Must Knows for Your Home Appraisal in Chicagoland
Great, you have an offer on the table - what comes next is the home appraisal in Chicagoland. And you’re ready! At least you will be after reading this article.
The Home Appraisal in Chicagoland Need to be Scary
For home sellers even with several offers on the table, the process can get prickly as it enters the home appraisal in Chicagoland stage. In fact, “appraisal issues” are the cause of 25% real estate contract delays. This is second to financing issues (which are 35%) according to the National Association of Realtors (NAR).
If your buyer is taking out a mortgage to purchase your property, then the home appraisal in Chicagoland is a must-do. It’s not possible to simply demand the fair market value of your house either. You must subscribe to the home appraisal. But this is where a little education and knowledge can help you navigate the process.
Keep in mind - both the buyer and the seller are going to feel anxious throughout the appraisal. Everyone wants to move right along into escrow, but this is the big question-mark stage. Will there be a delay? Will the home not be worth the offer? All these unknowns cause stress.
I’d like to go through a few tips on how to come out of the home appraisal in Chicagoland process alive.
Before you enter the home appraisal process, you can take steps to prepare by doing a pre-listing home appraisal. While the home appraisal happens after you accept an offer and usually within seven days after an inspector has reviewed your home, the pre-home appraisal can happen even earlier, even before you list your property. In so doing, you can lock down an asking price that you can run with until the property closes.
A pre-listing appraisal is particularly helpful if you expect you’ll encounter pricing challenges. For example, this may occur when you have a unique home that’s hard to nail down comps for or when the real estate market is extremely volatile and it’s difficult to hone in on a price.
Who pays for the home appraisal? And How Much is it?
Home appraisals are usually between $300-$500. However, you’re more than likely to pay on the higher end of $500. If you as the home seller cannot choose which home appraisal to choose, the lender will go through a third-party appraisal management company (AMC). In which case, it’s the buyer’s responsibility to pay for the home appraisal. The fee will be set by the lender, and not the appraiser company.
In this case, the price is likely going to be up to $750 and it will be quoted by the loan officer. As well, the price of the home appraisal in Chicagoland may increase if the property is more complex than the original scope.
Why Do I Need to Have a Home Appraisal?
The objective of a home appraisal is this: there needs to be an independent and impartial voice in the appraisal of a property. This cannot come from the seller nor the buyer. The appraiser’s client is the buyer’s lender - and they want nothing but the facts. The lender does not want to extend more money for a home that isn’t worth the price.
For example, if the buyer loses their job in six months and enters foreclosure, the lender wants to be sure that they can sell the home without incurring a steep loss. The home appraisal provides an accurate assessment of the property’s value.
In What Scenario Would an Appraisal Come in Under Contract?
Okay, so here’s the thing. There are several points that may cause a property to fail to appraise.
1. The contract price is over market value.
In a market that is in flux, buyers often compete for a house and try to outbid one another. This drives the listing price up. At appraisal, the home may not appraise for the blown-up offer price. If the buyer is depending on a loan to buy your property at this inflated price, forget it. The appraisal likely won’t pass if the comps don’t warrant it. However, if the buyer doesn’t need a loan and will pay all-cash, it could work out.
2. An appraiser finds an issue with the house.
If during the home appraisal process, the appraiser finds an issue with the property than it can impact its value. This must then be factored into the appraisal.
For example, a room that isn’t up to code or has a permit would be a red flag. Certain loans, such as FHA loans, require these issues to be repaired and rectified before the home can be appraised.
3. The appraiser was inexperienced or doesn’t know Chicagoland.
The home appraisal process is hyperlocal. If the appraiser isn’t familiar with Chicagoland, then they may not be able to determine the true market value of a home.
Here’s How You Can Prepare for a Home Appraisal
- Clean clutter from your home.
Treat this process as if you are showing your home to potential buyers.
- Secure your pets.
Don’t make the home appraiser deal with your barking dog or needy cat. Give them space and peace to do their job properly and without distraction.
- Clean the exterior.
Clean the exterior of your home. Mow the lawn, pull weeds, trim the hedges, just make it look nice. It’s the first impression, and you want it to set a good tone for the rest of the appraisal.
- Yes, do a paint touch up!
You want the appraisal to go smooth, so a bit of paint to spruce things up can go a long way.
Are you selling a home in Chicago, IL?
This is What Home Appraisers Look For
All appraisers use the same form during an appraisal. It’s called the “Uniform Residental Appraisal Report. This report asks basics, such as: neighborhood demographics, housing trends, available utilities, measurements, and property details such as condition.
But you want details, I hear you. Here are the specifics:
- Property site
- Construction quality
- Roof and foundation integrity
- Gutters and siding
- Exterior condition
- Square footage
- Functional layout
- Number and size of bedrooms, bathrooms, and kitchens
- Included utilities
- Health and safety accoutrements
- Interior condition
- Structural integrity
- Code compliance
The basic idea is this: how does your property compare to similar homes in the area. That’s why you need to keep your home in good shape and maintain the home so that it holds value compared to others in the area.
The home appraisal process takes about 30-60 minutes. Afterwards, you wait.
The final appraisal report may be ready in one week to 10 days. As the seller, you won’t automatically get a copy of the report. The lender will receive the copy, however, you can ask them to send you one as well. They have 30 days to provide one to you.
The final report is usually in the ballpark of 10 pages. It will contain local comparable properties with photos and details of each property. It will also include the appraised value, how the appraiser determined the value, and what factors the appraiser took into consideration.
After appraisal, it can take as few as a couple of days to close on your home!
What if I Want to Challenge the Appraisal?
If the appraisal comes back lower than you thought, you can do a few things:
You can get proof why you think it’s lower than it should be. Obtain other comparables in the same neighborhood and submit a “Reconsideration of value” to the appraiser. Keep in mind, however, that 90% of the time the appraiser will back up their original assessment, and the appraisal of your home will stand.
You as the seller can order a second appraisal, but this can be an expensive route. It also requires switching to a new mortgage lender.
Another thing you can try is to negotiate with the buyer and save the deal. You want to sell the home and the buyer wants to buy it. Perhaps a deal can be forged. You can do the following:
- Reduce your asking price to match the appraisal.
- The buyer can bring the extra money to the table.
- You can meet somewhere in the middle.
Your real estate agent can fill in the gaps here and will probably have ideas of their own you hadn’t considered. They can of course negotiate with the buyer’s agent to save the deal.
Look, the Home Appraisal in Chicagoland Isn’t as Scary as You Think
There are ways you can navigate the home appraisal process. If you start early, even before you list your property, you can do what you can to spruce up your home and make repairs in anticipation of the home appraisal after you find a buyer. If the appraisal comes in at or above the offer price - great! If not, your buyer may be able to make up the difference in cash or your real estate agent may have other options for you to pursue to keep the contract intact. Just remember, it ain’t over till it’s over. So hang in there throughout the home appraisal in Chicagoland!