the agreed selling price of the house. /1/ The adjustment may not be reimbursed.

B-240819, Jan 24, 1991, 70 Comp.Gen. 198

CIVILIAN PERSONNEL - Relocation - Residence transaction expenses - Finance charges A transferred employee may not be reimbursed the amount of a seller financing concession adjustment that went into the determination of the market valuation of his house which was the basis of the offer made to him by a relocation services contractor and accepted by him in the sale of his house.

Irving O. Cox:

The issue in this case is whether after selling his house to a relocation services contractor, a transferred employee of the Air Force may be reimbursed for the amount of a seller financing concession adjustment that was part of the basis of the agreed selling price of the house. /1/ The adjustment may not be reimbursed.

Mr. Irving O. Cox sold his house at his old duty station through the Air Force Relocation Services Program in which a relocation services contractor bought the house. The manner in which the relocation services contractor arrived at the price it would offer for Mr. Cox's house was to have comparable houses that had recently sold in the area appraised, average these appraisals together, and then offer the average as the selling price for the house. In appraising the comparable houses, the appraisers made an adjustment downward to account for financing costs paid by the seller, which usually occurred when the sales of those houses were underwritten by the Department of Veterans Affairs or Federal Housing Administration. Nonetheless, Mr. Cox accepted the offer by the relocation services contractor as the selling price of his house; now he claims reimbursement for the amount that his selling price was reduced by the average adjustment utilized by the appraisers for seller financing concessions on comparable houses used in the appraisal.

Federal agencies may enter into contracts to provide relocation services to transferring employees including, but not limited to, the making of arrangements for purchase of an employee's residence at his old duty station. 5 U.S.C. Sec. 5724c (1988). However, the implementing regulations prohibit payment for market losses. 41 C.F.R. Sec. 302-12.6 (1990). /2/ The adjustment for seller financing concessions on comparable houses was directly factored into the appraisal which determined the selling price of Mr. Cox's house. Although Mr. Cox calls the adjustment a part of the closing costs of his house, he had no such closing costs on his house. /3/ To claim a reduction in the appraised value of his house on which the selling price was based under these circumstances is, in effect, seeking reimbursement of a loss due to market conditions. Such a loss is not reimbursable. Cf., Joseph R. Brimacombe, B-238372, Aug. 1, 1990.

Accordingly, the adjustment for seller financing concessions that was a component of the appraisal which set the selling price of Mr. Cox's house may not be reimbursed.

/1/ This responds to a request for a decision received from the Director, Accounting and Finance, Headquarters Air University, Maxwell Air Force Base, Alabama. It was forwarded through the Per Diem, Travel and Transportation Allowance Committee (PDTATAC Control No. 90-06).

/2/ This is in accord with 5 U.S.C. Sec. 5724a(a)(4)(A) which specifically prohibits reimbursement for losses on the sale of a residence.

/3/ Mr. Cox alleges that he was misled by representations of his Relocation Services Program which promised to him the "sale price" of his house less the outstanding mortgage exclusive of "closing costs." explained above, there were no seller financing concessions paid on the sale of Mr. Cox's house as "closing costs," so none were subtracted from the "sale price" paid to Mr. Cox. Thus, there was no misrepresentation. Had the comparable houses studied by the appraisers been sold with financing that included no seller financing concessions, the appraisers would have made no adjustment for such concessions.