I’ve written before that having an offer accepted on a home purchase often isn’t as simple as getting the keys in your hand. The process from that point can be a long one, and one of the most important parts of it can’t be overlooked: getting an appraisal.
When you’re purchasing a home with a mortgage loan, the bank requires an appraisal to ensure the value of the property is in line with the mortgage amount. If the appraisal comes back lower than the offer price, the buyer must either make up the difference in a higher down payment or lose the loan.
Getting an Appraisal with a Cash Real Estate Purchase
If you’re going the route of purchasing a home with cash–which many buyers today are–an appraisal isn’t required. But the information in an appraisal is paramount to a real estate purchase, which is why I always recommend my clients spend the few hundred dollars to have one, even if they aren’t going the route of a mortgage loan.
When clients are purchasing a home with cash, it’s still crucial to know what they’re truly getting into with the value of the home. In a bidding war, which we’re seeing quite a bit of in the Chicago real estate market, buyers can be driven to offer a price that is beyond what the home is actually worth–which isn’t a good investment, no matter how much you want the home.
It’s important to keep in mind, however, that requesting an appraisal can raise an issue with the seller, as he or she could be concerned that the appraisal would come in below the agreed sale price.
If you have a seller who won’t allow an appraisal clause in the contract, I recommend my clients use the attorney approval period to get an appraisal on the home to ensure everything is in line.
The turn around must be quick, so it’s important that your realtor stays in constant communication with the seller’s realtor to ensure the process is moving along smoothly and the appraisal isn’t holding anything up. This is the piece the ultimately decides whether your sale is finalized at the closing table, and if it takes too long, a buyer or seller can choose to walk away rather than wait.
Finding a Chicago Real Estate Appraiser
If you’re getting an appraiser on your own, you have the opportunity to work with your realtor to find someone you think is right for the job. I always use an appraiser who has worked with properties in the heart of Chicago and with properties in the luxury home category, whether single-family homes or Chicago condos. That experience in the local luxury market is key to having your home purchase valued correctly.